Washington DC (June 12) – In a recent ruling, the California Supreme Court not only changed how worker classification occurs in the nation’s most economically-important state but also expressed a preference for full-time employment arrangements. Accordingly, the consequences of Dynamex v. Superior Court of Los Angeles show a profound and growing discord between how we work and how the law categorizes that work.

In a new policy paper, R Street associate vice president of state affairs, Ian Adams and state affairs associate, Brian Jencunas examine the U.S. workforce in light of new data from the Bureau of Labor Statistics, provide a legal overview of the Dynamex decision and conduct an analysis of the potential annual costs associated with the California Supreme Court’s newly embraced standard.

The paper argues that while it’s impossible to know how many workers will be re-classified as full-time, there is no question that Dynamex is – directly – going to increase the cost of doing business in California. As labor costs increases, those most tenuously attached to the labor force will be the first to lose the work upon which they rely. Additionally, there is clear evidence that the vast majority of workers in part-time or contractual employment arrangements actually prefer the flexibility that these exact arrangements provide.

The authors conclude, “the Dynamex decision is set to hurt workers and businesses alike by reducing flexibility and ratcheting up the cost of doing business in the Golden State.” Indeed, California’s entrenchment in a classification binary could end up costing California businesses anywhere from $1,300,944,074 to $6,504,720,371 annually. Rather, innovative new policies that would afford new protections and opportunities is the best way forward.