Judges say labor laws outdated to deal with sharing economy firms

courtroomFrom RStreet, R.J. Lehmann discusses the recent California court cases alleging that the drivers for Lyft and Uber are not independent contractors but were actually employees. R.J. reviewed the recent rulings by the judges in those cases and reports that the judges found that a jury needed to resolve the issues.  R.J. shared excepts from both decisions showing that both judges describe the current standard as “outmoded” and both judges suggested that the legislature might act to provide a better test.  He writes:

“Chen concluded that the traditional tests courts use to judge employment status aren’t terribly helpful when applied to Uber’s business model, or to the sharing economy in general.

Arguably, many of the factors in that test appear outmoded in this context. Other factors, which might arguably be reflective of the current economic realities (such as the proportion of revenues generated and shared by the respective parties, their relative bargaining power, and the range of alternatives available to each), are not expressly encompassed by the Borello test. It may be that the legislature or appellate courts may eventually refine or revise that test in the context of the new economy. It is conceivable that the legislature would enact rules particular to the new so-called “sharing economy.”

Or, as Chhabria put it in his conclusion, the jury in this case “will be handed a square peg and asked to choose between two round holes.”

The test the California courts have developed over the 20th Century for classifying workers isn’t very helpful in addressing this 21st Century problem. Some factors point in one direction, some point in the other, and some are ambiguous. Perhaps Lyft drivers who work more than a certain number of hours should be employees while the others should be independent contractors. Or perhaps Lyft drivers should be considered a new category of worker altogether, requiring a different set of protections. But absent legislative intervention, California’s outmoded test for classifying workers will apply in cases like this.”…””

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