Dynamex Is Dynamite, but Epic Systems Is Its Foil - Chamber of Commerce: The Sleeper in the Trilogy.

Author:Gould, William B., IV
Position:Symposium: Truth, Trust and the First Amendment in the Digital Age
 
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  1. INTRODUCTION

    Disputes about whether individual workers are employees or independent contractors have emerged with increasing frequency as the twenty-first century has unfolded. (1) Many of these disputes focus on the so-called "gig economy," which is a labor market characterized by the flexibility and the prevalence of short-term work as opposed to permanent jobs. (2) The Department of Labor refers to the gig economy phenomenon as providing alternative work arrangements, (3) while Audrey Freedman calls it the "contingent workforce." (4) In Europe, the gig economy is referred to as "atypical employment." (5)

    Though the issue of the dependent laborer--a concept thus far judicially unrecognized in the United States--was addressed more than a half-century ago, (6) the definition of what constitutes a gig economy has been described only within the past decade. (7) Traditionally, the gig economy has mostly been associated with chance engagements in a variety of venues for a short duration (8)--for example, labor lasting only for an evening, a weekend, or a week at clubs, restaurants, concert halls, shopping centers, open stadiums, and fairgrounds. Scholars best describe the gig economy as follows:

    The term "gig" originated in the music industry, where musicians go into the studio to record one song or play in a band for one performance. The musicians with such gigs have no expectation of recording at the same studio the following day or playing with the same band the following night. Borrowing from the music industry, we define "gig employment" as one-time jobs where workers are employed on a particular task or for a defined period of time .... [A] gig worker is not paid a wage or salary; does not have an implicit or explicit contract for a continuing work relationship; and does not have a predictable work schedule or predictable earnings when working. Applying this definition, some sole proprietors, some independent contractors, and anyone who is a day laborer or on-demand/platform worker should be considered a gig worker. (9) The description of this concept had its initial inspiration in the practice of musicians--disproportionately jazz musicians. (10) But members of symphony often engaged in separate gigs beyond their "regular" work as well. (11) This Article examines the concept of the independent contractor classification--a characterization at issue in early litigation involving the question of whether particular workers are employees or independent contractors. it describes the early cases arising in transportation, including over-the-road trucking, the taxicab industry, and package delivery companies like Federal Express ("FedEx"). The Article takes the position that the concept of flexibility, frequently used by employers to classify or reclassify employees as independent contractors, is a false justification for determining that employees are independent contractors. It also takes the position that engaging in part-time work for numerous employers is consistent with a finding of an employment relationship.

    The Article focuses upon a "trilogy of cases," beginning with the Supreme Court of California's unanimous, landmark decision in Dynamex Operations West, Inc. v. Superior Court of Los Angeles, (12) which established a presumption in favor of employee status (13)--a holding that has provoked considerable resistance from the business community. (14) The second case is the United States Supreme Court's 5-4 majority decision in Epic Systems Corp. v. Lewis, (15) which sustained prohibitions against employee class actions by upholding binding individual arbitration clauses--or "unbargained-for" (16) individual arbitration clauses, as Justice Ruth B. Ginsburg's powerful dissenting opinion describes them. (17) The Article also discusses the transportation exemption from the strong pro-individual arbitration strictures of the Federal Arbitration Act of 1925 ("FAA"), (18) an issue recently addressed in United States Supreme Court in New Prime, Inc. v. Oliveira. (19) Finally, the third case, Chamber of Commerce v. City of Seattle, (20) examines Seattle's unprecedented ordinance (21) that provided for collective bargaining for for-hire drivers, including taxicab drivers, as independent contractors and was deemed not to be preempted by the U.S. Court of Appeals for the Ninth Circuit. (22) The Article concludes that the court's treatment of Seattle's legislation under antitrust law is questionable but contends that the court's analysis has nonetheless established a roadmap for state legislation--an avenue opened more clearly by the court's conclusion that state and local governments are not preempted by federal law and have authority to legislate in this arena. (23)

