Much of the discussion over worker classification, whether over California’s Prop 22/AB5 or the federal Protecting the Right to Organize or PRO Act, centers on the use of the employee-friendlier ABC test in distinguishing employees from independent contractors. Employees enjoy the benefit of employment laws, independent contractors don’t.
But even if the ABC test appears to apply, workers don’t always enjoy protections under the laws. Understanding the ABC test better, helps explain why workers don’t always win even if the ABC Test applies.
The ABC test – control in fact
At least in Nebraska, if an employer can answer these four questions no, then their worker is not an employee : 1) worker free from control of work both under contract and in fact 2) service is outside of normal course of business and 3) the workers is customarily engaged in a trade, occupation, profession or business.
The biggest hurdle to obtaining employment status is showing a worker is free from control “in fact.” How exactly do you determine if a worker is free from control in fact? Courts like to use tests. The good news is the courts already have tests that they can use to distinguish a contractor from an employee.
The bad news is that these common law tests are the reason why the ABC test statutes were passed in the first place. More bad news, is that I believe many state court and federal judges will continue to apply common law tests to determine control in fact under the ABC test. Using common law tests tends not to work out well for workers.
I think the role of judges in interpreting statutes is a good transition to another reason why the ABC test is far from a panacea for worker injustice issues. Courts, aided by lawyers from management, are going to find ways not to apply the ABC test. I can think of at least two ways employers could dodge the ABC test when it would appear to apply.
Narrow definition of wages for state unemployment
In Nebraska, the ABC test applies to unemployment insurance. But our state Supreme Court found away around applying the test.
In Omaha World-Herald v. Dernier, the Nebraska Supreme Court held that a newspaper distributor for the Omaha World-Herald was not earning wages for the purposes of unemployment benefits. (Nebraska later broadened the definition of wages for unemployment, but kept the Dernier exemption for newspapers).
Narrow definition of interstate commerce for Fair Labor Standards Act
The 7th Circuit Court of Appeals, in a decision written future Supreme Court Justice Amy Coney Barrett, found that Grub Hub drivers were not covered by the Fair Labor Standards Act because the drivers were not engaged in interstate commerce. The court ruled that commerce between the states was only incidental to the drivers’ employment.
The commerce clause, or interstate commerce, is how federal laws that protect employee pass constitutional muster. Federal courts can also narrowly interpret what constitutes commerce for the purposes of federal law. That narrow definition of commerce stated in US v. EC Knight is why workers’ compensation is a state law. Up until 1947, insurance was excluded from the definition of interstate commerce, which would help explain why unemployment insurance laws are dual state and federal laws.