ACS Issue Brief on Employee Status

ACS is out with a new Issue Brief (authored by Brishen Rogers) on the question of employee status.  The brief, Redefining Employment for the Modern Economy, should be on the reading list of any lawyer or policymaker interested in the question of how to define employment in the 21st Century.  Drawing on the work of David Weil, the National Employment Law Project, and recent memoranda from the Department of Labor, the brief astutely identifies the problems with and sketches some sensible reforms to our labor and employment laws.

Rogers begins by, appropriately, locating his analysis in the broader trend toward what Weil names “fissuring” – questions of employee status matter, that is, not just in the gig economy but in the far more pervasive contexts of misclassification, subcontracting and franchising.  And Rogers, again rightly in my view, rejects the call for a new category of worker (describing Harris and Krueger’s “independent worker” proposal as a “false start”).  Rather than creating a new legal category, Rogers argues that we ought to “expand and clarify” the scope of employment under existing statutes. Through legislative amendment, he suggests that we:

  1.  Redefine employment per the “suffer or permit” test and specify that the “suffer or permit” test defines employment very broadly;

  2. Define workers in certain highly fissured industries as the legal employees of firms who contract with them individually for labor, and/or the joint employees of user firms who obtain their labor through subcontracting or franchising arrangements;

  3. Develop concrete guidance for courts to apply in other industries, or direct an expert agency to do the same; and

  4. Place the burden of proof on the party seeking to avoid employment status and implement other procedural and remedial reforms.

More particularly, Rogers suggests that Congress or perhaps the DOL provide a list of “enumerated industries whose workers will always be the employees of whoever purchases their services, whether directly or through an intermediary.”  He also effectively defends NELP’s proposal that states make broader use of the unemployment compensation procedural model “by creating a presumption that anyone who performs work for another is the other’s employee, then requiring the other to disprove employment status,” through the so-called ABC test.

I agree with much of what Rogers proposes here.  But, in setting out the problem to be addressed by legal reforms (what Rogers calls “the challenge of defining employment”), Rogers discusses the Lyft litigation and the widely-cited quote from Judge Chhabria’s opinion.  As Rogers puts it, “Chhabria struck a telling metaphor: if the case reached a jury, [the jury] would be ‘handed a square peg and asked to choose between two round holes.'”  Why?  According to Rogers (and Chhabria) Lyft drivers are not “classic independent contractors” because they are “actually at the core of Lyft’s business and often work for the company for years.”  But Lyft drivers are not “classic employees either,” because they can “set their own hours and had minimal contact with Lyft managers, and since Lyft didn’t exercise control over their appearance.”

I may be alone in this, but I don’t find Judge Chhabria’s metaphor compelling or apt. That’s because the metaphor assumes current law contains a fairly rigid and narrow definition of employee – for this reason, Chhabria thinks of the definition as a round hole into which a square peg can’t fit.  But, and I think Rogers might agree, the definition of employee is – properly construed – actually quite flexible and capacious and capable of incorporating many different types of work relationships.  Workers might not be “classic employees” (whatever that might mean) but still fit comfortably within the definition of “employee.” Witness, for example, the NLRB’s recent decision in Sisters of Camelot where the Board finds that door-to-door canvassers are “employees” despite the fact that they had remarkably flexible schedules, were minimally supervised, and were free to work for others.  The DOL has itself been clear on this point, concluding recently that you can be an “employee” even if you set your own hours and are never directly supervised.

I mention this not to critique Judge Chhabria’s choice of metaphor.  My objection is a substantive one.  Unlike Chhabria, I find the current definitions of “employee” to be broad enough, when properly interpreted, to capture the work relationships we find across the gig economy, and to reach much of the fissured workplace more broadly.  I certainly applaud and support the call for clarification (and legislative reinforcement) of this view, and Rogers deserves credit for making this call as effectively as he does.