The use of gig economy platforms (such as Uber, Doordash, and Fiverr) has grown at an explosive rate. Torts and employment disputes arising during gig economy transactions are becoming a regular occurrence. In this episode Zachary Pyers and Taylor Wade will discuss the following questions:
Visit our website for information about our legal services related to emerging technologies.
The use of gig economy platforms (such as Uber, Doordash, and Fiverr) has grown at an explosive rate. Torts and employment disputes arising during gig economy transactions are becoming a regular occurrence. In this episode Zachary Pyers and Taylor Wade will discuss the following questions:
Visit our website for information about our legal services related to emerging technologies.
ZBP Zachary B. Pyers, Esq.
TW Taylor Wade, law clerk
AH Amari Helm of Law and Leadership Institute
ZBP
Welcome to another special edition of the Reminger Report Podcast on Emerging Technologies. We are fortunate today to again be having a special law clerk/intern edition of the Reminger Report Podcast. We have our law clerk who has been with us for the summer, Taylor, joining us who’s going to be discussing some of her research and work she’s been doing over the summer, and we also have one of our interns through the Law and Leadership Institute, Amari, who is also joining us here today, so thank you both for joining us. If you would, could you both just introduce yourselves to our audience just briefly.
AH
I’m Amari Helm. I’m a tenth grader at the Law and Leadership Institute, and basically LLI is a summer program for high schoolers to learn about court systems and laws and rights that apply to them.
ZBP
Great. Thank you. You know, I was going to ask you what the Law and Leadership Institute was just so our viewers could know, but you already answered the question, so thanks. Taylor, if you would, just tell our audience a little bit about yourself.
TW
Yeah, absolutely, and my name is Taylor Wade. I am a rising 3L at The Ohio State University Moritz College of Law. I started working here at Reminger as a law clerk about a month or two ago, so I’ve been able to learn a lot from all of the attorneys here.
ZBP
Great, well we’re happy to have you both here today to discuss that with us, and Taylor, some of the research you’ve been doing, and I’ll give it context just for the overall discussion, is related to kind of a comparative analysis of gig economy workers and worker classifications. Here in the United States, you know we have traditionally like a dichotomy between independent contractors and employees, but you’ve been researching how the gig economy is changing that in the United States and then also comparing it to how other countries address this, the employment situation and the status of their workers. Is that kind of a fair summary?
TW
Yeah, absolutely.
ZBP
Well, we are, we’re excited to be discussing this with you, and one of the things I wanted to talk about, and I know that we’ve discussed this at length on the, on this podcast, is the gig economy, right, people, we, we’ve talked about it with different guests and hosts and, but if you could, just give us just a really brief kind of definition of when we talk about gig economy especially in the context of our discussion here today, what is it?
TW
Yeah, absolutely. I found a great definition that it’s characterized by flexible, temporary or freelance jobs, often involving connecting with clients or customers through an online platform, so this can include ride hailing services, food delivery services, freelance writing, graphic design, there’s a variety of services, and this offers individuals the opportunity to work on demand. They can have flexibility in choosing these jobs and working hours, and so now the economy, because of this prevalence of this type of work, it can really be more fairly defined as this gig economy.
ZBP
Thank you.
AH
And how does worker classification affect employment law and tort law?
TW
Yeah, absolutely. The classification of workers like Zach mentioned between employees and important contractors is very important especially to those legal protections that are offered to these workers, and then at times, employees can also be misclassified, and this will have an effect on their employment and tort liability, so employers are incentivized to misclassify workers to avoid tax requirements - paying higher wages, providing benefits, minimum wage, things like that - but also avoiding tort liability is another reason that employers may misclassify their employees because under tort law, a business can be held vicariously liable for the independent contractor turned employee’s tort through the doctrine of vicarious liability. Employers are liable for the actions of employees if they’re acting within their employment role, but they are not liable for the actions of independent contractors, so mostly businesses are not liable for the actions of their gig economy workers.
ZBP
Now, we talk about the gig economy. We’ve seen kind of a rise of this in the last decade or so. Why are so many workers becoming gig economy workers?
TW
Yeah, there is a wide variety of reasons. I think a big one is the technological advancements we’ve seen in the past so many years. Internet and digital platforms have really facilitated this growth of gig work, so now customers are able to connect with these workers instantaneously. Individuals are able to offer their skills in a convenient, inexpensive and accessible manner and companies are therefore able to hire people for these roles, so potential gig economy workers have a lot more open positions now than before, and also companies can find workers, workers can find jobs, and it has been a kind of supply and demand idea as well. Workers want flexible hours, they want independence. I think this was especially shown through the pandemic when there were so many people working at home. Workers and companies saw just how many jobs could be from home. I think people really liked the flexibility of that, and there’s also many workers that have been laid off after the pandemic. There’s economic downturns, technological advancements that may have replaced their jobs, so many workers are finding that even gig economy work is just as reliable as a permanent position that they may have had before. In addition, companies are offering less permanent positions, and they’re hiring more independent contractors, gig economy workers. This is mostly due to not having to pay the expenses that come with having a full-time employee, and some workers are saying that they’re moving towards gig work as a necessity not by choice.
