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Independent contractor status crashing in USA. Or is it?

Tuesday, June 23, 2015

There’s no question that the status of independent contractors is under massive attack in the USA from regulators, courts and activist lawyers. We’ve been following this for some time.

The giant transport company FedEx has for years been fighting to defend the independent contractor status of its drivers. But, in California, FedEx has now agreed to pay $228 million in compensation. This follows a 2014 Californian court ruling that FedEx ‘misclassified’ its drivers as independent contractors.

Ride-sharer Uber is under attack in California on the same issue. This month the California Labor Commission ruled that Uber drivers are employees, not independent contractors. Uber is confronted by the same Californian laws that have struck down FedEx. Without doubt, such rulings threaten the entire ride-sharing model of business (and more).

But don’t think this is over. Uber has an alleged valuation and backing of some $40 billion. Expect a hard-fought fight

This Californian push has to be understood within the aggressive anti-democratic labour institutions in that state. For example, the California Agricultural Labor Relations Board has been imposing compulsory unions on workers. The courts have found the Board’s actions to be unconstitutional.

This recent negative decisions have all been from California. In comparison, in Massachusetts, which has arguably the world’s most aggressive anti-independent contractor laws, the courts are ruling differently. Taxi drivers have been declared independent contractors, as have real estate agents (realtors).

This backwards and forwards movement is interesting within the context of a new report from the independent US government agency, the Government Accountability Office (GAO). The GAO’s report is consistent with other reports from across the globe over the last decade on independent contractor attitudes. The GAO finds that:
  • 85 per cent of ICs are ‘content with their employment type’
  • 57 per cent of ICs were ‘very satisfied’ with their jobs. This compared to only 45 per cent of standard full-time employees being very satisfied.

This debate on independent contracting is global and only becoming more intense. We'll be keeping an eye on this debate and publishing more as it comes to hand.

 

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