Lawmakers have begun to focus on independent contractors recently because of the increase in temporary “gig economy” jobs such as driving for Uber or Lyft, or performing work via TaskRabbit. Last week, the National Employment Law Project (NELP), a progressive labor group, promoted a list of model policies targeting companies that use independent contractors. Below is a summary of the model policies that NELP is advocating and examples of where these policies have been enacted or are currently being considered.
The “ABC Test” for Employee Status. The “ABC Test” is a measure for determining employee status that presumes workers are employees, not independent contractors, unless they: “(A) are free from control by the putative employer; (B) are doing work that is outside the usual course of business of the putative employer; and (C) are engaged in an independently established business.” In adopting the more stringent ABC test, as opposed to the IRS 20-Factor test or other employee status tests, more workers will be classified as employees versus independent contractors. Notably, last April, the California Supreme Court established the ABC test in Dynamex Operations West, Inc. v. Superior Court, although a subsequent appellate court ruling in Garcia v. Border Transportation Group, LLC determined that the ABC test applies only to wage order claims. Currently, state lawmakers are debating legislation (CA AB 5) that would codify the Dynamex decision. Two ABC test bills (WA HB 1515 and WA SB 5513) are also currently pending in the Washington Legislature.
Expanding Responsibility for Temporary Employees. In situations where an intermediary entity, such as a staffing agency or subcontractor, hires a contract worker, NELP proposes that both labor intermediary and host company should be responsible for complying with state labor standards laws. This would add liability to the hosts if staffing firms or temp agencies violate labor laws. Illinois enacted similar legislation in 2017, which went into effect last June.
Wage and Standards Boards. A wage board is an entity comprised of government officials, employers, workers, and sometimes consumers that makes recommendations to the governor or legislature regarding labor standards. Seattle passed a “Domestic Worker Bill of Rights” ordinance last year that follows this model.
Collective Bargaining for Independent Contractors. NELP is seeking to expand collective bargaining for independent contractors at the state level. A recent Ninth Circuit Court of Appeals decision could open the door for such laws.
NELP’s recommendations are likely to generate additional state legislative activity as we move through the 2019 legislative sessions.Though several states are addressing worker classification across various industries this year, we expect NELP’s proposals to hit a roadblock in states with Republican control. Additionally, it is likely that these issues will continue to play out in the courts at both the state and federal level.