A sweeping new California Supreme Court ruling restricting who is an independent contractor is shaking up an exceptionally diverse range of industries, including real estate.
The ruling, issued in April, affects an estimated 2 million independent contractors working in healthcare, beauty salons, gig economy jobs like Uber and Lyft, journalism, music, education, financial planning, agriculture, construction, technology, insurance, transportation and yes, real estate.
The decision is praised by the California Labor Federation as offering workers protections like minimum wage, unemployment, workers’ compensation and disability insurance. But some independent contractors say they like their freedom and have no interest in being employees.
“The interesting rub on this whole issue it’s not a traditional business versus labor fight,” said Jennifer Barerra, senior vice president of policy for the California Chamber of Commerce. “This is really about two different forms of the workforce – a worker vs. worker situation. It’s about whether employees get to choose what status they want to be and what works best for their lifestyle.”
The ruling on Dynamex Operations vs.
Superior Court of Los Angeles
provides a new three-part “ABC” test to determine
who can be an independent contractor.
The chamber is coordinating the I’m Independent Coalition, which is asking the state Legislature to allow more flexibility for independent contractors.
The ruling on Dynamex Operations West Inc. vs. Superior Court of Los Angeles provides a new three-part “ABC” test to determine who can be an independent contractor.
The ruling says that the worker must:
(A) be free from control and direction from the hiring business
(B) must perform work outside the scope of the hiring entity’s usual business
(C) have an independent business of the same nature of work (demonstrated by taking out a business license or marketing services, etc.).
The biggest change is Part B, which was never included under previous law.
Dynamex is a same-day courier and delivery company that classified all its drivers as employees until 2004 when it reclassified them as independent contractors. Though the drivers could set their own schedules, they had to wear Dynamex uniforms and notify the company of their availability. The state Supreme Court ruled that the drivers should be employees.
The court ruling has put doctors in a bind who are now caught between this ruling and the state Business and Professions Code, which bars hospitals from directly employing most physicians. Many doctors serve as independent contractors at several hospitals – sometimes working a few shifts at safety net hospitals, which provide lower reimbursement rates, and other shifts at higher-end hospitals which pay more. Because they set their own schedules, they can have more time to spend with children and family if they choose.
Caitlin Vega, legislative director at the California Labor Federation, said the Dynamex decision is needed to rein in businesses who have avoided responsibility for workers. When companies don’t adequately provide for them, many end up on public assistance, she said.
“Companies have made tons of profits off cheating workers,” she said. “Now there’s a clear test and workers will be able to enforce their rights.”
Source: Capitol Weekly