Creating a major change in the landscape for California’s gig economy, the California Supreme Court issued a ruling that made clear that many workers misclassified as “independent contractors” should actually be considered employees, and UC Hastings Professor Veena Dubal’s work played a role.
In its decision, published April 30, the state high court cited Dubal’s paper Wage Slave or Entrepreneur?: Contesting the Dualism of Legal Worker Identities (2017) 105 Cal.L.Rev. 65, 72. Dubal’s paper provided an overview of the multiple standards courts have used to determine which category a worker falls into, and identified one known as the “ABC standard” as the simplest method to distinguish employees from independent contractors. The state high court’s decision followed the path of Dubal’s analysis, and determined that the ABC standard is the most appropriate one to use.
ABC, Dubal explained, presumptively considers all workers to be employees. It considers three factors for distinguishing an independent contractor: an employer does not dictate how the independent contractor works, an independent contractor’s trade is, by custom, considered independent, much like a carpenter or a plumber, and, most important, an independent contractor’s work is outside of the usual course of the hiring entity’s business.
That means a plumber repairing a leak in a dress shop’s plumbing, for example, would be considered an independent contractor, but a seamstress making dresses for the same shop could not be. ABC is a “simple, fabulous test,” and far more objective that previously used standards, Dubal said. The original legal action in the case was brought by delivery truck drivers for Dynamex Operations West, Inc., whose work was clearly central to the company business, Dubal explained. “Dynamex is a delivery company. These are delivery drivers,” she said. “There’s no way they are not employees.” “Easily the most significant legal blow to Uber et al yet,” reporter Noam Scheiber said in a tweet linking to his New York Times story, which called the ruling one “with potentially sweeping consequences.”
The ruling is expected to have an especially huge impact on Uber and Lyft drivers, who may be entitled to back pay for minimum wage and overtime violations, Dubal said. “It’s particularly significant for people bearing vehicle expenses because that’s what puts people under minimum wage,” she explained. But the ruling is also expected to impact workers in a broad swath of businesses, from construction to nail salons.
To implement the shift, “It’s gonna take a lot of lawsuits,” Dubal said. But now, the barriers is much lower for workers categorized as independent contractors to be designated as employees, and therefore subject to minimum wage and other employee protections, she explained. “The law is so employee-friendly, it’s going to result in a surge of misclassification litigation to force companies to abide by the laws they were flouting.”
For smaller- and medium-sized businesses, however, the ruling may shift their business model without litigation, Dubal said. “They’re going to want to avoid it and make sure workers are making minimum wage. There’s a strong incentive to comply that wasn’t there before.”
As for her role in the decision which has been hailed as a victory for workers, Dubal was modest. “Tons of people have been writing about this for a really long time,” she said. But when pressed, Dubal admitted, “They definitely cited to my paper… and the spirit of the paper is certainly imbued throughout the decision.”
When asked if that was a gratifying feeling, Dubal confessed, “I had a nice couple of days.”