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.
State governments continue to respond to the COVID-19 pandemic in a number of different ways that impact businesses and employers. Workers compensation has been a much-discussed topic within this context. In September of 2020, California enacted a new law that codified previous executive orders the created rebuttable presumptions relating to employees who test positive for COVID-19. In addition to the rebuttable presumption, the law created a number of reporting requirements for employers and their workers compensation carriers and administrators.
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try to grapple with updating employment laws to cope with the change, judges are often stuck applying potentially outdated laws to modern situations.
In the aftermath of California’s aggressive attempts to crack down on the “gig” economy, other states have moved as well, though often in different directions. While many states have moved to pass laws specifically designed to protect the status of “gig” workers, New Jersey is in the process of passing its own attempt to regulate these workers. Indeed, the proposed New Jersey legislation would go so far that it would classify almost all workers in the state as employees and make it incredibly difficult for someone to claim independent contractor status.
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.
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.”
The National Labor Relations Board revised its definition of a joint employer in 2015, leading to a host of concerns from various businesses fearing expanding liability. The decision, commonly known as Browning-Ferris, survived multiple appeals and concerted lobbying of Congress. In the wake of the 2016 election, the revised joint employer rule seemed doomed, as the new administration seemed certain to revert to the old rule, considered friendlier to business owners.
In September of 2017, Republicans gained a majority of seats on the National Labor Relations Board. After several months spent relatively quietly, the National Labor Relations Board overturned or reversed a host of decisions and regulations in the first few weeks of December. All the reversals focused on Obama-era policies only in place for a few years.