  2. IMPLICATIONS OF THE INDEPENDENT CONTRACTOR STATUS

    While traditional employment continues to be the rule rather than the exception, the advent of ride-sharing companies, like Uber and Lyft, as well as other gig companies, like TaskRabbit and Instacart, has raised concerns that the gig economy represents a new phenomenon that undercuts traditional employment through exploitation. In 2018, a study conducted by the U.S. Department of Labor reported that the number of workers who are characterized as independent contractors in today's workforce had declined since 2005. (24) The statistics for this category only included workers who were mainly or exclusively independent contractors; (25) thus, the study excluded workers who supplemented their primary income with a second or third job as independent contractors. Because the U.S. Department of Labor report was designed to examine only a worker's primary work responsibilities, and thus only a general decline in the alternative work arrangements was shown, the report did not provide insight into whether the slight decline was due to an expanding traditional labor market or to high levels of underreporting by individuals taking on independent contractor work as a secondary source of income. (26)

    Despite the fact that, according to the U.S. Department of Labor report, the number of workers characterized as full-time independent contractors has declined in recent years, (27) the issues surrounding the gig economy remain more pertinent in our society than ever before. Characterization of a worker as an independent contractor rather than an employee has several important implications. First, it may categorize gig workers as unemployed, therefore painting an erroneous national economic picture based upon flawed data and consequent policy. (28) Second, a worker who is characterized as an independent contractor rather than an employee is excluded from the basic safety net policies created during the New Deal era of the 1930s--such as the Social Security Act of 1935 ("SSA"), (29) the National Labor Relations Act of 1935 ("NLRA") (30) or the Fair Labor Standards Act of 1938 ("FLSA") (31)--and further developed during the New Frontier and Great Society eras of the 1960s. (32) These legislative efforts, originating under President Franklin D. Roosevelt's New Deal, were developed largely in response to perceived widespread unemployment and job shortages and included measures that were designed to increase the number of jobs available in the united States, to increase wages, and to decrease the length of the laborer's average work week. (33)

    Under the New Deal, the SSA included provisions providing special assistance to covered workers in the form of unemployment compensation, (34) while the FLSA, in its original form, "set the minimum hourly wage at [twenty-five] cents[] and the maximum workweek at [forty-four] hours" (35) and established overtime hours during which employees must be paid. (36) Although initially the FLSA only applied to a limited scope of industries, the successive economic and social reform efforts of Presidents John F. Kennedy and Lyndon B. Johnson in the New Frontier and the Great Society eras successfully expanded the scope of the FLSA to encompass a broader range of industries, therefore allowing more employees to avail themselves of its protections. (37)

    The NLRA provided covered employees the right to "join together to improve their wages and working conditions, with or without a union." (38) However, with the passage of the Taft-Hartley Act in 1947, (39) the NLRA has reversed extant authority (40) and circumscribed employee rights to a relatively narrow common law definition. (41)

    However, independent contractors do not enjoy the minimum wage and maximum hour benefits of the FLSA or the unemployment compensation provisions of the SSA. (42) Some states, however, provide special assistance for the self-employed and therefore in some instances gig workers. (43) in addition, workers classified as independent contractors do not fall within the covered scope of the anti-discrimination legislation prohibiting discriminatory conduct on the basis of race, sex, religion, national origin, sexual orientation and age (44) or the Family and Medical Leave Act of 1993 (45) and comparable statutes at the state level providing an employee with time off without pay. (46)

    Independent contractors constitute a sort of precariat class, which includes those working in part-time or unscheduled jobs. in contrast to traditional jobs, independent contractor jobs frequently have a foreseeable expiration date. Benefits more likely available in the private sector to traditional employees, such as health care, sick pay, and vacations, are generally unavailable to the gig economy workforce. However, "The effects of growing inequality and loss of worker power are shared by workers in the standard and nonstandard jobs alike--stagnant wages, lack of access to workplace benefits, insufficient hours, wage theft, retaliation when trying to organize." (47) It is thought that this second tier of the workforce is responsible for static wage growth in the midst of a full employment economy, which has been present since at...

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