Carl Kanowsky: Millenial workplace woes in the ‘Gig Economy’
By Perry Smith
Monday, July 30th, 2018

Your kid just graduated from a prestigious four-year college that, at $50,000-a-year seemed high, but, hey, you love your kid, so you want the best, right?

Fortunately, he or she studied something practical that will lead to gainful employment, like history or social studies or literature.

Now it’s time for a job. Job, what job, “What’s that?” your beloved offspring inquires.

Surprisingly, your child learns that employers are not clamoring for an expert in the French writer, Andre Malraux, or someone who can extemporize for hours about what the Hundred Years’ War really was all about.

So, they get a gig at Uber or one of the food delivery companies like GrubHub or for a document delivery company like Dynamex.

At first, you’re merely bummed that years of education have lead to this, but then you’re devastated to find out that your Johnnie or Jill is an “independent contractor” and not an employee. No health insurance, no paid vacation, no worker’s comp coverage, no unemployment insurance for when things get slow, just to name a few of the negatives of this situation. Is this fair? Without your kid and thousands of others like her/him, these companies would not exist.

Shouldn’t that mean something?

The California Supreme Court recently considered this burgeoning set of relationships often found in the “Gig Economy.”

That is, where the worker’s connection with the company retaining his services is more of a one-off job as opposed to long-term career occupations. And often, the one performing the labor does it as an independent contractor, not as an employee.

In January 2005, well before the debut of Uber and Lyft, Charles Lee entered into a written independent contractor agreement with Dynamex to provide delivery services. He worked for a total of fifteen days. Then, in April 2005, Lee filed a class action lawsuit against Dynamex, alleging that for all of those fifteen days, he should have been a Dynamex employee and not an independent contractor.

This case then languished in both the trial court and Court of Appeal for thirteen years, with the different courts and judges attempting to wrestle control over what constitutes an “employee.”

This issue has bedeviled the courts for decades. Simply put, how do you determine if a worker performing a task is doing that job as an employee or an independent contractor?

Can the parties (i.e., the worker and the hiring company) decide that between them? Essentially, no. An agreement between the parties on that point does not bind either the courts or any regulatory agency (e.g., Workers Compensation Appeals Board, Employment Development Department, IRS, etc.) to respect that agreement.

Instead, for almost the past forty years, the courts have reviewed the connection between the company and the worker to see if it reflects an independent contractor relationship or an employment one. Using criteria established from a workers compensation decision by the California Supreme Court in Borello, the courts would compare these various factors to the case before it to determine if the company doing the hiring was exerting sufficient “control” to push the relationship into one of employment.

This proved to be an unsatisfying solution. One judge would find control (and thus, employment) when another would see a relationship more akin to a homeowner hiring a plumber, clearly an independent contractor situation.

In the past 10 years or so (which coincides with the time the Dynamex case brought by Charles Lee was winding its way through various courts), the judiciary has had to apply the Borello elements to workers in the Gig Economy.

There seemed to be a sense that components established before cell phones were in wide use (and, of course, well before Lyft and similar business models) was too archaic to be helpful.

Serendipitously, in the midst of this confusion and jockeying for which way to judge these types of arrangements, came Charles Lee and his case against Dynamex.

Ironically, a case brought by a worker with 15 days’ tenure and five years before the launch of Uber, would be the vehicle to provide a more definitive test to resolve this pressing employment question. I will cover the Dynamex decision in my next column.

Carl Kanowsky of Kanowsky & Associates is an attorney in the Santa Clarita Valley. He may be reached by email at cjk@kanowskylaw.com. Mr. Kanowsky’s column represents his own views, and not necessarily those of The Signal. Nothing contained herein shall be or is intended to be construed as providing legal advice.

About the author

Perry Smith

Perry Smith

Carl Kanowsky: Millenial workplace woes in the ‘Gig Economy’

Your kid just graduated from a prestigious four-year college that, at $50,000-a-year seemed high, but, hey, you love your kid, so you want the best, right?

Fortunately, he or she studied something practical that will lead to gainful employment, like history or social studies or literature.

Now it’s time for a job. Job, what job, “What’s that?” your beloved offspring inquires.

Surprisingly, your child learns that employers are not clamoring for an expert in the French writer, Andre Malraux, or someone who can extemporize for hours about what the Hundred Years’ War really was all about.

So, they get a gig at Uber or one of the food delivery companies like GrubHub or for a document delivery company like Dynamex.

At first, you’re merely bummed that years of education have lead to this, but then you’re devastated to find out that your Johnnie or Jill is an “independent contractor” and not an employee. No health insurance, no paid vacation, no worker’s comp coverage, no unemployment insurance for when things get slow, just to name a few of the negatives of this situation. Is this fair? Without your kid and thousands of others like her/him, these companies would not exist.

Shouldn’t that mean something?

The California Supreme Court recently considered this burgeoning set of relationships often found in the “Gig Economy.”

That is, where the worker’s connection with the company retaining his services is more of a one-off job as opposed to long-term career occupations. And often, the one performing the labor does it as an independent contractor, not as an employee.

In January 2005, well before the debut of Uber and Lyft, Charles Lee entered into a written independent contractor agreement with Dynamex to provide delivery services. He worked for a total of fifteen days. Then, in April 2005, Lee filed a class action lawsuit against Dynamex, alleging that for all of those fifteen days, he should have been a Dynamex employee and not an independent contractor.

This case then languished in both the trial court and Court of Appeal for thirteen years, with the different courts and judges attempting to wrestle control over what constitutes an “employee.”

This issue has bedeviled the courts for decades. Simply put, how do you determine if a worker performing a task is doing that job as an employee or an independent contractor?

Can the parties (i.e., the worker and the hiring company) decide that between them? Essentially, no. An agreement between the parties on that point does not bind either the courts or any regulatory agency (e.g., Workers Compensation Appeals Board, Employment Development Department, IRS, etc.) to respect that agreement.

Instead, for almost the past forty years, the courts have reviewed the connection between the company and the worker to see if it reflects an independent contractor relationship or an employment one. Using criteria established from a workers compensation decision by the California Supreme Court in Borello, the courts would compare these various factors to the case before it to determine if the company doing the hiring was exerting sufficient “control” to push the relationship into one of employment.

This proved to be an unsatisfying solution. One judge would find control (and thus, employment) when another would see a relationship more akin to a homeowner hiring a plumber, clearly an independent contractor situation.

In the past 10 years or so (which coincides with the time the Dynamex case brought by Charles Lee was winding its way through various courts), the judiciary has had to apply the Borello elements to workers in the Gig Economy.

There seemed to be a sense that components established before cell phones were in wide use (and, of course, well before Lyft and similar business models) was too archaic to be helpful.

Serendipitously, in the midst of this confusion and jockeying for which way to judge these types of arrangements, came Charles Lee and his case against Dynamex.

Ironically, a case brought by a worker with 15 days’ tenure and five years before the launch of Uber, would be the vehicle to provide a more definitive test to resolve this pressing employment question. I will cover the Dynamex decision in my next column.

Carl Kanowsky of Kanowsky & Associates is an attorney in the Santa Clarita Valley. He may be reached by email at cjk@kanowskylaw.com. Mr. Kanowsky’s column represents his own views, and not necessarily those of The Signal. Nothing contained herein shall be or is intended to be construed as providing legal advice.