Jeffrey (Jeff) H. Ruzal, Member of the Firm in the Employment, Labor & Workforce Management practice, in the firm’s New York office, was quoted in Law360 Employment Authority, in “Hybrid Contractor Classification Could Muck Up Litigation,” by Daniela Porat. (Read the full version – subscription required.)

Following is an excerpt:

A new law in Washington state entitling ride-hail drivers to minimum pay creates a hybrid worker classification caught in purgatory between employee and independent contractor status that attorneys on all sides say will cause upheaval and is the wrong approach to gig economy work. …

For management-side attorney Jeffrey Ruzal of Epstein Becker Green, Washington state's law may be the "hybrid 1.0" to future iterations in other jurisdictions that could possibly impose even greater requirements.

"We're dealing with very antiquated regulations around the analysis of what an independent contractor is as opposed to an employee," he said. "This new sort of hybrid approach if you will, what I'll call 'contractor with benefits' is sort of its own way of bringing up to date the view of the gig economy, which is really becoming more and more prevalent … and really can't be ignored." …

It's challenging for policymakers to respond and create a regulatory framework that gives workers employee benefits but also provides the flexibility of an independent contractor, Ruzal said.

"I don't think that it's necessarily possible to say that there are defined benefits or allowances that could be provided to independent contractors that would result in a best-of-both-worlds scenario," he said.

It's also a slippery slope, Ruzal said, because employee-friendly states and municipalities may continue pushing the limits of this third worker classification and the concept of an independent contractor could be swallowed up all together.

Nevertheless, it's unlikely that jurisdictions will try to apply this hybrid concept to jobs outside the gig economy, Ruzal said.

"The last thing that progressive states and localities want would be to have the reverse effect of capturing too many workers within it," he said, "and therefore essentially, taking away rights that they would have otherwise had as employees." …

Adding another worker classification will sow even more confusion in wage and hour actions, attorneys said.

For one, it may lead to alternative pleading scenarios, Ruzal said. A plaintiff might claim she was misclassified as an independent contractor instead of an employee, but if she is not found to be an employee she should still get the benefits under whatever hybrid classification applies, Ruzal said.

"I think it will be a mess," he said. "I think it's going to result in a lot of murkiness, and I think that it's ultimately going to result in some very messy and murky litigation." …

Need For Clearer Demarcation

The federal standard for whether a worker is an independent contractor or employee has been in flux between administrations. …

The regulations need to be updated in a way that reflects the reality of the gig economy, Ruzal said.

"The default of 'everyone is an employee with few exceptions' is an outdated concept," he said. "We're in a much more entrepreneurial society, and a lot of that is part of the progression of the gig economy."


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