ECBM's Blog: Information To Protect What You Grow

Lost in bigger election news, a major ballot initiative in California sought to determine the future of the gig economy. California were asked to decide to implement or reject Proposition 22 as part of their ballots on November 3, 2020. Proposition 22 sought to re-define the way California classifies workers of ride-sharing apps. Uber, Lyft, and other services spent approximately two hundred fifty million dollars seeking to convince the California public to adopt the measure. They succeeded. While not all ballots have been counted yet, Proposition 22 currently has a seventeen point lead and all major news organizations have declared that it will pass.

The rise of the gig economy radically transformed employment for many people in a very short time. The impacts and consequences of that transformation are still working their way through various parts of our country’s legal system. While legislators try to grapple with updating employment laws to cope with the change, judges are often stuck applying potentially outdated laws to modern situations.

More employers are opting for a remote workforce. Whether due to the recent COVID-19 health crisis's challenges, costs associated with a more traditional workspace, keeping your talent on the team after a move, or other issues with a conventional commute to the office more employers than ever are taking advantage of the availability of technology and the possibility of having remote team members. 

For the past several years, attempts at the federal and state level to clarify rules on joint employment situations have caused considerable heartburn and anxiety for employers. While several states and the Obama administration attempted to broaden the situations in which companies could be held liable for joint employers, other states and the Trump administration have pushed back and sought to protect many types of companies from being held accountable as joint employers.

Employment contracts are different from most other types of commercial contracts. A host of unique rules apply to employment contracts. At the end of the day, though, they are still contracts and must adhere to the basic rules of contracts, even if those rules are sometimes applied in different ways. This is particularly true when discussing non-compete clauses.

It was expected that California’s Assembly Bill 5 passed late last year would spawn tons of litigation. The law radically changed how workers from uber drivers to television show writers were classified. Those negatively impacted by the law aggressively lobbied for changes and exemptions while planning litigation should their lobbying efforts fail.

There has been an ongoing fight over how to define employees for the past few decades.  As technology has re-shaped the workforce, this fight has gotten more intense.  State and federal governments have struggled to set clear lines dividing independent contractors from employees for a number of purposes, including taxation and the application of workplace benefits.  These benefits and taxes add on average 20% to 30% to the cost of hiring and paying a worker.

Hours of service requirements are a big deal for trucking companies. The penalties for violations can be significant – up to $16,000 per violation. Violations will also impact a trucking company’s safety score, impacting their insurance premiums. At the same time, compliance with hours of service requirements involves significant office work and record-keeping, which also cost money.

Action over cases have become increasingly common over the past two decades. These cases involve employees collecting worker’s compensation from their employer, and then suing a third party that caused their injuries through negligence who had a contractual indemnity clause with the employer that covers the lawsuit.   The prevalence of these suits have led insurance companies to take action by issuing new endorsements aimed at protecting themselves.

The Fair Labor Standards Act sets national standards for wage and hour issues related to employees. The law empowers the Department of Labor to set eligibility standards for overtime pay as well as a series of exemptions for it. Employees who qualify for overtime under the law receive time-and-a-half pay for hours worked more than forty hours a week. Time-and-a-half pay is a 50% increase to the employee’s “regular rate of pay.”