Dozens of businesses and trade organizations, including three local chambers of commerce, have sent a letter to the California Legislature outlining concerns about the legal precedent set by the state Supreme Court’s decision in Dynamex Operations West Inc. v. Superior Court. The letter also requested that the Legislature suspend the application of the ruling until a new method of classifying employees can be determined.
The Simi Valley, Camarillo and Oxnard chambers were among the 76 signers of the letter, which also was backed by major “gig economy” firms such as Uber and Lyft. Service companies that rely on contract workers to support their businesses are thought to be especially vulnerable to legal action following the April 30 ruling, which laid out a three-part test to determine whether a worker should be considered an employee or an independent contractor.
“The economic impact of this ruling has far-reaching negative implications for nearly all sectors of the economy,” the letter said. “Companies in a wide range of industries throughout California will be exposed to costly litigation and will have limited resources to maintain their businesses.”
Businesses objected to the ruling on the basis that it would limit opportunities for individuals seeking flexible or part-time work arrangements and would open employers up to excessive legal claims, causing litigation costs to skyrocket. Companies in Massachusetts have weathered significant litigation since that state adopted a similar worker classification test to the one laid out in Dynamex, the letter said. The potential fallout in California would be compounded under the state’s Labor Code Private Attorneys Act – known to some as the “sue your boss law” – which gives employees the right to make labor violation claims against a current or former employer even if they were not directly affected, the letter said.
“The time to act is now, before work opportunities are destroyed, and before the trial lawyers start crushing businesses with on onslaught of litigation,” the letter said.