November Elections May Decide Fate of Gig Worker Classification Regulations

We recently authored “Elections May Decide Fate of Gig Worker Classification Regs,” the first of a series of articles on wage and hour issues for Law360.  Subscribers can access the full version here - following is an excerpt:

As the gig economy has grown, so too have questions about it. One of the most consequential questions in the past several years has been whether workers in the gig economy are properly classified as independent contractors for purposes of various federal and state statutes, or whether they should be classified as employees of the businesses with which they have relationships.

The answer to that question has tremendous implications for both the companies and the workers. Various standards have emerged to address this question. The standards are by no means consistent, nor are they as clear as one might hope.

The same gig economy worker could be properly classified as an independent contractor under federal law, yet found to be misclassified as an independent contractor under state law. Indeed, the worker's status could vary across different federal statutes, or under different laws in a single state.

In 2019, California enacted a statute known as A.B. 5, adopting a demanding ABC test for workers to qualify as independent contractors. And it is no secret that the legislators who drafted A.B. 5 were taking aim at gig economy companies and ride-share and food-delivery operators in particular.

At the same time, the U.S. Department of Labor has taken a very different approach, issuing guidance in 2019 indicating that many of these workers are, in fact, bona fide independent contractors under federal law. Just days ago, the DOL issued a proposed rule that takes a comparatively expansive view of who can be an independent contractor.

In the upcoming elections, both of these approaches to classifying gig economy workers will effectively be on the ballot. A victory by Democratic presidential nominee Joe Biden points toward a regulatory and enforcement view starkly at odds with the DOL's current approach. In fact, Biden has publicly declared his support for adopting the California standard as the law of the land for purposes of a broad range of labor, employment and tax statutes.

And in California, Proposition 22, a voter initiative that would overturn the California statute as applied to some app-based drivers, has qualified to appear on the November ballot.

The outcome of the November elections both at the federal level and in California will likely determine whether the gig economy as we have come to know it continues to operate in a nonemployee model.