Independent Contractors and the Gig Economy: Objective Standards Needed to Provide Guidance
The hiring of independent contractors is a popular and lawful tool employers use as a part of their overall business model. For businesses, it is a cost-effective way in which to address specialized needs. For entrepreneurs, it is a way in which to maximize profits and grow their own business. Businesses have utilized independent contractors for years and have always struggled with the subjective and conflicting standards at the federal and state levels with regard to who qualifies as an employee versus an independent contractor. With the creation of the gig economy that significantly relies upon the use of independent contractors, the proper classification of individuals as independent contractors has intensified. Independent Contractors and the Gig Economy
Mandated Predictability Jeopardizes Workplace Flexibility
The topic of predictable scheduling has become a national issue for labor groups over the last several years. The groups have focused primarily on five main areas:
• Lack of adequate notice of work schedules, referenced as “just-in-time scheduling”;
• “Clopening,” which is working a closing shift and an opening shift back-to-back;
• On-call shifts;
• Last-minute requests to work a shift or last-minute cancellation of shifts; and
• Guaranteed hours, or a lack thereof.
Proponents of predictable scheduling have stated that these issues have an impact on low-wage workers and part-time employees who try to work multiple jobs, as well as women who struggle with child care.
Opponents argue that mandating scheduling requirements will limit an employer’s flexibility to accommodate employee requests for time off, limit offers of additional hours for employees who seek or want to work more, and significantly increase the cost of doing business. This national debate between predictability versus flexibility will continue to be a policy consideration in California in 2017. Mandated Predictability Jeopardizes Workplace Flexibility
Family Leave in California One of Long List; Cumulative Burden on Employers
A paid family leave mandate under federal law was one of the topics of interest in the 2016 presidential debate that both the Republican and Democratic candidates supported. California has championed this issue for the past decade as the first state in the nation to implement a paid family leave program. Despite the significant advances in California on this issue, however, as well as the myriad of family-friendly leaves California offers, there continues to be a constant push for additional family leave and protections. While the California Chamber of Commerce certainly supports a work/family balance, new stringent, mandatory, protected leaves of absence imposed on California employers can disrupt the workplace and create an avenue for costly litigation. Accordingly, any new proposed leave of absence for employees should be considered in light of the existing leaves of absences employers already are required to provide in California. Family Leave in California One of Long List
Defeated a proposal in 2016 discriminating against arbitration agreements in consumer contracts (AB 2667) and in employment agreements (AB 2879).
Derailed attempts in 2016 to permit price-setting by independent contractors (AB 1727); exposing employers to a private right of action related to their Injury and Illness Prevention Program (AB 2895); and eliminating worker and employer flexibility with a mandated scheduling requirement (SB 878).
Defended employers against unwarranted litigation by securing amendments in 2016 to state-run retirement savings program to limit employer liability (SB 1234).
Halting job killer legislation in 2015 that would have increased labor costs, including a one-size-fits all scheduling mandate (AB 357); automatic minimum wage increase (SB 3); significant expansion of the California Family Rights Act (SB 406); and significant increase in workers’ compensation costs (SB 563).
Securing approval of urgency legislation giving employers a limited opportunity to cure technical violations in an itemized wage statement before being subject to costly and devastating litigation, so an employer can devote its financial resources to expanding its workforce (AB 1506 of 2015).
Reducing Unnecessary Requirements in 2015:
- Backed bipartisan state legislation creating additional conformity between state and federal tax law, thereby easing accounting, recordkeeping and filing requirements for businesses (AB 154).
- Supported veto of plan to create expansive new notification requirements from employers to individuals who are not employees in order to solve a narrow concern with variance applications for elevators (AB 578).
- Won defeat of proposal to mandate double pay for almost all employees who worked on Thanksgiving (AB 67).
Clarifying Employer Responsibilities in 2015:
- Worked extensively with author to obtain employer-friendly amendments to clean-up legislation to the 2014 paid sick leave bill, including grandfathering in paid time off policies in effect before the new law, options for different sick leave accrual methods and options for calculating the appropriate rate of pay for paid sick leave (AB 304 of 2015).
