What California’s Gig Economy Ruling Means For Small Businesses

On May 14th, the California Supreme Court delivered a ruling on the gig economy that could have far reaching consequences for small businesses.

For those unfamiliar with the term, the ‘gig economy’ refers to the prevalent form of employment which became (and continues to be) popular after the 2008 recession.

Individuals — mostly millenials and out-of-work baby boomers — found themselves unable to gain full time employment in post-recession America. Companies like Airbnb and Uber stepped in, allowing people to choose shorter, temporary hours for jobs for which they were their own boss, hence the term ‘gig’.

Since then, several companies have been founded around different ‘gigs’.

Additionally, ideas around work are changing, particularly among millennials, meaning more and more people prefer to work part-time and set their own hours. It’s a situation that greatly benefits small businesses as it allows them to hire people only for the job at hand.

But concerns have been raised about the treatment of gig workers. Unions argue that despite them working temporary jobs, they deserve the same benefits as salaried workers.

This year, the California Supreme Court ruled against courier company, Dynamex on the classification of hundreds of its couriers.

To summarize, the court ruled that if a worker is doing work related to your usual business, they must be classified as a full time employee. For instance, if you have a baker working in your bakery and they don’t have a separate baking business, they’re considered your employee.

The ruling was limited to Dynamex but there’s no doubt it’s opened a gateway to lawsuits against successful companies that have built themselves on the gig economy.

Then, there are small businesses, many of whom have come to rely on contract workers to avoid having permanent employees on the payroll.

If you’re one of these small businesses, it’s likely this ruling is making you a bit worried.

And should you be?

The answer is yes. And no.

If you’re classifying a long-time employee who is essential to your business as an independent contract worker, not only is it wrong, you’re also leaving yourself wide open for lawsuits.

However, hiring a contract worker through larger gig companies means, bar any accidents that they may have whilst doing one of your tasks, you’re free of any blame. Any lawsuit rulings will affect the larger company and you won’t be prosecuted for simply patronizing their business.

To save yourself from worry, it’s best to have essential employees on a payroll, be it part-time or full-time. If there are other tasks that need to be done, you can delegate them to independent contractors who have their own business or outsource them to companies abroad.

This way, you save money and sleep easy because you aren’t breaking any laws.

If you’re delegating work to one-man businesses and outsourcing companies, you’ll need to find a way to pay them. For small businesses, bank wires are often more trouble than they’re worth. They’re slow, unreliable, and costly.

Use Veem.

Veem provides easy global payments to small businesses at a lower cost than your bank. You can send and request international transfers with just a click, which saves you significant amounts of time.

Additionally, since Veem charges no wire fees and offers competitive foreign exchange rates, you’ll save a lot of money as well.

Sign up for a free Veem account and enjoy global payments designed for small businesses.

This content was originally published on the Veem blog. Check it out for more information and exclusive articles.