This is a sponsored column by attorneys John Berry and Kimberly Berry of Berry & Berry, PLLC, an employment and labor law firm located in Northern Virginia that specializes in federal employee, security clearance, retirement and private sector employee matters.
By John V. Berry, Esq.
A substantial portion of the workforce has flocked to new types of employment, such as working for Uber, Lyft, GrubHub, TaskRabbit and others.
These employees have largely been classified by employers as contractors, instead of regular employees, to avoid paying their employment taxes and providing benefits. However, this may be starting to change with a recent decision from California.
“Gig” or “New economy” workers, such as drivers for popular driving services like Uber and Lyft, appear to be seeing a shift in their employment status under a new decision from the Supreme Court of California.
The case will make it significantly more difficult for companies in California to classify these drivers as independent contractors and avoid paying them wages and benefits as required by state law and may start a trend in other states, like Virginia.
Court Issues ABC Test
The California Supreme Court ruled in favor of workers for a document delivery service company, called Dynamex Operations West, who were seeking employment status.
The drivers for the delivery service brought their case to court several years ago, arguing that they were required to wear the company’s uniform and display its logo, while providing their own vehicles and incurring all the costs associated with the deliveries.
In the Dynamex case, the court instituted what it called the ABC test to determine whether workers should be considered employees or contractors using new and specific criteria.The new test presumes individuals are employees unless the company proves the following three criteria used to classify the individual as an independent contractor:
- The worker is free from the control and direction 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.
It is believed that this decision will have a significant impact on companies that use independent contractors, such as Uber/Lyft, Amazon, Instacart, GrubHub and TaskRabbit. Notably, the decision could require such employers to apply this “ABC test” to their drivers and couriers, representing a change in the regular tests that typically apply to these types of employers.
Some other state courts have also begun adopting this new ABC test to determine employee status in light of changes to the types of employment in the new economy.
Conclusion
When facing employment issues it is important to have the assistance and advice of counsel. If you need assistance with an employment issue, please contact our office at 703-668-0070 or at www.berrylegal.com to schedule a consultation. Please also visit and like us on our Facebook page.