Once again, debates regarding worker classification could put California employers at risk.
Classifying workers correctly is always a critical issue for employers to consider. However, recent events, such as the nationwide Uber driver strikes in May, have led more workers in many industries to question their work status.
Several companies could face legal issues, including Google
According to Inc. Magazine, Google classifies more than half of their workers as independent contractors. And many of those contractors sent an open letter in December to Google's CEO claiming that they deserved a different classification and access to employee benefits because of:
- Their direct interaction with company business
- The work they complete for Google
They came to this conclusion using the ABC test put into place after a court ruling last year.
How does last year's Dynamex decision impact the current situation?
The trigger behind these workers' claims—and in turn, the issues employers are facing—is the ABC test established in a court ruling last year.
Dynamex Operations West Inc. v. Superior Court of Los Angeles established the ABC test to help employers determine whether a worker is an employee or an independent contractor. The test determines someone is an independent contractor if they meet three conditions:
- A. The worker and their responsibilities are not under the direct control of the employer.
- B. The worker's responsibilities are outside or supplemental of business as usual.
- C. The worker practices a trade independently that is similar to the employer's business.
Workers classified as independent contractors now are using the strict conditions of the ABC test to file misclassification claims against their employers. And the action that workers at Google, one of the largest companies in the country, took could impact many other workers across the state.
However, many employers claim the test is not accurate, and that it could essentially eliminate independent contractor positions entirely. This could seriously inhibit many businesses across various fields.
What employers must consider in light of these developments
The Inc. Magazine article reports that potentially more than 20% of businesses have at least one worker who is misclassified. And even that one misclassified worker could be enough grounds for a lawsuit. It may be helpful to review the status of all workers to ensure they are correct.
Several employers are currently challenging lawmakers and the ABC test. But in the meantime, employers should be cautious when classifying workers to protect their business and avoid a challenging and damaging lawsuit.