The California Supreme Court’s Dynamex v. Superior Court decision on April 30 was a game changer. The impact for established business using an independent contractor model and indeed those solo entrepreneurs contemplating creation of service businesses is significant though incapable of full measurement. This is an evolving story and Dynamex has requested a rehearing.
The Complexity of the Employee Status Issue
The case began as Lee v. Dynamex and the question was whether a group of individuals who agreed to provide delivery driving services as independent contractors were misclassified and should have been compensated as employees. That question exists at the intersection of personal liberty to contract and the state’s interest in protecting workers in lopsided economic power situations from making deals bad enough that there is an impact to society justifying the state in forbidding the deal. Paragraph two of the decision reveals that the court viewed independent contractor status as a threat to workers’ rights. On the other hand, consider the ride app driver who in many instances has employment and benefits from another real job and is simply looking to increase income. The 1099 issued him for his driving income assures he will pay income taxes but does he really derive benefit from adding to his Medicare tax and Social Security tax or state disability Insurance load? That presents a constitutional and perhaps a philosophical question.
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