California Appellate Court: “Gig” Drivers are NOT Employees.
“GiG” Drivers …
may work as independent contractors.
For the past five years, California has been embroiled in a hotly contested issue: are “gig” drivers like those who drive for Uber, Lyft, and DoorDash employees or independent contractors? How did this fight start? In 2018, the California Supreme Court issued a ruling that basically held that workers that provide services for hire are presumed to be employees. (See Dynamex Operations West, Inc. v. Superior Court of Los Angeles (2018) 4 Cal. 4Th 903). Under Dynamex, all workers were automatically employees, and the only way a worker could be classified as an independent contractor was to pass a three-prong test, also known as the “ABC” test.
Shortly after the court decision in Dynamex, the state legislature passed a new law (AB 5) that identified workers in various sectors as employees, including truck drivers and, of course, “gig” workers like those who drive for Uber, Lyft, and DoorDash. The new law was broad and made workers in a wide range of different sectors, who have traditionally been independent contractors, “employees” overnight.
In response to the new law making all workers employees, “gig” companies pushed for a ballot measure to allow “gig” workers to work as independent contractors and Proposition 22 was drafted. In 2020, Proposition 22 was passed by the voters. The passing of Proposition 22 allowed “gig” companies like Uber, Lyft, and DoorDash to continue to classify their workers as independent contractors, despite the court ruling in Dynamex.
Shortly after Proposition 22 was passed, a lawsuit was filed in California court that argued that Proposition 22 violated California’s constitution. A Superior Court judge in Alameda County agreed and held that Proposition 22 was unconstitutional. This ruling was appealed to the California appellate court. In the most recent court ruling, a California appellate court has overturned the Alameda trial court’s ruling. As a result, most of Proposition 22 is in effect and “gig” drivers may continue to operate as independent contractors- rather than as employees.
What is the significance of all this?
On one hand, some people see their inability to be classified as independent contractors as an encroachment on their rights. They argue that if they choose to work as independent contractors, they should be able to do so.
On the other hand, for the employers, the cost of doing business will increase substantially if all their workforce are considered employees -and not independent contractors. This is because employees have rights, benefits, and protections that independent contractors do not have, including minimum wage, sick leave, family leave, unemployment, disability benefits, etc.
Others who oppose Proposition 22 believe that allowing companies to hire “gig” workers and treat them as independent contractors will only encourage large corporations to do away with salary workers, meaning that “gig” workers will become the norm and salaries and benefits will become a thing of the past.