Jan. 15, 2020 – The gig economy and the different kinds of employment that people are seeking out today is leading to a lot of questions about whether a worker is an employee or an independent contractor, says Madison attorney Caitlin Madden.

The common example is whether someone working for a ride-sharing service like Lyft or Uber is controlled sufficiently by that company to be considered an employee. Freelance facilitators like TaskRabbit, a job matchmaker, raise potential legal issues.

“There are a lot of questions raised about who employs that person, which has implications for their compensation but also things like worker’s compensation and unemployment benefits,” said Madden, an employment lawyer at Hawks Quindel S.C.

Madden, who spoke on the topic of independent contractor status at the 2019 Health, Labor, and Employment Law Institute, said the test to determine whether a worker is an independent contractor or an employee varies but generally comes down to control.

“It comes down to the level of control a company has over the worker, and who is making decisions about the nature of the work and the type of work they are doing,” said Madden, who noted a significant case decided in California in 2018.

In Dynamex Operations West, Inc. v. Superior Court of Los Angeles, the California Supreme Court introduced a new standard for determining whether a worker is an independent contractor and simplified the traditional “economic realities test.”

That decision, Madden noted, may result in a lot more workers being considered employees, provided that the decision expands to other states over time.

“It’s very important for employers to look at what’s happening in this area because it’s changing at the federal and state levels,” Madden explained.

Lawyers who advise employers (and employees) should stay well-informed on these legal developments as the gig economy continues to grow in the U.S.