- Negotiated amendments to legislation clarifying basis for an employee to take leave under existing school activities leave law (SB 579 of 2015).
- Secured substantive amendments to wage theft bill to alleviate concerns of employers trying to comply with the law (SB 588 of 2015).
- Worked with author to make bill requiring electronic filing of unemployment insurance tax returns less onerous than originally proposed (AB 1245 of 2015).
Winning Safe Harbor for Employers with Gender Equity Pay Bill: Negotiated legislation placing in statute what existing case law requires employers to do, including safe harbor language so that employers can avoid unnecessary litigation when there are legitimate reasons for pay differences. (SB 358 of 2015)
Stopped costly workplace mandates in 2014, including minimum wage increases linked to the Consumer Price Index (SB 935); increased workers’ compensation penalties and litigation (AB 2604); and expansion of discrimination litigation (SB 404).
Stopped economic development barriers in 2014, such as allowing liens on an employer’s property based upon alleged-yet-unproven wage claims (AB 2416).
Supported legislation signed into law in 2014 to clarify that employers don’t violate state law regarding discrimination against employees with driver licenses that note they are not documented citizens if the employer must take action in compliance with immigration law (AB 1660).
Supported legislation in 2014 easing compliance by allowing email or telephone reporting of work-related incident subject to immediate notification of Cal/OSHA (AB 326).
Defeated costly workplace mandates in 2012, such as a bill driving up the cost of commodities to consumers by removing the overtime exemption allowed for agricultural employers (AB 1313); an automatic minimum wage increase (AB 1439); expanded leave requirements (AB 2039); and a targeted burden on companies with call centers (AB 2217). Also secured amendments to remove the threat of frivolous litigation for inquiring into an applicant’s most recent employment background (AB 1450). Advocated veto of bill increasing the cost of food by creating unprecedented and excessive consequences for perceived and actual violations of heat illness prevention regulations (AB 2346).
Supported legislation signed into law in 2012 that preserves existing employer rights to conduct workplace investigations with regard to personal social media (AB 1844).
Negotiated amendments in 2012 to bills that would otherwise have exposed employers to new wage-and-hour litigation or greater likelihood of penalties for good faith administrative errors on wage statements (AB 1744, SB 1255).
Supported veto in 2012 of proposed requirement for individuals and families who hire “domestic work employees” to comply with onerous wage-and-hour mandates that even sophisticated businesses struggle to satisfy (AB 889).
Employment Litigation on the Rise in California
Position: The CalChamber does not defend employers who intentionally violate the law or discriminate against employees based upon their protected statuses or protected activity. The current litigation environment, however, is not targeted at just employers who intentionally violate the law. Good employers who make innocent mistakes, or who make objective, reasonable employment decisions still are subject to constant threats of costly litigation in an attempt to leverage a settlement from the employer that is less than what it would cost the employer to defend the lawsuit.
California needs to limit the numerous pathways of costly litigation against employers and either allow employers an opportunity to resolve good faith mistakes before lawsuits are filed or allow employers to recover their costs and attorney fees for successfully defending litigation in order to limit the nuisance value lawsuits filed. Employment Litigation on the Rise
Private Attorneys General Act
Position: PAGA is a primary concern of the employer community due to the financial leverage it provides to plaintiffs’ attorneys to pursue claims for minor violations. Frivolous litigation that results in significant monetary settlements wherein the plaintiffs’ attorneys retain a majority of the money for fees and employees are provided a minimal amount is not fulfilling the stated intent of PAGA.
The CalChamber is supportive of any efforts to reform PAGA to ensure the goals of labor law enforcement are satisfied, but that it is not used as a vehicle to enrich trial attorneys. Private Attorneys General Act
2017 Business Issues and Legislative Guide
Agriculture and Resources
California Environmental Quality Act (CEQA)
Expanding Opportunity — An Agenda for All Californians
Health Care Reform
Housing and Land Use
Labor and Employment
Labor and Employment Bills
- 2017-2018 Bills
- 2015-2016 Bills
- Bills on unemployment insurance/state disability insurance (UI/SDI)
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Senior Policy Advocate
Labor and Employment, Legal, Taxation