On May 2, 2019, the Ninth Circuit in Vazquez v. Jan-Pro Franchising Int’l, Inc. held that the California Supreme Court’s 2018 decision in Dynamex Operations West v. Superior Court applied retroactively. Dynamex adopted the “ABC” test for independent contractor classification for claims arising under California’s Wage Orders. For those claims, an employer must show that all three prongs of the ABC test are met to justify independent contractor status. For information on Dynamex’s adoption of the ABC test, read our prior coverage here. READ MORE
Further to the reclassification of the service agreement between an independent deliveryman and Deliveroo, ordered by a Spanish lower Court, French jurisdictions recently shifted position, considering that several independent workers should be deemed employees of the platform that they were working for. READ MORE
As has been widely reported, last month the California Supreme Court issued a decision in Dynamex Operations West, Inc. v. Superior Court of Los Angeles that rejected the long-standing, multi-factor test to determine whether a worker is an employee. The Dynamex decision established a three-factor “ABC” test that, on its face, places the entire burden of showing that a worker is not an employee squarely upon the hiring party. The ABC test asks whether:
- The worker is free from the direction and control of the hirer in connection with the performance of the work, both under the contract for the performance of such work and in fact;
- The worker performs work that is outside the usual course of the hiring entity’s business; and
- The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity.
In a case highlighting the European Continent’s approach to worker privacy, the Grand Chamber of the European Court of Human Rights ruled that employers may violate employees’ rights when monitoring their electronic correspondence in the workplace. In Barbulescu v. Romania, the Grand Chamber reversed a prior decision from a smaller panel of the European Court of Human Rights (“ECtHR”) which had determined companies have far-reaching authority to monitor employees’ electronic communications—a similar standard to that which exists in the United States. READ MORE
In the past few years, the American workforce has shifted dramatically. By some estimates, as many as 53 million Americans are now self-employed. Many of them work in the “gig” or “on demand” economy, which has emerged as the new norm for doing business. In general, the gig economy offers traditional services, such as transportation, food delivery, and housing, in a more efficient way by connecting consumers directly to service providers. But, as with many innovations, gig economy companies face challenges from multiple fronts due to mounting legal pressures. Employment laws written in the 1930s haven’t kept up with the pace of innovation, and trying to apply them to the way services are delivered today is like trying to fit a square peg into a round hole. READ MORE
Effective June 7, 2017, the Department of Labor (“DOL”) has withdrawn informal guidance on independent contractors and joint employment. The guidance on independent contractors came from an Administrator’s Interpretation released in 2015 and was the result of the DOL’s renewed focus on worker misclassification. In it, the DOL seized upon a broad definition of “employ” under the Fair Labor Standards Act (“FLSA”)—“to suffer or permit to work”—to conclude that “most workers are employees under the FLSA.” The DOL’s guidance on joint employment was released in 2016 and also came from an Administrator’s Interpretation. The guidance provided a broad interpretation of joint employment in the wake of the NLRB’s Browning-Ferris decision. It also distinguished between “horizontal” joint employment, which occurs when the employee has an employment relationship with two or more sufficiently related employers, and “vertical” joint employment, which occurs when the employee has an employment relationship with one employer (such a staffing agency or subcontractor), but economic realities show that he or she is economically dependent upon another entity. READ MORE
The Second Circuit has affirmed the dismissal of a class action of New York City “black car” drivers who alleged they were misclassified as independent contractors by their dispatchers. In reaching its ruling, the Court found that multiple factors of the economic realities test weighed against employee status for the drivers.
Black car drivers provide rides to high-end clientele, such as business executives, celebrities, and dignitaries. In 2012, a class of drivers sued Corporate Transportation Group Ltd. and a number of its affiliates (collectively, the “dispatchers”) alleging they were misclassified as independent contractors in violation of the FLSA and New York Labor Law. After originally granting conditional class certification, the U.S. District Court for the Southern District of New York granted the dispatchers’ motion for summary judgment, concluding the drivers were properly classified as independent contractors under both statutes. READ MORE
Companies operating in the “on-demand” or “gig economy” have enjoyed tremendous success in recent years, as emerging technologies and shifts in consumer tastes have buoyed their growth. These companies span a cross-section of industries (transportation, food delivery, lodging) but have one thing in common: each aims to deliver traditional services more efficiently by connecting consumers directly with service providers.
But as we all know by now, success often begets legal challenges. Take Uber, for example. The company has faced a thicket of litigation in recent years, most notably related to the question of whether its drivers are employees or independent contractors.
Like many companies in today’s economy, Uber has implemented an arbitration policy as a way to efficiently resolve disputes. Below we recap some of the developments in this area and preview some legal issues that companies will want to monitor in the months ahead. READ MORE