Monday’s decision by the California Supreme Court could throw a wrench in the plans of companies that rely on gig workers for low-cost employment.
The news: The court tore down the previous outline for determining how a worker should be categorized, and put a simpler system in its place. Workers are now considered employees if they perform tasks that are in the “usual course” of business operations and their employer has control over them.
Why it matters: A worker classified as an employee is about 20 to 30 percent more expensive than an independent contractor. That spells a big hit to profits for companies that rely on gig workers, and could raise prices for users.
Where do Uber drivers fall? Unclear. Change at companies like Uber is likely to be far off, since drivers sign agreements to solve their disputes outside the court system. Without a specific court ruling on whether its workers are employees, Uber won’t be counting them that way anytime soon.
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