In a ruling that could change the workplace status of people across the state, the California Supreme Court made it harder Monday for employers to classify their workers as independent contractors.
The unanimous decision has implications for the growing gig economy, such as Uber, Lyft and other app-driven services — but it could extend to nearly every employment sector.
In recent years, the hiring of workers as independent contractors — not subject to government rules on minimum wage, overtime and rest breaks — has exploded. A 2016 study by economists at Harvard and Princeton universities estimated 12.5 million people were considered independent contractors, or 8.4% of the U.S. workforce.
The ruling is likely to lead many employers in California to immediately question whether they should reclassify independent contractors rather than face stiff fines for misclassification, employment lawyers said.
“A huge number of businesses will be calling their lawyers saying ‘What should I do?'” said Michael Chasalow, a professor at the USC Gould School of Law.