There’s a reason that in the midst of record low unemployment and a booming economy, workers are seeing real wages decline. It’s because the system is rigged.
Over the past few decades, many companies have shifted to a business model of misclassifying workers as independent contractors. Companies save millions while workers lose all employee rights and benefits, have no protection against sexual harassment, racial discrimination or injuries and are banned from organizing for better conditions.
In April, the California Supreme Court issued a unanimous ruling that made it harder for companies to misclassify workers as independent contractors. The Dynamex decision was a victory for working people -- truck drivers who are cheated out of wages, warehouse workers forced to risk their health and gig economy workers who want to be treated with dignity and respect.
But in the final weeks of the legislative session, the California Chamber of Commerce, the lobbying arm of corporate CEOs, is asking lawmakers to set aside this ruling and intervene on behalf of corporate special interests. Such an action would be unprecedented, entirely unnecessary and would only serve to pad the bottom line of large corporations.
The Dynamex ruling sets clear rules to create a fair business climate. Companies that want to use contractors simply have to show that workers are free from employer control, outside the regular scope of the business and independently established in that trade. If a worker is truly an independent contractor, that’s not a difficult standard to meet. More than 20 states use some version of that test.
What the decision does not allow is a company to force a worker to act as an independent contractor while the company sets rates, directs work and imposes discipline. Small businesses doing the right thing are at a competitive disadvantage when large corporations cheat their workforces.
By expanding employee protections, the ruling will mean fewer workers will have to rely on the safety net when they are sick, laid off or hurt at work. It will also significantly benefit the state; the California Division of Labor and Enforcement Standards says that misclassification costs the state $7 billion annually.
Many of the same companies asking for relief from this decision have already had workers come forward saying they have been misclassified and seeking unpaid wages. Undermining this decision would be a slap in the face to every worker who has their rights unfairly stripped away just so companies can rake in more profits.
Caitlin Vega is legislative director of the California Labor Federation. She can be contacted at email@example.com.