Last year, Uber became entangled in multiple employee misclassification lawsuits. These primarily involved individual incidents where contracted drivers exceeded the hourly threshold to be deemed “full-time” under the Affordable Care Act (ACA), resulting in blocks of time where health care was required to be offered, along with other requirements such as overtime and expense compensation. The ACA mandate that any employee working in excess of 30 hours, qualified as a “full time” employee, with a required offering of health insurance on behalf of the employer. Once Uber piqued on the court’s radar, many more cases inevitably followed suit.
Valve Corporation, a video game manufacturer based in Washington State, is in the midst of a $3.1 million lawsuit involving an employee-turned-independent contractor following her relocation to California to undergo gender reassignment surgery. The video game company is responsible for renowned games like Half-Life, Team Fortress, Counter-Strike, Portal, Day of Defeat, Left 4 Dead, and Dota 2, as well as powering 3D video game platform Source as well as distribution platform Steam, responsible for computer and gaming platform SteamOS.
Powering over 125 million gamers, and developing the VR Vive with HTC, and partnered with Google, Lions Gate, and HBO, a decision against the gaming juggernaut could send ripples throughout the gaming industry.
The former employee alleges that she was required to switch to an independent contractor status following her move, despite performing the same responsibilities as before, which included translating the video game content from English to Spanish. Allegedly, she was referred to as “it” by her supervisor, and had previously filed a complaint to Human Resources against Valve for promising paid work to unpaid employees that was never addressed. When her position was moved, she offered to relocate but was denied and terminated as an “employee.” She is now suing Valve for transgender discrimination, coupled with damages that include the receipt of health benefits and higher tax rates with no unemployment benefits available since she was deemed a “contract worker.”
It’s a double whammy of sorts for Valve, but perhaps indicative of the growing problem surrounding the myriad of ways workers are conveniently classified within organizations. In Valve’s case, while wrongful termination and gender discrimination are at the forefront of the case, the misclassification status as an employee is one that will echo into many industries, primarily that of TV and gaming, where services are typically on a contract basis, especially work from state-to-state.
It signals the need for clarification in classification laws, but hope is on the horizon. A bill introduced in April (published in May), called the “Clarify Workers Misclassification in the Construction Industry Act,” looks to remedy the ongoing misclassification of construction workers along with sturdier rules on tax compliance. This will also benefit construction workers’ classifications when it comes to health care and ACA requirements for reporting following the close of every tax year. States like South Dakota have taken the initiative with 29 other states to partake in a “Memorandum of Understanding” with the U.S. Department of Labor to outline specifics when it comes to employee classification and readily relaying that information to its employees and equivalents.
For many employers, this may all read as a necessary evil. Dave and Busters learned that the hard way when they too were sued for purposely minimizing employees’ schedules to duck the ACA mandated offering of health care. It’s arguably far easier for an employer to trim an hour or two from a work schedule in an effort to maintain a maximum when it comes to overtime or even health care. But with the latter, it’s all eyes on them.
