A “Gig Economy” is an environment in which temporary positions are common and organizations contract with independent workers for short-term engagements. Legislation proposed by California Assembly Member Loretta Gonzalez (D – San Diego) would make it easier for some workers currently classified as independent contractors to be regarded as employees. The bill, known as the California 1099 Self-Organizing Act, would create a rebuttable presumption that a worker is an employee if the worker performs services that require a license under the Contractors’ State License Law (or if the worker performs the services for someone who is required to obtain such a license.)
If the bill is passed, the burden of proof will be shifted, so that workers participating in the “gig economy” (that is, who work through hosting platforms such as Uber or Lyft) will be regarded as employees unless their employers are able to prove that the workers are actually independent contractors. It does not, however, grant the workers official employee status, or lay out any rights that the workers must receive.
How the Gig Economy Burden Can Be Overcome
The bill specifies how an employer would go about demonstrating that a worker is an independent contractor. To overcome the presumption that a worker is an employee, the employer would have to show that the following factors have all been met:
- That the worker has the right to control the performance of the contract, and discretion as to how the contract is performed, and that the primary factor being bargained for is the result of the work (rather than the means by which the work is done),
- That the worker is “customarily engaged in an independently established business,” and
- That the worker is genuinely an independent contractor, and that the employer is not just trying to avoid giving the worker employee status.
If you are wondering how an employer could meet the third requirement, and show that the worker is genuinely an independent contractor, the proposed bill includes a list of factors that could be seen as evidence of independent contractor status. This list includes the following factors:
- Whether the worker has control over when and where the work is performed
- Whether the worker holds a license pursuant to California’s Business and Professions Code
- Whether the worker has a substantial investment in the business other than personal services
- Whether the worker is held out as being in business for himself or herself.
Before introducing the legislation, Gonzalez stated in an editorial in the Sacramento Bee that the legislation is intended to give workers in the gig economy the right to collectively bargain, and the right to form associations. The editorial includes an estimate that 2 million Californians are part of the gig economy.
What Does This Mean for Your Rights?
If you run a business that matches workers with short term work engagements, this legislation could have a major impact on your obligations to your employees. If you work for such a company, it could grant you labor rights that you don’t currently enjoy. It may be well worth your time to call or email the experienced employment and labor law attorneys at Beck Law P.C., in Santa Rosa.