US labor law divides workers into “employees,” who are entitled to coverage under certain laws such as workers’ compensation, overtime, and the right to organize, and “independent contractors” who are entitled to coverage. are not covered by these laws.
But a variety of jobs in what is sometimes called the âgig economyâ don’t fit perfectly into either category. Someone who drives regularly for Uber, and thus makes their availability known through Uber’s computer system, follows the pricing and service guidelines set by Uber, and participates in Uber’s various rating systems, doesn’t seem quite right. makes you an “independent contractor”. âBut given that this worker is essentially free to set their own hours and is not supervised by a supervisor, that doesn’t sound like a standard employer-employee relationship, either.
Rather than taking the round peg / square hole approach and trying to classify jobs in the odd-job economy as âemployeesâ or âindependent contractorsâ, it may be more useful to think about creating a category additional legal. Seth D. Harris and Alan B. Krueger offer some interesting thoughts on the self-employed. They propose a third legal category, which they call the âindependent workerâ, to fall between the legal categories of employees and independent contractors. (By the way, it seems to me that there must be another name for this group that would more clearly differentiate them from âindependent contractors.â I love âgig workersâ myself, but I am open to suggestions.)
Harris and Krueger point out that the current legal standard for distinguishing between “employees” and “independent contractors” involves nine different distinctions – and these distinctions are made in different ways in the Fair Labor Standards Act, the Employee Retirement Income Security Act (ERISA ), in tax law and in various court decisions concerning all of the above. The nine distinctions are:
âRole of work: is the work performed an integral part of the employer’s business?
Skills involved: doesn’t the job necessarily depend on particular skills?
Investment: Does the employer provide the necessary tools and / or equipment and does he bear the risk of losing these investments?
Independent business judgment: Did the worker withdraw from the competitive market to work for the employer?
Duration: Does the worker have a permanent or indefinite relationship with the employer?
Control: does the employer set the amount of remuneration, the working hours and the way in which what work is done?
Benefits: Does the worker have insurance, a pension plan, sick leave or other benefits suggesting an employment relationship?
Method of payment: does the worker receive a salary or a guaranteed salary as opposed to remuneration per task?
Intent: Do the parties believe they have created an employer-employee relationship? “
It is not difficult to imagine various labor and compensation relationships that transcend these distinctions in various ways. For example, in Canada there is a third category of ‘dependent entrepreneurs’, who are entrepreneurs who derive 80% of their income from a single business and therefore have access to some of the standard legal protections for employees. , but not all.
Harris and Krueger define their proposed legal category of âself-employedâ as follows:
âSelf-employed people operate in a triangular relationship: they provide services to identified clients through intermediaries. Intermediaries create a communication channel, usually an âappâ that customers use to identify themselves as needing a service, such as a car. transportation, landscaping or food delivery services (an intermediary does not need to use the internet to match freelancers and clients …) … the intermediary does not assign the client the self-employed; rather, the self-employed person chooses or refuses to serve the client (sometimes within broadly defined limits). However, the intermediary may set certain threshold requirements for self-employed persons eligible to use their app, such as criminal background checks. The intermediary can also set the price (or at least an upper limit of the price) for the service provided by the self-employed through its app. But the intermediary has no additional control over how and whether a particular self-employed person will serve a particular client. The intermediary is usually rewarded for his services with a predetermined percentage of the fees paid by the client to the self-employed person. … The self-employed person chooses when and if they want to work. The relationship can be fleeting, occasional or constant, at the discretion of the self-employed person. “
They estimate that there are about 600,000 “self-employed”, or about 0.4% of employment in the United States, working with online intermediaries. in the concert economy. This number appears to be increasing rapidly. They also mention a number of existing jobs that do not work through online apps but seem to share many traits of ‘freelance workers‘ and discuss the number of traditional taxi drivers (as opposed to Uber and Lyft drivers), temporary drivers employees of recruiting agencies, contractors, members who obtain jobs through union hiring offices, outside sales employees and (perhaps) direct sales employees occupy the points of sale. triangle with other economic players. “
Here’s a brief summary (with more discussion in the paper) of Harris-Krueger’s proposal for how âself-employed peopleâ would be treated under the law:
In our proposal, the self-employed – whether working through an online or offline intermediary – would be eligible for many, but not all, of the benefits and protections that employees enjoy, including freedom to organize and collective bargaining, the protection of civil rights, withholding taxes and employer contributions for social charges. Since it is conceptually impossible to assign their working hours to a single intermediary, the self-employed would not, however, be eligible for hour-based benefits, including overtime or minimum wage requirements. In addition, since the self-employed would rarely, if ever, qualify for unemployment insurance benefits given the discretion they have to choose to work through an intermediary, they would not be covered by program or would not be required to pay taxes to fund that program. However, intermediaries would be allowed to pool self-employed workers for the purpose of purchasing and providing cheaper and better insurance and other benefits without risking their relationship to turn into an employment relationship.
Like any compromise choice, a new legal category like the Harris-Krueger proposal for âself-employed workersâ is going to be somewhat unpopular with many parties. Many companies would prefer to treat their workers together as independent contractors, to whom they have no additional legal responsibilities. Some concert workers would prefer to have both their existing freedom of action, but also the legal protections of employees. To resolve these issues, we can either take the full employment approach for lawyers and advocate the issues over and over again in each new context in which they arise – an approach that is already underway – or we can settle for a compromise position. I have no firm opinion on whether the Harris-Krueger proposal for the legal status of “self-employed” is the right compromise. But that almost certainly beats the choking of the gig economy under paperwork and legal briefs.