As the business of artificial intelligence is expanding, it seemed it was only a matter of time before the AI industry became the subject of an independent contractor misclassification lawsuit. Last month, one of the leading generative AI modeling companies was sued in a proposed class action in California by a worker who claims that he and similarly situated AI workers were misclassified as independent contractors instead of employees. As described below, the AI worker’s lawsuit alleges that the company for whom he provided generative AI services directed and controlled how and when he performed his tasks. While the complaint alleges a high degree of direction and control by the company over the manner and means by which the named plaintiff and other AI workers performed their services, there is nothing in particular about the AI industry that should derail AI businesses from structuring, documenting, and implementing their IC relationships in a manner that complies with federal and almost all state laws governing ICs. Like companies in many other industries, companies in the AI industry can use a process such as IC Diagnostics (TM) to maximize their IC compliance in a customized and sustainable manner consistent with their business models.

A federal agency last week accused the companies that created and produce the Netflix reality television series “Love is Blind” of misclassifying the contestants on the show as independent contractors (ICs) instead of employees. The complaint issued by a regional director of the National Labor Relations Board (NLRB) against the…

The most compelling news involving independent contractor compliance and misclassification last month was not a class action lawsuit or a government investigation but rather a government study released by the Bureau of Labor Statistics of the U.S. Department of Labor. The study, discussed in more depth below, covers the…

Private equity firms regularly conduct due diligence of legal risks that could impact potential investments. Yet when considering whether to invest in a target company structured in whole or in part on an independent contractor (IC) business model, few PE firms consider IC misclassification exposure with a sufficient degree of…

Businesses can learn quite a lot from a legal challenge faced by others in the same industry. Recently, we noticed that a large health care system operating in seven states west of the Mississippi had been sued in a class action for allegedly misclassifying registered nurses (RNs) as independent contractors…

The most significant legal development in the past month in the area of independent contractor compliance was the enactment of California’s Freelance Worker Protection Act, which goes into effect on January 1, 2025. We have reported on freelance pay protection laws enacted recently in Illinois and New York,…

Many commentators will likely suggest that the law involving independent contractor misclassification will become more favorable to businesses and less favorable to workers with a change in the White House. While things will not likely get worse, they will not likely improve one iota.

Right now, under the Biden Administration,…

Is independent contractor misclassification, standing alone, a violation of the National Labor Relations Act? Last month, the National Labor Relations Board issued a decision in a case involving workers who were found to be misclassified by a company as independent contractors. While the NLRB did not answer the question above,…

One of the most important legal developments last month is a new lawsuit filed by registered nurses against a leading health care system alleging that they have been misclassified as independent contractors instead of employees. The proposed class and collective action was filed late last month in a federal district…

The legal developments in the area of independent contractor misclassification and compliance last month include cases against a record label company, an Islamic Center, and a waste recycling company. Lawsuits for IC misclassification come from a diverse array of workers because companies in an endless number of industries have adopted…