What makes an employee an “employee”? This question has been a hot-button legal topic throughout the country, but most notably here in California. There has been an ongoing dispute in California as to whether gig-based app companies like Uber, Lyft, and Door-Dash drivers were "independent contractors" or “employees.” For multiple reasons, including deceptive and misleading advertising, California voters passed Proposition 22 in November 2020, which exempts drivers working for gig-based app companies from having to classify their drivers as employees. By creating this exemption in the law these companies will be able to avoid providing App Based Drivers In California many benefits and rights other employees in California are entitled to. To determine a worker’s rights the distinction between “employee” and “independent contractor” is an important one. Employees are granted protections and rights under the Industrial Welfare Commission’s wage order, the Labor Code, the Unemployment Insurance Code, and the Fair Employment and Housing Act. Included in these laws are requirements regarding meal and rest breaks, overtime, workplace safety, retaliation, minimum wage, discrimination, harassment, and retaliation. Independent contractors do not have as many rights as these laws provide employees. While Proposition 22 did afford certain minimum wage, reimbursement, and health insurance protection, these do not mirror those afforded to employees. Without the passage of Proposition 22 App Based Drivers In California for gig companies would have been considered employees, thus would have been entitled to many more protections and rights. The 1938 Fair Labor Standards Act established the “suffer or permit to work” standard. This broad definition meant that a worker was an employee if an employer required or allowed them to work. But in 1989, the California Supreme Court created a new test when it decided S.G. Borello & Sons, Inc. v. Department of Industrial Relations. This test, called the Borello test, also addressed the issue of distinguishing employees from independent contractors and included multiple factors for a court to consider. After Borello, the California Supreme Court established in Dynamex Operations West, Inc. v. Superior Court of Los Angeles (2018) a three-part test, the “ABC test,” to determine whether a worker is an independent contractor or not. The Court held that a worker would be considered an employee unless a company could establish all three factors in the test. Therefore, the burden is on employers to prove that a worker is an independent contractor. Those factors are:(A) that the worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact;(B) that the worker performs work that is outside the usual course of the hiring entity’s business; and(C) that the worker is customarily engaged in an independently established trade, occupation, or business. The employer must establish all three factors or else the worker will be assumed to be an employee. The California legislature codified this decision into law in 2019 with Assembly Bill 5. Soon after the passage of Proposition 22 in November 2020, a lawsuit was filed by a passenger, App Based Drivers In California, the Service Employees International Union (SEIU), and SEIU California State Council. The suit, Castellanos v. California, alleged that Proposition 22 limits the legislature’s constitutional power. The California Supreme Court declined to take up the case and denied the petition for Writ of Mandate in February 2021. However, the court denied this without prejudice which means that the case can be re-filed in another court. At the time of writing this blog, Proposition 22 is in effect. A case filed before the passage of Proposition 22 in 2019 has already been impacted. The case, James et al v. Uber Technologies, Inc., is a class action lawsuit made up of almost 5000 Uber drivers who claim they were misclassified under Assembly Bill 5 as independent contractors. On June 17, 2021, a judge for the U.S. District Court for the Northern District of California allowed Uber to amend its original reply to the complaint to include an argument that Proposition 22 applies retroactively. Whether a court will determine that Proposition 22 does apply retroactively is still an open question. As long as Proposition 22 is in force if you are app-based transportation or delivery driver and you feel that your rights have been violated it is important to seek legal advice. A good employment lawyer will be able to assist you and answer any questions you may have regarding your rights under the law.