Protecting Employee Rights in a Gig Economy

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Protecting Employee Rights in a Gig Economy

In 2019, California’s Governor Newsom signed AB 5 into law. This law covered a worker’s employment status and when an employer can classify a worker as an independent contractor vs. an employee.

The California Department of Public Health, UC San Berkeley, and UC San Francisco partnered to establish the California Labor Laboratory. Their organization found that about 40% of the state’s workforce is made up of gig workers.  

One area of concern is that the mental and physical health of gig workers gets ignored, as gig workers are not afforded standard protections like group healthcare and dental insurance policies. More importantly, many gig workers end up working longer hours without the benefit of overtime pay.

The gig economy is thriving. It’s a labor market where workers are given short-term contractors or freelance work instead of permanent jobs with paid benefits. Gig work can be convenient for workers, and cheaper for employers, but it can also lead to abusive tactics, long hours, and low pay. California’s AB 5 offers protections that workers haven’t had before. Yet, gig workers may not understand their rights and how to speak up for themselves.

California’s Gig Economy and a Breakdown of Employee Rights

As a worker in California, you need to know your rights. The first thing to understand is that not every worker is correctly classified. You need to run a quick ABC test to determine if you should be an employee and not an independent contractor. 

  • Are you free from all control and direction of the company in terms of the performance of the work? If you are a true gig worker, the employee couldn’t tell you that you must attend company meetings at their office from 9 a.m. to noon every Friday.
  • Are you doing work that is outside of the company’s usual realm of business? A gig worker could be hired to clean windows at an IT firm, but that IT firm couldn’t hire an IT specialist to drive to their business clients to install new servers and still qualify that worker as a gig worker.
  • Are you doing things in your normal skill set, trade, or occupation? If a company hires a freelance photographer to restore counters, it’s outside of the worker’s normal work.

If a worker answers all three of these with a yes, that worker has passed the ABC test. Any no answers are a failure and the worker could be considered an employee.

There are some situations where the ABC test doesn’t apply. In those cases, the Borello test may be used instead. This includes occupations like:

  • Accountants
  • Architects
  • Attorneys
  • Competition judges
  • Engineers
  • Home inspectors
  • Insurance agents and claims adjusters
  • Investment and financial advisors
  • Marketing professionals
  • Medical and veterinary specialists
  • Promoters
  • Salespeople

 The Borello test asks:

  • Are you performing services that are different from what the hiring business does? Is the work you do an integral part of that company’s business?
  • Are you supplying your own equipment and tools to complete the work? Did you have to purchase any materials or equipment to complete the work asked of you?
  • Does the service you’re providing require special skills?
  • Is the work done without supervision?
  • How long is the work expected to last?
  • Are you paid hourly or by the job?
  • Can you hire others?
  • If the business fired you without warning, would there be a breach of contract?

If there is any question that you might be an employee vs. a freelancer or independent contractor, it raises the question if you’re being misclassified.

Here’s a good example. A publishing company of nature websites and guides hires editors to work as independent contractors making it clear that no job benefits will be provided. However, that company then provides the editors with the software they must use to complete the job, an employee profile on the “About Us” page, a specific hour when they must sign in and claim work to do, and hours when they are to be active and checking and responding to messages on Slack. 

Plus, they had all independent contractors sign a non-compete clause preventing the editors from accepting other jobs related to nature. It seems an awful lot more like things asked of an employee over a freelance editor who is allowed to set their own schedule.

Why Does This Matter?

You might think that as long as you’re making money, it’s not that big a deal. It is a big deal. Gig economy workers who drive for companies like Uber and Lyft experienced sharp rate decreases when one of the companies cut the per-mile rate by almost 50%. While a driver was making at least $100 for a trip to and from the airport to San Diego dropped to $65. In addition to lowered pay, workers do not gain benefits like paid vacations, sick days, or even minimum wage protections. 

If you look at the wages of employees who do the same job as you, how much are you losing? How much is the company gaining?

Our Best Strategies For Protecting Your Rights

As a freelancer or independent contractor, how do you protect your rights? This is harder as many independent contractors don’t know where to start. 

On January 9th, the U.S. Department of Labor enacted a rule that requires some companies to treat certain workers as employees and not independent contractors. Until now, the rules were that workers who own their own businesses or are welcome to work for competing companies are considered contractors.

Starting March 11, 2024, six factors are used by the Fair Labor Standards Act (FLSA) to analyze whether a worker is an independent contractor or an employee. Those factors are:

  • Amount of control and nature of control the business holds: Does the contractor set his or her schedule or does the business?
  • Chance for profit or loss: Includes things like whether the worker can choose the order in which work is performed, how long a job will take, and if the worker can decline jobs that aren’t worthwhile or increase the pay rate for harder jobs.
  • Degree of permanence in the working relationship: Is the work indefinite and subject to things like non-compete agreements?
  • How important the work is to the business: Is the work integral to the business and could it pose problems if the contractor walked away without notice?
  • Investments by the worker and the business: Is the worker making investments in his or her business as a self-employed worker? If only the business is investing in the supplies and equipment needed, it raises questions.
  • Worker’s skill and initiative: Does the worker have special skills or is there specific company training that must be completed before the worker begins?

The new rule examines whether the work performed is integral to that company and how much control the company has over the worker. It also looks at how dependent the independent contractor is on that company. The goal is to get companies to evaluate the amount of hours and investment workers are putting into the company to avoid having companies use gig workers as a means to save money on wages, benefits, and overtime pay. It will not, however, eliminate the rigid protections California already has in place for gig workers. 

We know how scary it is to stand up and be that one person who says enough is enough. Shegerian Conniff is here to support you. You’re not going to have to fight this fight alone. We fight for Fresno gig workers’ rights and legal treatment. Talk to our employment law specialists to address what the laws are, and whether or not you’re a true gig worker, and we’ll help you decide the best step forward.

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