The UK’s Employment Appeal Tribunal ruled last week in favor of a bicycle courier working for Addison Lee who sued claiming that the taxi and courier company had incorrectly classified him as a self-employed contractor rather than an employee, Jo Faragher reported at Personnel Today:
The Independent Workers’ Union of Great Britain (IWGB) represented Christopher Gascoigne, who first took the taxi and courier firm to an employment tribunal last August. … The tribunal heard that Gascoigne had to re-sign his contract every three months, terms of which included: “You agree that you are an independent contractor and that nothing in this agreement shall render you an employee, worker, agent or partner of Addison Lee and you shall not hold yourself out as such.”
In dismissing Addison Lee’s appeal against Gascoigne’s claim, the EAT referred to the fact that Gascoigne had claimed he could get into a “tricky situation” for not accepting a job, and that his location was often tightly controlled so he was well placed for future deliveries during the day.
Gascoigne’s successful suit is the latest in a series of decisions to come out of the tribunal system against gig economy companies with businesses built on the contractor model, beginning with a ruling for Uber drivers in 2016 and for another bike courier for CitySprint in January 2017. Uber lost its appeal of the 2016 ruling last November, though the company said it would appeal again to higher courts, including the Court of Appeals and the Supreme Court. The Supreme Court is currently hearing an appeal by Pimlico Plumbers, which had lost a case brought against them in which one of their former plumbers was deemed a worker (a classification in UK law with more rights than “contractors” but fewer than “employees”), not self-employed.
In a ruling handed down on Monday, the California Supreme Court found in favor of drivers for the last-mile delivery service company Dynamex, who claimed to have been misclassified by the company as independent contractors when they were really its employees. Gizmodo’s Brian Menegus outlines the facts at issue in the lawsuit, first filed in 2005:
Starting in 2004, drivers were required to provide their own vehicles—and pay for all the incurred costs that came with that, like gas, maintenance, insurance, and tolls—while being “generally expected to wear Dynamex shirts and badges […] and/or the customer’s decals to their vehicles when making deliveries for the customer.” … They were converted from employees to this new, more precarious classification “after management concluded that such a conversion would generate economic savings for the company,” the ruling states, creating a deeply lopsided power dynamic.
The court’s decision will have far-reaching consequences, as it ruled not only on the merits of these drivers’ complaint, but also on the manner in which the distinction between employees and contractors should be drawn. The judges significantly reinterpreted their predecessors’ ruling in the 1989 case of S. G. Borello & Sons, Inc. v Dept. of Industrial Relations, which had historically been cited as establishing a standard for classifying workers as contractors based largely on the degree of control a company exercised over their work. The court instead favored the “ABC” standard used in other jurisdictions like Massachusetts and New Jersey, which treats workers as contractors only under the following conditions:
The UK government has issued a series of policy proposals designed to bolster the rights of workers in the country, hinting at new legislation on how workers are classified as employees or contractors, new rights for agency workers, and updated minimum wage and living wage policies, Emily Burt reported at People Management last week:
The government said it would look to amend the Agency Workers Regulations 2010 to remove the opt-out for equal pay, preventing organisations from recruiting workers on extended agency contracts that keep them on low pay through the ‘Swedish derogation’ loophole for businesses recruiting through agencies. This followed a recent report into agency workers, published in March by the TUC, which found that six in 10 agency workers were employed for more than a year in the same role at the same workplace, driving pay levels down. …
The government responded to calls by MPs to bolster the position of precarious workers by exploring a pilot of a pay premium to the national minimum wage and national living wage for workers on non-contracted hours, assisted by the Low Pay Commission.
The proposals come less than a year after the Independent Review of Employment Practices in the Modern Economy, led by Matthew Taylor, a former advisor to Tony Blair, released its findings and recommendations on how regulators should handle the gig economy. In its proposals last week, the government adopted some of these recommendations and indicated that it was considering others:
A year ago, UK plumber Gary Smith won a case in the Court of Appeal against Pimlico Plumbers, where he had worked for six years and from which he contended he was unfairly dismissed after seeking to reduce his hours. Pimlico considered Smith a self-employed independent contractor and contended it had no obligations to him as an employee. The Court of Appeal accepted that he was not an employee, but ruled that he was properly classified as a worker, entitling him to some (but not all) the rights enjoyed by regular employees, such as holiday and sick pay.
