Photo: Daniel Hertzberg for ALM.
LimeBike’s so-called “juicers”—workers who scoop up the signature green and yellow electric bikes and scooters wherever they’ve been left and make a buck charging them up—represent the novel, now-thriving business model in the gig economy that relies on independent contractors.
LimeBike, which rents scooters in cities across California and dozens more around the world, once recruited “juicers” on its website, proclaiming the San Francisco-based company was “Always looking to grow our team.”
But documents filed in a lawsuit in San Francisco Superior Court against Neutron Holdings Inc., which does business as LimeBike, claim the company stripped the representation from its website.
Why the seemingly innocuous phrase was removed could reflect the wave of lawsuits filed against gig economy companies and the types of big questions that companies are grappling with after a California Supreme Court decision in April made it harder for employers to classify workers as contractors.
The court’s decision has rattled companies and forced state and federal courts to grapple with unresolved questions. Meanwhile, plaintiffs attorneys find themselves with more leverage to argue against workforce structures that label workers as independent contractors and not employees.
The implication that Lime's juicers are part of the company's “team” could clash with the new worker-classification scheme, known as the "ABC test," that was created in the California court's ruling in Dynamex Operations West v. Superior Court. One of the prongs—known as the “killer B” by some management attorneys—only allows a worker to be classified as a contractor if the work he or she does is outside the scope of the company’s business.
“Lime still has the mindset of a startup,” said Korein Tillery's Garrett Broshuis, an employment attorney based in St. Louis who is following the case. “An innovative system may get praise in business school, but it can’t ignore requirements of California law.”
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On its face, the "B" prong in the classification test is the most difficult to overcome for gig economy companies that have built their business models on the backs of independent contractors who enjoy greater flexibility but miss out on many of the benefits accorded to employees.
“The lawsuit itself is attacking the myth of the gig economy that these workers are receiving flexibility and the ability to work several jobs. They can’t,” said Gay Grunfeld, managing partner at Rosen Bien Galvan & Grunfeld in San Francisco, which is representing the Lime plaintiff with the Chicago firm Waskowski Johnson Yohalem. “The Dynamex decision squarely applies here.”
Littler Mendelson shareholder Lisa Lin Garcia in San Francisco, who represents Lime, did not respond to request for comment.
The new California test also requires the employer to establish that a worker is free from the control and direction of the hirer in connection with job responsibilities. And an employer must show that a worker is "customarily engaged in an independently established trade, occupation or business of the same nature as the work performed for the hiring entity."
Erin Leach, a management-side attorney at Snell & Wilmer, said companies in California are re-evaluating whether their workers should be part-time employees instead of contractors, diving into their internal and external communications and working to comply with the state's more rigid classification test.
“How narrowly can you define what your business is?” Leach said. “We are left with a lot of open questions of how this ruling will be applied.”
A Littler paper in June, assessing the Dynamex decision, said that it's not always clear how a business is defined. “The court provides a couple of overly simplistic examples that belie modern business reality.” The paper suggests that the new standards will be difficult for companies to overcome.