Ruling Could Turn California Gig Economy Giants’ Contractors Into Employees

Uber and Lyft and other similarly situated gig-economy companies are lobbying for Californian democrats to override a recent court ruling that could require them to reclassify their independent contractors into employees. The April ruling was handed down by the California Supreme Court. The far-reaching ruling could make it significantly harder for companies across the industry to claim their workforces are not eligible employees under state wage laws.

Hoping to blunt the ruling’s impact, businesses are urging California political leaders to take action in their favor through legislation or executive action by the governor. Either move would make noise across the national debate regarding rights and roles of workers in today’s gig economy. The businesses affected by the ruling insist that it is stifling innovation and threatening the livelihoods of California workers. They seek a balance between the need for flexible, scalable work arrangements and the rights of California workers and that the definition and implication of said definition should not be simply left to the courts or determined based on old models.

In addition to many popular gig-economy businesses, the California Chamber of Commerce has been quite outspoken in opposing the new requirements indicating that the business model of today’s gig-economy companies does not lend itself to the strict structure of a traditional employer-employee relationship. The chamber argues that forcing this on the companies leaves them in an impossible position and prevents them from continuing forward with their business model. The chamber is attempting to get a legislative fix before the session closes at month’s end. Without this type of fix, they feel entire sectors of California’s economy would be left in jeopardy. As is – without a legislative fix of some sort – the on-demand economy may no longer be a viable business model, which could be devastating as people depend on it.

The California Labor Federation reiterates their support of the ruling and insists they will resist efforts to suspend or reverse. Their stance is based on record highs of income inequality and the millions of working families struggling to make ends meet in what has become an unfair economy. They feel protecting California’s workers should be the top priority of California’s leaders rather than protecting big corporations.

If you have questions about minimum wage, overtime pay, or other employee rights provided by federal and California laws, please get in touch with one of the experienced employment law attorneys at Blumenthal Nordrehaug Bhowmik De Blouw LLP.

New Trend in Employment Law: Unpaid Intern Class Action Suits on the Rise

A New York federal judge, U.S. District Judge Paul G. Gardephe, recently certified a class of approx. 3,000 Warner Music Group Corp. interns claiming misclassification as exempt from minimum wage and overtime requirements. The case is based on a violation of the Fair Labor Standard Act and depends on the allegation that the plaintiffs performed the same tasks as nonexempt employees. Plaintiffs were uncompensated interns working in a variety of Warner Music Group Corp. departments (radio promotions, product development, artists and repertoire, etc.)

Unpaid intern class action lawsuits such as this are a growing trend in wage and hour litigation. Plaintiffs are unpaid interns simply suing for pay under the Federal Fair Labor Standards Act or FLSA. Recent filings by unpaid interns have made allegations against a number of large corporations including: Hearst Corp., Fox Searchlight Inc., the “Charlie Rose” show, etc. In one instance, an intern who was paid a stipend filed a class action lawsuit alleging that the stipend he received was insufficient according to wage and labor laws. When the amount of the stipend was compared to the amount he would have earned for hours worked at federal minimum wage, the number fell short of minimum standards set up by the FLSA as well as New York state law.

Interns are historically underpaid (or not paid) and overworked. The current trend in unpaid intern class action lawsuits seems to indicate that this “accepted practice” may be going out of style.

For more information on identifying whether or not your internship violates wage and hour laws, contact an expert at Blumenthal, Nordrehaug & Bhowmik.