Noting that employees in the U.S. are entitled to a long list of legally mandated benefits and protections whereas independent contractors are not, a recently published law and policy article argued that many gig economy workers occupy an ambiguous area between employee status and independent contractor status that demands legal clarification, as well as action by legislators and businesses to ensure that these workers are not left with little bargaining power or access to important benefits like health care and retirement savings plans.

“Workers, Protections, and Benefits in the U.S. Gig Economy,” by Seth D. Harris, an attorney and visiting professor at the Cornell Institute for Public Affairs, was posted online on July 12, and will be included in the forthcoming Global Law Review (September 2018). Harris observed that under existing U.S. labor, employment, and tax laws, a worker in any one work relationship is either an “employee” or an “independent contractor;” but that this binary classification of workers has been called into question by “gig economy” or “online platform” companies that provide personal labor services through smartphone apps, such as ride-hailing, food delivery, and home cleaning and handyman/woman services.

According to Harris, while independent contractors are presumed to have sufficient individual bargaining power to secure their own individual contracts with contracting partners, online platform companies’ relationships with their “independent workers” force these workers into a gray area between employee status and independent contractor status. He pointed out that U.S. law does not currently offer a clear and broadly applicable rule for resolving the resulting ambiguities and ensuring consistent and predictable decisions by adjudicators, which could lead to serious social and economic problems.

The article outlined several potential policy solutions to address these gaps, including the amendment of labor, employment, antitrust, and tax laws by Congress and state legislatures to allow independent workers and other workers in similar relationships with companies to organize and bargain collectively, secure protection from labor market and workplace discrimination, and benefit from companies withholding their income taxes and contributing to payroll taxes and health insurance at the same levels they contribute to employees.

A second potential strategy described in the article calls for the enactment of new laws or policies permitting or facilitating the creation of “portable benefits” systems, in which benefits are easily transferable for workers engaged with multiple companies. Such systems could be offered by the government, online platform companies in partnership with third-party providers, or third-party entities.

Finally, Harris suggested that Congress and state legislatures consider establishing or expanding public benefits systems to provide benefits and protections to all independent and similar workers, explaining that “as with non-governmental portable benefits systems, some benefits and protections could be included in these public systems—retirement savings, health insurance and other forms of insurance, paid leave systems—while others that are inextricably bound up with a particular work relationship, especially minimum labor standards, could not be included.”

From Benefit Trends Newsletter, Volume 61, Issue 8

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