Let’s talk about a ‘hybrid’ worker

Last week, U.S. District Judge Jacqueline Scott Corley, after a lengthy bench trial, ruled that Raef Lawson was not an employee of GrubHub Inc. during his four-month stint as a driver for the food-delivery service. Lawson v. GrubHub Inc., 15-cv-05128 (N.D. Cal. Feb. 8, 2018).

While that opinion will be subject to 9th Circuit review, Judge Corley's 33-page opinion deeply analyzes what makes a person an independent contractor, looking at how Grubhub ran its business, the degree of control they exercised over their workers, and myriad other factors under the Borello test. Pin-pointing the exact test and factors the court applied is not an easy feat, but it is clear that these gig economy cases are burdensome and tedious for the litigants and the courts. What is also clear is that the facts matter, and the interpretation of those facts can swing the case one way or the other. We haven't really been given certainty with this opinion and it leaves more questions than answers for future cases.

Many more of these cases are likely to be filed in the coming years, and gig economy lawyers will have to debate whether to settle such claims when the business model won't and can't change. If the business can't change, settlements don't really buy the gig company much peace. The next suit could be filed immediately after the ink is dry on any settlement, and these tech companies could find themselves in a cycle of litigation. Despite the challenge this legal uncertainty presents for startups and established companies, it is unlikely that these types of business are going anywhere anytime soon. These businesses, for better or worse, have become a significant part of many middle-class lives by offering a degree of convenience that was unavailable just a few years ago.

Moreover, due to the flexibility, these companies create jobs individuals who may not be able to find employment in traditional workforces. If you take the time to talk to your Uber or Lyft driver, you will find a wide-range of personalities and life situations that make this job ideal for many people's lifestyles. There are full-time drivers, students or parents who are only available to earn cash during inconsistent or unconventional hours. There are even retired individuals who just want to get out of the house a couple days a week.

Judge Corley considered all these issues and seemed conflicted in her decision to deny the drivers employee status. She states in her conclusion, "Under California law whether an individual performing services for another is an employee or an independent contractor is an all-or-nothing proposition. If Mr. Lawson is an employee, he has rights to minimum wage, overtime, expense reimbursement and workers compensation benefits. If he is not, he gets none. With the advent of the gig economy, and the creation of a low wage workforce performing low skill but highly flexible episodic jobs, the legislature may want to address this stark dichotomy. In the meantime the Court must answer the question one way or the other."

Judge Corley seems to be noting a clear fact: The law has not caught up with society. This is not uncommon, but when such circumstances arise we need to encourage the California Legislature and potentially Congress to address these issues. To that end, I propose the creation of a new category of worker, a sort of hybrid "independent worker." I think it is time to do away with the all-or-nothing, binary choice of employee or independent contractor. The gig economy workers don't feel like employees to many because of their flexibility, but they also don't feel like independent contractors. Their ability to earn their money is based on repetitive low-skilled tasks, and while they are given a level of freedom, they are also bound by prices set by the company and policies and procedures that limit their abilities and choices. Neither title of employee or independent contractor really fits.

By categorizing them as independent contractors, these workers miss out more than just overtime and other Labor Code protections. They do not have the benefit of worker's compensation coverage, unemployment, or the protections available to employees who are harassed or discriminated against. Additionally, the public may suffer if injuries occur on the road and the Ubers and Lyfts of the world can deny exposure when their workers cause catastrophic harm. Finally there are tax implications and pension implication to these categorizations. The IRS and state taxing authorities would much prefer employee status because of leakage in the system when the independent contractors pay their own way.

On the flip side, there are issues that come with employee status that don't seem conducive to this gig economy world. Is it fair to pay overtime to an employee who can set their own hours? If gig economy workers are classified as employees much of the flexibility that makes the jobs attractive will be eliminated in favor of strict rules and scheduling guidelines. If Uber is an employer, it is going to want to ensure that its employees comply with whole host of policies and procedures to protect itself.

To that end, I think it's time to start a conversation about what this third category of independent worker would look like. Would such a person be entitled to overtime pay in some situations? Should there be a guaranteed minimum wage where individuals are working but rides or delivers are not available? Do we need some minimum guidelines to ensure safety but still balancing the need for flexibility? Would this third category only apply to gig economy workers or would some more traditional jobs find their way into the fold?

This problem isn't going away, and it is likely to spread in unforeseen and complicated ways. While the Labor Code provides significant protections to workers in traditional jobs, the way in which gig economy workers choose to work may not make it a perfect fit for many of them. Similarly, the freedom enjoyed by independent contractors may not be the right fit when applied to a group of workers who interact with the public in such intimate ways and whose numbers are growing by the day. Trying to shove this workforce, the likes of which we have never seen before, into categories that never contemplated them, may not be the best approach. The independent worker may be a way to create a system that provides base level protection for the workers and society without jeopardizing the business models that have created an increased quality of life for many consumers. This is uncharted territory, but with technology changing at such a rapid click, we should have the conversation now.