Page 25 - BusinessWest November 23, 2020

Earlier this month, California voters sent a message to their lawmakers when they passed a ballot question that exempted app-based drivers working for companies like Lyft and Uber from
a California law that had previously made them employees. Earlier this year, a law had taken effect in California that made it clear these driv- ers were to be treated as employees and, thus, were entitled to certain employment-related benefits and legal protections. The California ballot win is a significant victory for app-based companies that utilize gig workers to deliver
and, therefore, is not the current federal law on this matter. Our current federal rule in effect
for establishing independent-contractor status
is based upon a multi-factor test, which can be confusing in its application, thus prompting the proposed change. The purpose behind the newly proposed rule is to bring clarity to the confusion in the application of the test itself.
Prior to the proposed rule, there was no definitive guidance on how to go about weighing and balancing the various factors and whether there was a prioritization among them. Now, the
why a worker is not an employee.
To establish that fact, Massachusetts compa-
nies must satisfy all three parts of a three-part test: companies must show that the work is per- formed without the direction and control of the company, outside the usual course of the com- pany’s business, and by someone who has their own independent business or trade in that type of work. Again, all three parts of this test must be met for the Massachusetts worker to be deemed an independent contractor.
Where most companies fail the test is with respect to the second part — that the worker must perform work outside the usual course
of the company’s business. For example, with respect to a driver for Uber, arguably, under Mas- sachusetts independent-contractor law, the driv- er would be deemed an employee; the company is in the business of ride sharing, and the driver is performing that work by driving customers to and from certain locations.
The problem with the misclassification of workers as independent contractors is that it car- ries with it very stiff penalties and triggers several potential violations of laws. Indeed, misclassifi- cation of an independent contractor can create issues with respect to wage-and-hour law, such as minimum wage and overtime compensation, unemployment benefits, workers’ compensation coverage, and certain payroll-tax withholdings.
“Whether one refers to such workers as gig workers, freelancers, or broadly as independent contractors, this area of employment law has been a thorn in the side of many businesses for several decades.”
two core fac- tors proposed should make it easier to assess a worker’s status and, arguably, pave the way for more workers to be classified as independent contractors. The proposed rule seems to recog-
services.
The U.S. Department of Labor (DOL), our fed-
eral agency that enforces federal wage-and-hour laws, appears to be trending toward loosening its stance on independent-contractor law as well. This September, the DOL proposed a new rule that establishes two core factors as determinative ones in an overall five-part independent-contrac- tor test. The two core factors are the nature and degree of the worker’s control over the work and the worker’s opportunity for profit or loss based on initiative and/or investment.
Remember, this rule is pending approval
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nize the prerogative of workers who want to work independently and maintain freedom from an employer’s day-to-day control over them.
For now, whether a worker is an independent contractor or an employee is a clear question in the Bay State. Massachusetts law utilizes a clear three-part test that is otherwise very restrictive on both businesses and the workers who do not want to be considered employees. In Massachu- setts, when analyzing a worker’s status, there
is always a presumption of employment. This means the burden is on the company to prove
Furthermore, situations involving the mis- classification of workers can give rise to class- action lawsuits. Companies that violate Massa- chusetts wage-and-hour laws alone are subject
Independents
Continued on page 39
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