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California Court Tightens Independent-Contractor Rules

May 6, 2018

By Steve Wishnia and Neal Tepel

SACRAMENTO, Calif.—In a ruling one labor-side lawyer called “an earthquake, a seismic shift,” the California Supreme Court on Apr. 30 drastically revised its standard about when employers can classify workers as independent contractors. “When a worker has not independently decided to engage in an independently established business but instead is simply designated an independent contractor,” Chief Justice Tani Cantil-Sakauye wrote in the unanimous decision, “there is a substantial risk” that the business hiring them is attempting to evade the labor-law requirements for wages and hours. To be a legitimate independent contractor, the court held, workers have to be in a genuinely separate business, “such as an independent plumber or electrician—who would not reasonably have been viewed as working in the hiring business.” The ruling involved drivers at Dynamex Operations West, a Southern California delivery company that had reclassified them as independent contractors in 2004—but it could affect thousands of workers in California, including drivers at FedEx, Lyft, and Uber. “If I were a gig-economy employer, I’d be taking a deep breath today and I’d be on the phone to my lawyers to discuss risk assessments,” Oakland lawyer Beth Ross told the San Jose Mercury News. Read more

May 6, 2018

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