CARES Act May Propel Gig Economy Employment Law Shift


Kevin R. Vozzo, Member of the Firm in the Employment, Labor & Workforce Management practice, in the firm’s New York office, authored an article in Law360, titled “CARES Act May Propel Gig Economy Employment Law Shift.” (Read the full version – subscription required.)

Following is an excerpt:

In 2019, California enacted A.B. 5, a controversial law designed to make it more difficult for businesses to classify workers — including those providing services in the gig economy — as independent contractors.

The new law, which went into effect on Jan. 1, codifies and expands use of the so-called ABC test in California to differentiate between employees (who are entitled to certain benefits and other protections under the law) and independent contractors (who generally are not).

Although worker classification has been a polarizing issue for many years, A.B. 5 — in conjunction with the continued expansion of the gig economy — intensified the debate. Soon after California Gov. Gavin Newsom signed the bill into law, businesses in several industries mounted challenges to the statute in court. In addition, lawmakers have since introduced a number of bills seeking to amend the law, or repeal it outright.

Despite the backlash in California, other states may soon follow suit. Indeed, New Jersey considered similar legislation in 2019, and Illinois and New York are expected to do so within the next year.

The motivation behind legislation like A.B. 5 is clear: extending the protections of various labor and employment laws — such as the right to earn minimum wage and overtime, and to collect unemployment insurance benefits — to as many workers as possible. But for many workers and small businesses, the legislation could do more harm than good.