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Employment Law Impacts the Sharing Economy

Posted on in Employment

Over the past few years, California has seen unprecedented growth in the sharing economy. In the sharing economy, sometimes referred to as the "gig" economy, companies like AirBNB, Uber, Lyft and Postmates provide the infrastructure within which individuals rent rooms, drive people around and do errands for others.

Typically, workers in the sharing economy sign documents stating that they are independent contractors. However, whether a worker is an independent contractor or an employee is determined by their actual relationship with the contracting company, not by a statement in a contract. Increasingly, courts and government agencies have been finding that sharing economy workers are employees and are subject to employment law.

In 2015, a judge granted class-action status to a suit alleging that up to 160,000 Uber drivers have been misclassified as independent contractors. If the Uber drivers win, they could be granted reimbursement for mileage and tips. In addition, they could gain legal protection from underpayment of wages, discrimination, unpaid overtime, sexual harassment, unlawful termination and wage & hour violations.

A change in employment status could make a big difference for both the Uber drivers and their employer. Courts sometimes take a dim view of misclassifying employees. In 2002, a jury awarded a saleswoman for Mary Kay $11.2 million when she sued for unlawful termination. During the suit, the company relied on the contract which said that the saleswoman was an independent contractor. $10 million of the $11.2 million award was for punitive damages.

Employment law can apply to workers in the sharing economy, even if they are classified as independent contractors. For more information, please contact us.

 

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