November 4, 2019

More States Scrutinize Gig Economy Classifications

Shortly after California passed a new law to establish the “ABC” test to clarify if a worker should be classified as an independent contractor or an employee entitled to benefits such as minimum wage, health insurance, and workers’ comp, two more states have begun to take action surrounding worker classification.

New Jersey labor auditors are investigating Uber and Lyft to see if rideshare companies are misclassifying drivers as independent contractors instead of employees, utilizing the same “ABC” test used in California.

The state sent out surveys to drivers over the last year, seeking information about work arrangements and tax status in order to determine if Uber and Lyft should be responsible for minimum wage, overtime, disability insurance, employment taxes, and other responsibilities tied to employment.

Meanwhile, rideshare and technology companies testified before a New York Senate panel regarding employee classification. Gig economy organizations like Lyft and Uber claim that workers wish to maintain the flexibility of being independent contractors, for qualifying them as employees could come with many drawbacks to the workers. Others state that workers deserve benefits that come with an employee classification, including workers’ compensation.

The purpose of this meeting was to find a middle ground between distinct employee and contractor classifications, with some suggesting the Black Car Fund to provide workers’ comp benefits to workers by charging a tax to rideshare transactions, while others claim such a tax could increase costs to the consumer, significantly impacting business and in turn impacting workers.

Healthesystems previously published an in-depth article on growing questions of compensation in the gig economy, which is available online at RxInformer journal.

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