Gig Worker Classification: How Might Recent Cases Affect You?

You’ve seen it in the news. You may have even chatted with an Uber or Lyft driver about it during a ride. Worker classification in the gig economy has become a big issue in the public eye, and in many messy legal fights. High-profile companies like those mentioned have been grabbing most of the headlines.

It comes down to this: Tech giants don’t want to offer benefits to gig workers, so they’re drawing a difference between employees and independent contractors. But gig workers are demanding the basic labor rights that employees enjoy, like overtime, sick leave, and workers’ comp. Who will prevail? And what does it mean for how candidates navigate their earning opportunities?

Prop 22 Rules Against Workers in California

A key moment in the fight came this past July, when the California Supreme Court upheld Proposition 22 in a huge win for such companies as Uber, Lyft, and DoorDash. The ruling said that app-based transportation and delivery drivers will still be treated as independent contractors. Therefore, they will remain ineligible for paid leave, workers’ compensation, overtime, and a so-called living wage.

The decision came after five major companies banded together and dished out a record-breaking $200 million to persuade California voters to approve the ballot measure, which ultimately achieved its objective of defeating a Supreme Court ruling from 2018 that classified such workers as employees. The implications go far beyond California, as both Uber and Lyft have vowed to pull out of any state that requires worker protections for independent contractors.

But Other States Are Still Litigating the Issue

Several U.S. states and cities, including New York City, Seattle, and Colorado, are nonetheless introducing legislation to improve wages and benefits for gig economy workers. Uber and similar companies claim that stricter regulations will make workers less independent and lead to increased charges for consumers. Gig workers persist in challenging their classification under local employment laws. Some observers fear a hodgepodge of regulations across the United States that would complicate compliance and impact service availability in certain regions.

It’s a basic understanding that employees should receive health benefits, a fair wage, and other privileges like paid time off. But what makes an employee? Gig economy companies point out that independent contractors trade the advantages of being an employee for the flexibility and personal control of the gig lifestyle. Many states use what’s known as an “economic realities” test, developed by the Department of Labor, that takes into account how permanent the work is and how much the worker controls the job. This debate will undoubtedly continue.

Challenges and Impacts

With many workers providing services for several entities at the same time, traditional employment lines are blurred as never before. Should there even be a third classification that blends elements of both employee and contractor? Individual businesses may try to set their own standards, but as a nation — and even as individual states — the nuances of gig employment are still being worked out through legislative action, voter initiatives, and court rulings.

Job seekers should stay informed on these developments, as they’ll shape the gig economy’s future workforce needs, company compliance, and reasonable expectations for job security, pay, and benefits.