In a slow news week like this one, we sometimes take an opportunity to get our readers caught up on stories we’ve been keeping our eye on in the world of labor and employment law.  For the past year, we’ve monitored the progress of the California state law that said workers who performed tasks within a company’s regular business were controlled by the company and had to be treated as employees.  This law codified a 2018 California State Supreme Court ruling that originally determined that the gig workers of the state were employees.

The California law survived legal challenges this year by both Uber and Lyft, but enforcement of the law was put on hold when the companies requested and were granted a stay of the injunction requiring them to comply with the law.  The stay ultimately put off imposition of the injunction until a vote could be held on Prop. 22 – a law put forth by the companies that exempted them from the terms of the California gig worker law.  Uber, Lyft and DoorDash put over $200 million into the campaign to get Prop. 22 approved, and it paid off, as California voters approved granting the three companies the exemption to allow their workers to remain independent contractors.

Because of the vote, the three companies will not be required to pay employment tax, workers’ compensation or unemployment, and the companies will no doubt continue to provide their services in California.

As we said when we originally discussed the changes taking place in California, these are not laws that impact any other state in the country, but the decisions of California courts and laws coming from the Golden State are highly influential on other states across the country.  Local and state governments are all facing significant budget shortages in the coming year due to lack of revenue following the pandemic.  One can be sure that California’s law attempting to make gig workers employees will not be the only effort by a state to get at the profits being realized by these massive technology companies.

After all of the legal back-and-forth, and struggle to enforce its own laws against the companies that worked within its confines, the State of California was taken down by a simple ballot measure (and $200 million).  However, if another state decided to pass a similar law to that created by California, there is no telling what kind of an effort Uber and Lyft would put into fighting that measure, and whether the citizens of the state would be so willing to support such a ballot measure that would take money away from a state hard-strapped for cash.  The gig companies have vowed to lobby for federal protection against similar state laws, but with possible changes in administration, there is no telling how far those efforts will go.  While it appears the California chapter of this story is closed, it is not likely the last time we’ll hear about similar measures taking place in other states.

The classification of employees and independent contractors can be a difficult one, and it will likely become more difficult as laws like that used in California develop across the country.  If you, or your organization need assistance with the classification of your workers, contact the Wiley Law Office, for wage and hour advice that works.