CA gig economy vote invigorates independent contractor debate

Voters in California resoundingly approved a law creating a "third way" of classifying workers, giving rise to hopes that the rigid federal law may be altered to accommodate the rapid expansion of nontraditional workers in the 21st century economy.

The treatment of independent contractors under federal law is among the most divisive issues in employment law. Federal law creates two distinct categories of workers: employees and independent contractors. The differences are enormous.

Employees are governed by laws assuring them of minimum wage, overtime, pension rights, coverage by antidiscrimination laws, and the right to form unions. In addition, a company must withhold income tax and contribute to Social Security and Medicare on its employees' behalf. In a great many cases, employees also are awarded fringe benefits, such as health insurance, paid sick leave, vacations, and other mandated leaves.

Independent contractors receive none of those benefits under the law, and that has led to complaints that they are being exploited. However, a significant percentage of contractors value their independence, regard themselves as self-employed, fear they would lose work if they had to be treated as employees, and note that they often work as contractors at second or "moonlight" jobs.

AB 5 and Proposition 22