The nature of work is changing, but the ways in which it is classified and understood are not. The consequences of this growing discord between how we work and how the law categorizes that work are profound and are highlighted by the California Supreme Court’s recent ruling in Dynamex v. Superior Court of Los Angeles.
In addition to altering the terms upon which worker classification occurs in the nation’s largest and most economically important state, in its decision, the Court expressed a normative preference for full-time employment arrangements:
Although in some circumstances classification as an independent contractor may be advantageous to workers as well as to businesses, the risk that workers who should be treated as employees may be improperly misclassified as independent contractors is significant in light of the potentially substantial economic incentives that a business may have in mischaracterizing some workers as independent contractors.
Moreover, it does so in spite of clear evidence that the vast majority of workers in alternative arrangements (part-time or contract) value the flexibility afforded to them precisely by those arrangements.
Accordingly, the present study examines the statistical complexion of the U.S. workforce in light of new data from the Bureau of Labor Statistics, provides a legal overview of what new burdens the Dynamex decision requires, and then conducts an abbreviated economic analysis of the potential annual costs associated with the California Supreme Court’s newly embraced standard.
In so doing, it concludes that the Dynamex decision is a judicial policy response to a manufactured crisis that does not, as an empirical matter, exist. And further, the decision will—conservatively—cost California businesses anywhere from $1,300,944,074 to $6,504,720,371 annually.
