California Supreme Court narrows independent contractor designation

The California Supreme Court just unanimously ruled to narrow which workers a business may define as independent contractors.

The landmark case was brought forth by a driver for Dynamex, a delivery service that operates nationwide. Prior to 2004 Dynamex drivers were employees, but the company decided to alter their classification to independent contractors in order to save money.

In spite of widespread legal differences between employees and independent contractors, the roles of the drivers remained predominately unchanged. The changes that did occur though were largely stacked against the drivers. For example, they were required to provide their own trucks and pay their own expenses (to be deducted from taxes at the end of the year).

They could work when they wanted, but how much money they made during available hours was largely dependent on the workload allocated to them by the dispatchers. So one could imagine that over time certain drivers became preferred over others for various reasons.

The company also required all drivers to sport their shirts while making deliveries (purchased of course, by the drivers themselves).

This ruling holds enormous implications for all sorts of businesses, including big names like Uber and Lyft that rely on the relatively new “gig economy”. If these companies are forced to redefine their drivers as employees, they will then be forced to pay into the workers’ compensation and unemployment taxes in addition to other parameters. According to The New York Times, the distinction of employee will cost a company around 20 to 30 percent more than an independent contractor.

John Rosenbaum is an Orange County Workers Compensation attorney that has been a trusted legal source in southern California for decades. If you are in need of legal assistance, contact our offices today.

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