The California Supreme Court served a potential blow to the state’s gig economy with a ruling Monday that would make it tougher for companies to classify workers as independent contractors instead of employees.
As reported by the New York Times, the decision will force major players like Uber and Lyft to change their business models, including following overtime, benefits and unemployment employee requirements. Before the ruling, there were approximately 10 factors that went into determining whether a worker was an independent contractor or employee. The court decided on a simpler “ABC” test that is already implemented in New Jersey and Massachusetts. Under the new test, workers would be considered employees if they perform tasks that are the “usual course” of the company’s business.
So what does this mean for Uber and Lyft? If you are an Uber or Lyft driver or an independent contractor, what does this mean for your business?
*We reached out to Uber and Lyft for comments on the state’s ruling. Uber declined our request did not reply to our request in time for the segment.
Richard Meneghello, Oregon-based partner at Fisher Phillips, a gig-economy law practice group with offices in L.A. and Orange County; his focus includes California gig economy law; he tweets @pdxLaborLawyer