EEOC’s 2017-2021 Strategic Enforcement Plan – Targeting “Gig Economy” and Independent Contractor Misclassification
The EEOC has issued its new Strategic Enforcement Plan for the fiscal years 2017 to 2021, which outlines the areas in which the EEOC will focus its litigation and investigation resources in the next four years. The Plan is notable for its emphasis on the “gig” workforce – that is, the short-term, temporary, or freelance workers (often working for companies like Uber, Lyft, AirBnb, or Taskrabbit) who are typically classified as independent contractors rather than employees.
In the Plan, the EEOC identified the rise of the “gig” economy as an “emerging and developing issue” warranting increased focus, particularly with regard to “clarifying the employment relationship and the application of workplace civil rights protections in light of the increasing complexity of employment relationships and structures, including temporary workers, staffing agencies, independent contractor relationships, and the on-demand economy . . .”
Essentially, the Plan evidences the EEOC’s intent to crack down on companies seeking to avoid liability under the employment laws by misclassifying workers as independent contractors rather than employees. The EEOC’s designation of misclassification as an enforcement priority is not entirely surprising, as it is in line with other recent statutory and regulatory developments in this area. For example, as we noted here, last month California enacted AB 1897, which provides that employers using labor contractors, such as staffing agencies, will now “share with the labor contractor all civil legal responsibility and civil liability for all workers” supplied to company. Similarly, both the DOL and the NLRB have issued guidance expanding the definition of a “joint employer,” making it more likely companies using contract labor will be considered an “employer” for the purposes of the employment laws, regardless of whether they label the work relationships as ones with “independent contractors.”
In light of these developments, companies may wish to evaluate their use of individual independent contractor relationships, to determine the extent to which an individual may properly be considered an employee rather than a contractor per the guidance above, and the attendant risk. Similarly, companies indirectly using independent contractors, such as through staffing or “temp” agencies, would be well-served by evaluating their agreements with these agencies to ensure that they contain appropriate safeguards (including guarantees of wage and hour compliance, and perhaps indemnification agreements) to protect against the potential risk of a finding of “joint employer” status.