Employee Misclassification The New World Order?

With several companies engaging a section of their workers as independent contractors, these companies are not complying with labor and employment laws in relation to such workers

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Possibly, the current biggest HR-legal issue faced by on-demand and gig economy companies globally is whether their workers are being misclassified. Several companies in this sector have been engaging a section of their workers as independent contractors and not as employees. As a result, these companies do not comply with the labor and employment laws in relation to such workers.

Various courts have been examining this issue of whether workers have been misclassified as independent contractors and accordingly be entitled to employment related benefits and protection. On April 30, 2018, the California Supreme Court passed an important decision on this topic. The judgment is likely to have a huge impact on such arrangements and can potentially change the legal landscape for gig economy companies in California, USA, and possibly worldwide!

The case relates to Dynamex Operations West Inc. v. The Superior Court of Los Angeles County. Dynamex, which is a package and document delivery company in the US, had adopted a new policy and contractual arrangement under which its truck drivers were regarded as independent contractors instead of employees, contrary to its previous practice. The drivers filed a class action lawsuit stating that they have been misclassified as independent contractors. The basis of their argument was that they continued to perform the same tasks as they had when they were employees of Dynamex and the fact that Dynamex continued to exercise the same level of control on them.