“Employment” Law In The “Gig Economy”

One of the most long-lasting challenges to working families that lingers since the Great Recession is employers’ refusal to put employees back on payroll.  Instead, employers continue to hire workers on a “gig” basis as independent contractors, depriving millions of families each year of basic employee benefits and straining already strained family finances.

Much ink has been spilled on employment law blogs about how to fight for your right to be classified as an employee instead of a contractor, and I won’t rehash it here.  Suffice it to say that if you are treated like an employee in every other way except for the fact that you don’t have benefits, you have legal remedies.

But what if your employer is smarter than that?  Savvy employers can usually structure their arrangements well enough to fend off an employee misclassification lawsuit.  So the question arises:  If you really are an independent contractor (and not just a misclassified employee), what rights remain to you in the workplace?

While independent contractors do not enjoy all of the same protections as employees, there are a number of statutes and causes of action that are still available to independent contractors.

Race Discrimination

For employees, Title VII of the Civil Rights Act is the traditional vehicle for combating race discrimination in the workplace.  But minority contractors also have a powerful statutory vehicle to vindicate their rights in Section 1981 (42 U.S.C. 1981).  Section 1981 states that racial minorities have the same rights to “make and enforce contracts” as non-minorities, and this includes “the making, performance, modification and termination of contracts, and the enjoyment of all benefits, privileges, terms and conditions of the contractual relationship.”  Practically speaking, this means that racial minorities can assert claims of racial discrimination against their employer, even when they are properly classified as “independent contractors.”

Sexual Harassment

Just because you are a contractor does not mean that you have to put up with severe or pervasive sexual harassment.  North Carolina courts have recognized that sexual harassment can give rise to a claim for Intentional Infliction of Emotional Distress (“IIED”) or Negligent Infliction of Emotional Distress (“NIED”).  These are State law torts that are not dependent on proving any particular employment arrangement or relationship.  However, whether you are an employee or a contractor, you still must prove that the company knowingly permitted or ratified the conduct in order to assert a claim.

Workplace Injuries

Workplace injuries are one area where independent contractors have the advantage.  While employees must usually pursue compensation for on-the-job injuries through the workers’ compensation system, independent contractors are free to seek compensation for their injuries under traditional negligence causes of action.  When an independent contractor is injured on the job, the employer does not get the benefit of the “exclusive remedies” provisions of the workers’ compensation statute, nor can the employer limit its liability to the contractor.

If you are an independent contractor and are hurt on the job, you should speak to a lawyer as soon as possible.  In the meantime, you should decline to sign any releases or to accept any settlement offers, and you should decline to give any statements.  An employer may try to convince you that you “have to” file a workers’ compensation claim. If you are truly an independent contractor, you have no such obligation, and your potential recovery is substantially greater outside the workers’ compensation system than within it.

Payment For Services

Independent contractors do not have the protections of the North Carolina Wage & Hour Act, such as minimum wage and paid overtime.  However, if you believe you are not being paid properly under an independent contractor arrangement, you can still obtain just compensation.  There are a number of rules of contract interpretation that an experienced attorney can use to ensure that the reading of the contract that is most fair to you is the one ultimately upheld.  For example, if your employer drafted the contract, that fact can often be used against the employer in interpreting it.

Further, if the employer engages in fraud or deception with respect to the contractual relationship, independent contractors can assert claims under the North Carolina Unfair & Deceptive Trade Practices Act, N.C. Gen. Stat. 75-1.1 et seq.   Although courts have held that the employer/ employee relationship cannot serve as the basis for an unfair trade practices claim, the UDTPA is commonly asserted between and among contracting parties.  Under the UDTPA, a successful plaintiff can recover three times the damages proved at trial.  Accordingly, it is a powerful claim to assert against an unscrupulous employer, if there are facts to support it.

Be Forewarned

One final word of warning to contractors: Never, ever sign an independent contract in which there is a non-compete provision.  North Carolina courts have allowed non-compete provisions to be enforced against independent contractors, which is a real slap in the face to North Carolina workers just trying to make ends meet at home.  If you have to take a “gig” as an independent contractor to keep a roof over your head until you can find more stable employment in your field, the last thing you want to do is give your cheap-skate employer the opportunity to foreclose you from obtaining full employment with one of its competitors.  If the employer believes that a non-compete provision is necessary to protect its business, it should be willing to hire you as an employee and provide employee benefits in exchange for the restraint on your ability to obtain those benefits elsewhere.