The California legislature has an opportunity to clarify how the state should classify its independent contractors now that the California Supreme Court has issued a final ruling on Dynamex Operations West Inc v. Superior Court, according to a labor law attorney.
“The legislature should review this more carefully and try and create a solution that is clear and fair,” said attorney Nina Yablock.
On Jan.14, the California Supreme Court decided that determining worker classification applies retroactively, according to Westlaw Today, and that a "worker is a company's employee if he or she is involved in its usual course of business, is under the company's control, or is not involved in an independent trade or business."
“Businesses have to struggle to stay in compliance in California, whether they are struggling because the laws are onerous or because the laws are unclear, but that's not the Supreme Court's problem,” Yablock told the Southern California Record. “They have to follow the law but it is a legislature problem to try and create a quick, clear path for businesses and employees and contractors to succeed.”
As previously reported, voters approved Proposition 22 on Nov. 3, which allows businesses like Uber and Lyft to classify workers as independent contractors rather than employees.
"I think the statute takes precedence because it's about something specific," Yablock said. "Businesses need clarity. Businesses want to be in compliance but if the state can't figure out how to pass a law that everyone is comfortable with, that is a good compromise and that’s clear, then California is going to keep losing businesses.”
HP Enterprise, Oracle and Tesla have all announced they are relocating out of California due to taxes, according to media reports. At 13.3%, California’s income tax rate is among the most expensive nationwide.
“Companies who do things in good faith can end up with big penalties,” Yablock added. “If more companies give up and move out of California, it hurts everybody. Workers who want to work a certain way, can’t. They are denied the freedom to contract with who they want. Workers who want to be employees may not be able to because businesses have left the state. What's to be gained by allowing confusion to continue?”