On April 29, 2019, the U.S. Department of Labor (“DOL”) issued an opinion letter finding that “on-demand” service providers working for a virtual marketplace company are independent contractors under the Fair Labor Standards Act.
The opinion letter comes almost two years after the DOL withdrew informal guidance on independent contractors issued under the Obama administration, in which the DOL concluded that “most workers are employees under the FLSA.” The new opinion letter signals an approach more friendly to “gig economy” virtual marketplace companies (or “VMCs”), online and/or smartphone-based referral services that connect consumers with service providers providing a wide variety of services, such as transportation, delivery, shopping, moving, cleaning, plumbing, painting, and household services. READ MORE
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.
Some seven months after the publication of Matthew Taylor’s independent ‘Review of Modern Working Practices’, the UK Government has finally issued its response to the Taylor proposals: the “Good Work” response (the “Response”). Big news, you might think – but it’s fair to say that it promises more than it delivers.
Some of the headlines in the UK press would have you believe that there has been a large scale reform on UK employment rights and this was certainly the expectation– but this just isn’t the case, at least for now. The Government has stated that it is in agreement with 52 of the 53 recommendations from Matthew Taylor’s commissioned review, which considered how employment practices need to change in order to keep pace with modern business models (the “Taylor Review”), and it has acknowledged that, “all work should be fair and decent, with scope for development and fulfilment” – but the major points in the Response are all subject to further consultation and we are far from having concrete plans in place to effect change. READ MORE
In what could prove a harbinger of worker classification developments to come, Assembly Member Lorena Gonzalez (D – San Diego) has proposed AB 1727, “The California 1099 Self-Organizing Act.” The bill, which is at the earliest stages of the legislative process, would provide an avenue for certain workers classified as independent contractors to engage in “group activities” including organizing, bargaining, and striking. At bottom, the legislation would give certain independent contractors the ability to collectively confront those with whom they contract.