Los Angeles partner Mark Terman was quoted in a SHRM article titled, “Gig-Worker Model Upends Employee Classification Debate.” The article examined the ongoing conflict regarding how to classify workers under federal and state law.
Mark said, “Some state laws more closely follow federal law and are more willing to allow independent contractor classification. Many states, like California, continue to be hostile to independent contractor classification and I wouldn’t expect them to follow or adopt the emerging federal trend on classification of gig-economy service providers as independent contractors.”
In reference to a recent DOL opinion letter stating that those who use an unnamed “virtual marketplace” platform to connect with consumers are independent contractors Mark said, “This is consistent with what I see as a trend at the federal level to recognize the realities of gig companies providing the platform for service providers and not employing the service providers. The National Labor Relations Board made a similar ruling May 14 that classified service providers as independent contractors unable to unionize under the National Labor Relations Act.”
The article also cited how California law differs from other states, and the California Supreme Court’s application of the “ABC” test in Dynamex Operations West, Inc. v. Superior Court of Los Angeles. As it relates to complying with state and federal classification regulations Mark said, “Most states still operate under the federal Fair Labor Standards Act, but as a general rule, the law of the state where the companies’ services are performed will govern employee status.” He emphasized that companies will have to re-evaluate their business models and account for “applicable state law first, since state law will likely be more onerous for compliance purposes, and then secondarily federal law.”