The company chose to appeal that ruling further, and on Tuesday, the UK Supreme Court began hearing arguments in the case, the BBC reports:
The case hinges on the distinction between Mr Smith’s status as either a self-employed contractor, or a worker for the company. He was VAT-registered and paying tax on a self-employed basis, but worked solely for Pimlico Plumbers. After he suffered a heart attack in 2010, Mr Smith, from Kent, wanted to work three days a week rather than five. Pimlico refused his request and took away his branded van, which he had hired. He claims he was dismissed. …
[Charlie] Mullins, the founder of London-based Pimlico Plumbers, says that plumbers were hired on the basis that they were self-employed, provided their own materials and did not have workers’ benefits, but were paid significantly more as a result. He argues that the case has nothing to do with the gig economy and that Mr Smith is not in the same as an Uber driver.
The Trump administration and the Republican leadership in the US Congress intend to take up the issue of the gig economy this spring and propose labor law reforms to address the unique circumstances of this segment of the workforce, Sean Higgins reports at the Washington Examiner:
The big issue: When do workers for those companies stop being contractors and become employees? Business groups are eager to limit those circumstances, which the Obama administration and court rulings have chipped away at. The Trump [administration] will offer its take when the Bureau of Labor Statistics publishes its Contingent Worker Survey in the spring that will offer new data on workers doing short-term, nonsalaried “gig” jobs. …
A source in the Labor Department who requested anonymity said the study probably will be published in April. It will become a springboard for legislation to clarify a host of issues, including potentially the most controversial one: the contractor-or-employee issue. … The Trump administration has been tight-lipped on its plans, saying only that it wants to modernize the rules.
The Contingent Worker Supplement to the Current Population Survey was reintroduced during the Obama administration by former Labor Secretary Tom Perez in January 2016. Independent estimates of the size of the alternative workforce in the US vary dramatically, whereas the dearth of official data has limited policy makers’ ability to address the challenges created by the advent of the gig economy.
Speaking at an event in October, Labor Secretary Alexander Acosta expressed support for overhauling US employment laws to account for the advent of the gig economy and the changing relationship between workers and employers. The government needs to “keep pace with the pace of change in the private sector” and “re-examine the rules that regulate the employer-employee relationships that have an impact on the ability of individuals to work in a modern system,” Acosta said.
US Magistrate Judge Jacqueline Scott Corley issued her ruling on Thursday in a case brought against GrubHub late last year by former food delivery driver Raef Lawson, who claimed that the company’s gig economy business model had violated his rights as an employee under California law. Corley was not persuaded, however, by Lawson’s argument that GrubHub exerted enough control over when and how he worked for him to qualify as an employee and instead found that the company was correct to treat him as an independent contractor, TechCrunch’s Megan Rose Dickey reports:
A key element of the case centered around the Borello test, which looks at circumstances like whether the work performed is part of the company’s regular business, the skill required, payment method and whether the work is done under supervision of a manager. The purpose of the test is to determine whether a worker is a 1099 contractor or a W-2 employee.
On the basis of the Borello standard, Corley concluded that “GrubHub’s lack of all necessary control over Mr. Lawson’s work, including how he performed deliveries and even whether or for how long, along with other factors persuade the Court that the contractor classification was appropriate for Mr. Lawson during his brief tenure with GrubHub.” She also expressed concerns over Lawson’s honesty, noting that he misrepresented his education in his résumé and “intentionally manipulated the app to get paid for not working,” undermining the credibility of his testimony.
Being the first to weigh in on whether gig economy workers enjoy rights as employees, Corley’s ruling could set a precedent with implications for other gig economy companies. However, as Dickey notes, the judge hesitated to cast her ruling as dispositive with regard to the gig economy as a whole:
The Work and Pensions and Business Committees in the UK Parliament have unveiled a bill meant to close what its supporters call loopholes in current law that let employers misclassify employees as self-employed as a means of saving labor costs and evading their legal responsibilities to those workers, Sky News reports:
It says personnel should be classed as a “worker by default” to ensure access to basic rights such as sick pay because hundreds of thousands are currently being “burdened” by risks associated with flexible working. …
Labour’s Frank Field, who chairs the Work and Pensions Committee, said: “The two committees are today presenting the Prime Minister with an opportunity to fulfil the promise she made on the steps of Downing Street on her first day in office.” He said the draft Bill “would end the mass exploitation of ordinary, hard-working people in the gig economy.”
Opponents of the bill, such as the Confederation of British Industry, say it is shortsightedly cracking down on all forms of flexible employment. As the CBI’s managing director for people and infrastructure Neil Carberry put it to Sky News: “Based on a very limited review of the evidence, the committees have brought forward proposals that close off flexibility for firms to grow and create jobs, when the issues that have been raised can be addressed by more effective enforcement action and more targeted changes to the law.”
Over at Personnel Today, Jo Faragher digs deeper into the bill, which also recommends: