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  • Writer's pictureLeslie A. Farber

How the Gig Economy is Redefining the Workplace

Updated: Jul 3, 2019

​Nontraditional work arrangements - that is, employment cobbled together through multiple part-time, temporary, or freelance jobs, projects, or short-term contracts, rather than a standard 9-to-5 - have become a major part of the job economy in the U.S., with the total number of all “alternative workers” growing from 26 million to 29.7 million since 2002. “Contingent workers,” or anyone who does not work a standard full-time job, made up 40.4 percent of workers in 2010.

While these forms of employment have existed for decades, a new type - deemed “the Gig Economy” - has proliferated since the advent of smartphone technology, apps, and online marketplaces have taken over the way we consume, work, and search for labor.

The Gig Economy is a term now used to refer to both traditional “freelance” or “independent” positions as well as those which are generally both temporary and influenced by technology. Examples of online Gig Economy jobs can be driving an Uber or Lyft, deriving income from renting AirBnB spaces, or working remotely as a freelance writer - many of which provide little control over pay or other terms of work, although they offer immense flexibility regarding the hours and location of the work performed.

With this change in the structure of the American job economy has come a host of questions regarding what defines an employee, who is entitled to certain benefits traditionally provided to full-time workers, and what protections should be afforded to online and other “gig” workers.

Employees vs. Independent Contractors

U.S. labor laws effectively boil the workplace down to two different categories: employees, who are entitled to certain protections (such as the right to unionize, or minimum wage), and independent contractors, who are, for the most part, not explicitly afforded these rights.

Workers in the digital age, however, are finding themselves stuck in a gray area not anticipated by the decades-old legislation that sought to delineate the two types of work. Whereas traditional independent contractors have the ability to negotiate their contract, individuals looking to work for companies such as Lyft or Uber must accept the terms of employment as they stand, or search elsewhere for a job.

In an effort to literally redefine the workforce, policymakers have begun to call this type of employment “dependent contracting” in order to best describe a type of employment where an individual is not enlisted as an employee, yet is financially dependent entirely or mainly on one employer. Canada has already used the term in influential court cases where workers’ rights were called into question on the basis of their terms of employment.

The current quandary faced by labor regulators in the U.S. is primarily how to preserve the flexibility and profitability of these Gig Economy jobs and organizations, while supporting nontraditional employees and protecting their basic rights as workers.

The Gig Economy, Dependent Contractors, and The Law

Personal driver/on-demand taxi service Uber has recently lost several cases in which “driving partners” challenged their status as independent contractors, in favor of gaining the term “employee” and thus some of the rights that come with the protection afforded by labor laws. In one, an Uber employee was quietly granted unemployment by the California Employment Development Department, something not generally afforded to contractors of any type.

The implications of classifying its drivers as employees, rather than independent contractors, could be detrimental to Uber and other business models set up to provide opportunities for its workers to make money on a flexible schedule, but little else in terms of benefits or amenities. Classifying drivers and others who participate in this profitable sharing economy as independent contractors allows these companies to continue to avoid paying unemployment and other benefits.

It is fairly safe to say that employment law as it relates to contracts, receipt of unemployment, and the rights of workers to certain protections is in the process of undergoing massive changes. Working independently in the Gig Economy, whether for an app-based company or another online business, may no longer mean that you are at the mercy of employment terms that may violate your rights.

If you are seeking legal counsel regarding the terms of your employment, whether as a full-time employee, independent or dependent contractor, or other definition thereof, contact the Law Offices of Leslie A. Farber for a full assessment of your legal rights as an American worker.

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