Can Contractor ‘Gig’ Work Coexist with Employment Status?

The debate over the classification of gig workers as independent contractors versus employees has been a hot topic in recent years, with legal challenges and trials in California and Massachusetts bringing the issue to the forefront. However, new research from Northeastern University suggests that both workers and platforms may benefit from a shift away from the independent contractor model to standardized employment.

A team of interdisciplinary researchers from Northeastern and Boston College conducted a study on a U.S.-based package delivery platform that facilitated last-mile deliveries between retailers and consumers. The study found that as workers transitioned from independent contractors to employees, their flexibility remained the same, while the company’s operational efficiency improved.

The research was presented during a culminating conference event at Northeastern, which focused on a four-year collaboration funded by the National Science Foundation to better understand algorithmically-controlled work. The event coincided with lawmakers in Massachusetts considering new regulations targeting transportation and delivery network companies like Uber, Lyft, and DoorDash.

Ozlem Ergun, a distinguished professor of mechanical and industrial engineering at Northeastern and co-author of the study, explained that the company in question reclassified its California workforce from contractors to employees in response to a change in the law in 2020. The company operates in various cities across the country and saw operational advantages in making the switch.

By analyzing operational data and conducting interviews with workers and management, the researchers compared the impact of the reclassification in California to cities outside the state where workers were still treated as independent contractors. They also compared the data from 2020 to previous years to assess the overall impact of the change.

The study’s findings suggest that transitioning gig workers to employee status can benefit both workers and platforms, with increased operational efficiency and maintained flexibility for workers. This research fills an important gap in the literature by providing data-driven assessments of the merits of treating workers as employees.

The rise of the gig economy and the challenges it presents extend across disciplines, with experts like Hilary Robinson, an associate professor of law and sociology at Northeastern, advocating for more nuanced approaches to platform regulation. The emergence of on-demand digital platforms coincided with the rise of smart devices and the 2008 financial crisis, leading to the transformation of the services sector and the economy as a whole.

In addition to the California study, Ergun and her colleagues are working on ongoing interdisciplinary research at Northeastern to optimize outcomes for all platform stakeholders. By studying the impact of reclassifying gig workers as employees, researchers are shedding light on the potential benefits of standardized employment for both workers and platforms in the gig economy.

Overall, the research presented by Northeastern highlights the potential advantages of moving away from the independent contractor model in the gig economy. By prioritizing operational efficiency and worker flexibility, standardized employment could offer a more sustainable and equitable solution for all stakeholders involved.