Once again, our economy is changing. Just like the industrial revolution brought new opportunities for advancement, the digital economy is also bringing with it new ways for people earn a living – either full time or on the side. While this can bring tremendous opportunity for enterprising workers, companies have taken advantage of the new “gig economy” by classifying their employees as independent contractors, even if they don’t qualify.
While working as an independent contract can come with perks like being able to make your own hours, there are downsides, such as paying your own Social Security and self-employment tax. At the same time, companies using independent contractors don’t have to pay Social Security or employment tax on their independent contractors, although they do sacrifice a certain amount of control over the workers as a result, and they usually pay a little more by the hour, day or project.
But lately it seems like companies want to have their cake and eat it, too. Lawsuit after lawsuit has been filed against major companies for allegedly misclassifying their workers as independent contractors, even when they allegedly don’t meet all the requirements. Such a situation puts workers at a significant disadvantage when they have to bear all the financial burdens of being an independent contractor, without any of the perks.
The California Supreme Court has recently agreed to hear a case involving such allegations against Dynamex Operations. In doing so, the court may decide to reconsider California’s previous definition of “employee” and the Court may decide on a new test to determine whether a worker is an employee or an independent contractor. Since 1989, courts have been using the Borello test, but that might not be enough to handle the needs of workers almost 30 years later. Continue reading