Equality and Independence in the Gig Economy

The regulatory fight over gig worker classification has been a contentious issue that has entered a new phase. Businesses in the gig economy are facing questions about what they owe the workers they rely on. Next month, the U.S. Department of Labor is expected to provide a new rule addressing this question, but there is intense disagreement over what the “right” answer should be.

In 2021, the Trump Administration issued a new rule restricting who qualifies as an employee. Although the Labor Department attempted to rescind those rules after President Joe R. Biden took office, a federal court allowed the changes to take effect. Last year, the Labor Department proposed a new rule that would broaden who qualifies as an employee, with expectations for the rule to be finalized next month.

Under current U.S. employment law, workers are generally classified as either employees or independent contractors. This distinction became relevant during the New Deal era when legislation such as the National Labor Relations Act and the Fair Labor Standards Act established workers’ rights to minimum wages, benefits, and collective bargaining. However, the rules implemented by the Trump Administration still do not provide wage and hour protections to most independent contractors under the FLSA.

The number of gig workers, or workers not classified as “employees,” has grown substantially in recent years. Studies have shown that a significant portion of American workers engage in gig work, with major companies increasingly relying on freelance contract workers. However, there is a divide among commentators on how well the gig economy serves workers.

Proponents of classifying gig workers as independent contractors argue that it benefits both workers and employers by increasing work flexibility and saving money on labor costs. They also suggest that most gig workers simply want to supplement their primary income. On the other hand, critics argue that averaging wages among gig workers can conceal substantial differences, with some workers earning significantly less than others.

Observers who support classifying gig workers as employees argue that the current paradigm deprives some workers of control over their work lives and discourages the growth of gig economy companies. Some scholars have called for establishing new categories of employment, while others suggest looking to foreign jurisdictions for guidance on regulation.

In recent scholarly articles, experts have proposed various solutions to the challenges posed by gig worker classification. Some argue for extending employment and labor protections to all workers classified as “non-employees,” while others suggest adopting a hybrid employment model based on the sports and entertainment industries. Researchers have also raised concerns about algorithmic wage discrimination and the potential for gig workers to be subject to forced labor.

Overall, the debate over gig worker classification is complex and multifaceted, with significant economic implications. As regulators continue to grapple with this issue, it is essential to consider the diverse perspectives and potential solutions put forth by experts in the field.