The so-called gig economy has made it much easier for employers to claim that their hired labor is made up of independent contractors as opposed to employees. The distinction is important because employees are entitled to a host of benefits to which independent contractors are not entitled. That includes the right to overtime pay, health insurance, workers’ compensation, and the right to sue under certain forms of discrimination. In other words, employers, when they can get away with it, are incentivized to classify a worker as an independent contractor instead of an employee. It saves them money in many cases and does not leave them vulnerable to lawsuits in other cases.
Recently, the California Supreme Court issued a ruling that would make it more difficult for employers to classify their laborers as contractors. This could end up having a profound impact on “on-demand” services such as Uber and Lyft.
The decision, which came against a Washington-based company called Dynamex, concerned itself with the potential for misclassification of laborers. The majority opinion indicated that businesses are being incentivized to misclassify employees as laborers due in large part to the substantial economic benefits such misclassification allowed.
While Missouri is unlikely to see such a labor-friendly change, at least under the current leadership, misclassification lawsuits have become far more commonplace in the current economic climate.
There are many reasons that classification as an independent contractor could work to the benefit of both an employer and the person hired. Independent contractors are expected to be able to set their own hours, work for multiple companies, and incur costs associated with doing business, but logistically, contractors have significantly more freedom than do employees. Independent contractors do not have employers, they have customers.
Tests for Determining Who is and is Not an Independent Contractor
While the majority of states simply use the IRS guidelines for making the distinction between employees and independent contractors, states like California and Nevada have clarified the difference using their own metric, which creates more stringent guidelines that are less open to interpretation.
Due in large part to the fact that so much of the modern labor force works “gigs” as opposed to retaining steady employment, there may be a shift coming soon in how these classifications are handled. If a ruling like California’s can turn Uber and Lyft drivers into employees as opposed to contractors, it may mark a shift in how the rest of the U.S. considers contract employment. Today, misclassification lawsuits are among the most common labor lawsuits that are filed against companies.
Still, Missouri may not be one of the first states to abandon the IRS metric for determining classification. Missouri has recently enacted a number of measures that are widely seen to be anti-labor. These including damage caps on employee discrimination and hostile work environment cases and revoking protections naturally extended to whistleblowers.
Do You Believe that Your Employer Has Misclassified You?
If so, HKM Employment Attorneys of Kansas City may be able to help. Give us a call at 816.607.4691 and we will begin discussing your case immediately.