Aug 9, 2018      News      

Long Beach Area Chamber of Commerce calls for the state Legislature to intervene on a recent California Supreme Court case

The Long Beach Area Chamber of Commerce – along with local workers – is taking a stand against a recent California Supreme Court decision that could upend the way independent contractors and freelancers are classified in the state.

People who work as contractors said at a Thursday, Aug. 9, press conference that the decision could change their lives and hurt their ability to make a decent living.

In the case, Dynamex Operations West, Inc. v. Superior Court of Los Angeles County, the California Supreme Court unanimously affirmed a decision that lays out three requirements that companies must meet to classify workers as contractors:

  • the worker is free from the control and direction of the company with how the work is performed
  • the worker is providing a service or product that’s outside the company’s core business
  • the worker is otherwise practicing the same type of labor beyond his or her affiliation with the company

If a company has contractors that do not meet those requirements, the decision states the company must classify them as employees.

During Thursday’s press conference, local contractors said the decision will force them to give up their flexibility and autonomy, could impact their ability to work at all, as well as transform entire industries statewide.

Bonita Smith is a rideshare driver who said she began the work after years as a traditional store manager because she got a knee injury in that position, and her ability to move around and perform physical tasks has been severely diminished.

She said her ability to be an independent contractor has saved her because she no longer has to face the disability discrimination that she encountered during her 18 months trying to re-enter the traditional job market.

“We know there’s laws about – you’re not supposed to be singling out someone who’s disabled,” Bonita Smith said. “But it’s the world we live in. It’s happened.”

She said time and time again, when she would interview for a job, the opportunities would dry up once she disclosed her disability. Now, she worries she won’t find any way to make an income if her ability to be a contractor is taken away, too.

But individuals’ freedom to have more flexibility isn’t the only thing at stake, according to Dr. Marc Futernick. As an emergency medical physician who is a contractor, he said the entire industry is based on doctors’ ability to forego the traditional employment relationship with hospitals.

Futernick said doctors frequently work regular shifts at affluent hospitals and will take a few shifts at their local nonprofit or community healthcare center every month. If they’re forced to be employees, he said, they will have to choose between one or the other, and it’s the community hospitals that will face the brunt of the consequences.

“The safety net will suffer in a significant way,” he said.

Not everyone agrees that the court case will have an adverse effect. Steve Smith, a spokesman for the California Labor Federation, said in a phone interview that the decision will just bolster workers’ rights.

“It’s important to note that once somebody’s labeled an independent contractor, they lose their right to basic fundamentals like the minimum wage, overtime, protection from harassment, discrimination, access to unemployment benefits,” and more, he said.

Steve Smith said companies like Uber and Lyft that have made their business model by using independent contractors for their core service have been skirting law that already existed, and this case just makes the workers’ rights more clear-cut.

“In the last couple decades, corporations have become bolder and bolder in trying to cheat those workers,” Steve Smith said. “The Dynamex decision just simply restates in a very clear way that in order to be considered an independent contractor, you have to meet some standard.”

According to data the Bureau of Labor Statistics released last year, about 7 percent of employed workers in the country – roughly 10.6 million people – are independent contractors, which includes independent consultants and freelancers.

About 79 percent of those independent contractors said they preferred their work arrangements to a traditional job, according to the BLS survey.

For Bonita Smith and Futernick, that is certainly true. Bonita Smith said that when it comes to benefits and pay, “a traditional job is not going to guarantee benefits.”

She said one of her former jobs was for a company where the owner intentionally kept a small number of employees so he wouldn’t have to provide benefits.

“There are other resources, like Covered California and Medi-Cal. There are ways for us to get medical benefits,” she said. “They’re there. We just have to use alternate resources, and your employer just won’t be paying for it.”

The path forward for these workers is asking state legislators to pass legislation to curb the effects of the decision before this year’s session closes at the end of August. Contractors and freelancers from across the state are expected to rally for the cause in Sacramento on Aug. 15.

As far as the legislators are concerned, some have said it’s not feasible to rush something through in the next three weeks.

“The Dynamex​ decision strikes at the core of what the future of work looks like in our society,” State Assembly Speaker Anthony Rendon (D-Paramount) said in a statement. “From the decline of union membership to court rulings like the Janus decision, we’ve seen the continual erosion of workers’ rights. If the legislature is to take action, we must do so thoughtfully with that in mind. That will not happen in the last three weeks of the legislative session.”

State Senate President Pro Tem Toni Atkins concurred in her own statement.

“The California Supreme Court voted unanimously for this new test,” she said. “I agree with Speaker Rendon that forging any legislative review or response to their decision in just three weeks isn’t workable.”

Assemblyman Patrick O’Donnell, who represents Long Beach, was less definitive on the issue.

“I support employee protections, but I also understand the impact of the Supreme Court decision on contractors and businesses,” he said in a statement. “I am in discussions with other members of the Legislature on potential legislative actions.”

For the workers and companies alike, waiting until next year will be too long, said the Long Beach Area Chamber of Commerce’s President and CEO Randy Gordon.

“We need Sacramento to act to provide certainty to the millions of Californians who don’t want their livelihoods disrupted,” Gordon said. “We need a suspension (of the decision), and this is the time to determine a better solution for benefits for everyone.”

Read the full article from the Press Telegram here.