Dive Brief:

A "contingent workforce specialist" working for startup Magic Leap has sued the company, alleging that she was fired for speaking up about misclassifications, in violation of a state whistleblower law (Couto v. Magic Leap, CACE-18-005482 (March 9, 2018, Circuit Court for the 17th Judicial Circuit in and for Broward County, Florida)).

Kimberly Couto has alleged that she repeatedly expressed concern that the company had misclassified hundreds of employees as independent contractors. After one meeting in which she voiced this concern to upper management and the company's legal team, she was fired, according to the suit.

Couto maintains that Magic Leap, maker of not-yet-produced augmented reality glasses, misclassified employees to cut costs. It still treated them like employees, however, controlling where, when and how they worked; allowing them to attend "town hall" meetings; giving them access to some employee perks; and paying for their computers, equipment and travel expenses.

Dive Insight:

Classification issues continue to plague employers, especially big names in the gig economy. A closely-watched GrubHub case was recently decided in the employers' favor, although experts warn that each situation must be examined individually.

At the same time, the U.S. Department of Labor (DOL) has rescinded an Obama-era guidance document on independent contractors, and has not yet replaced it. If more employers plan to hire contingent workers, as many say they plan to do, they'll have to carefully consider both DOL standards and applicable case law to ensure these workers don't cross the line to employee.

As for whistleblower protections, not every state has the same coverage that Florida offers to employees in the private sector. And when it comes to federal law, especially the Fair Labor Standards Act, a legal theory called the "manager rule" can mean that HR isn't protected just by disagreeing with an employer's actions. Instead, an employee generally must show that she wasn't just performing her job and was instead lodging a personal complaint — often a high bar for someone involved in HR duties.