AH
Okay, and why are these kinds of workers __________?
TW
Yeah, absolutely. There’s been a lor of concerns with these gig economy workers regarding things like worker protections, job security, access to benefits. Again, many of these gig economy workers are classified as independent contractors, so they do not have the rights and protections that are usually afforded to employees like minimum wage, overtime, paid sick leave and things like that. In addition, gig economy workers often face irregular income streams and financial uncertainty, so fluctuating demand, competition, they might not have stable income. Also, traditional employment benefits like health insurance, retirement plans, paid time off are typically not provided to gig economy workers. The responsibility for these falls on the individuals themselves as well. Gig economy workers operate in a environment without any sort of protections. It can be very dangerous at times. In addition, they lack any sort of collective bargaining power due to how many of them are so dispersed and fragmented, so this can even make it more difficult for them to negotiate for better pay, working conditions or anything else of that nature.
ZBP
And if you could, can you kind of explain to us how other potential states here in the United States but other countries as well are kind of handling or extending more worker rights in the gig economy?
TW
Yeah, absolutely. I think as we’ve seen, there’s a lot of issues that are facing these types of workers so there are a few states and countries that have attempted to give these gig economy workers more rights and protections. California and Washington are a few states, and then also the United Kingdom has taken action as well. So, in California, in 2009. Assembly Bill 5 was passed to address worker misclassifications including the gig economy. This presumed that workers were employees unless they met specific criteria to be independent contractors, so this was the codification of the 2018 case, the Dynamex case, and this set out the ABC test. It’s very similar to the economic realities test that has historically been used in the United States. The ABC test specifically states that (a) the individual is free from direction and control applicable both under the contract for the performance of service and in fact; (b) the service is performed outside the usual course of business of the employer; and (c) the individual is customarily engaged in an independently established trade, occupation, profession or business of the same nature as that involved in the service performed. So this created a lot of gig economy workers to be covered as employees, so companies like Uber and Lyft did not like this. They opposed AB5, and so they, along with other of these companies, funded a successful ballot initiative called Proposition 22. This was in 2020. It specifically addressed this classification of app-based rideshare and delivery drivers, and this allowed these workers to remain classified as independent contractors rather than employees. As independent contractors, they were able to still have their flexibility and their independence, but it also allowed them to have certain benefits and protections which are typically associated with employees. So under Proposition 22, rideshare and delivery companies were required to provide drivers with a guaranteed minimum earning level, healthcare subsidies for those working over a certain number of hours and compensation for job-related injuries. Supporters said that this is going to preserve flexibility for drivers and also give them some level of protection and benefits, but opponents are stating that this undermined labor rights and this is going to allow the gig economy companies to avoid providing any of these employee benefits and protections. Ultimately, under Proposition 22 is that a third category of worker now for app-based rideshare and delivery drivers to give some of the rights with employees but not all of them. In addition, Washington has created its own sort of approach to this, so typically in Washington all workers are covered as employees unless they meet very strict exemption definitions. Those who meet one of the exemptions will be classified as an independent contractor. First, the personal labor test is used, and if it fails, the 6-part and 7-part tests will be applied. So under the personal labor test, a worker is an independent contractor if they bring their own employees to perform the work or they bring heavy or costly specialized equipment and their expertise to operate it. If a worker does not pass this test, they are subject to the 6-part and 7-part tests, and under these tests, a worker is only an independent contractor if all of those statements are true, 7 if it’s a construction, and these statements are very similar to other employment classification tests dealing with control. Also in Washington state, they have specifically laid out guideposts for how to address these gig economy workers. So Washington state has stated “A worker accessing work from the app-based platform that your business runs is not automatically exempt from coverage. Oftentimes app-based workers are subject to significant forms of direction and control from the employer including full control of the pay rate, ability to withhold pay, instruction on how to complete services and the right to take punitive action based on customer evaluations. Being able to set their own schedule, using their own tools or even having a business license is not enough for a worker to be exempt from coverage. The worker must also be completely free from direction and control and pass all other exemption requirements.” As an employer of app-based workers, it’s important to understand these things. In 2023, the Washington Engrossed Substitute House Bill 2076 went into effect. This creates a set of minimum benefits for rideshare drivers. This ensures things like minimum per-trip payments, paid sick leave, Workers’ Compensation and discrimination and termination protections for the rideshare drivers. They’re also protected from retaliation from employers for exercising their legal rights, something these workers have historically been exposed to, and the paid sick leave is accrued at roughly the same rate as a typical full-time employee, so these protections are really aimed at ensuring that these gig economy workers receive fair compensation, appropriate rest rates, reimbursement and protections. And as well, in the United Kingdom, the United Kingdom separates their workers into three classifications unlike the United States where we have two, so they have employees, workers and independent contractors. So the UK defines an employee as someone who works under an employment contract while a worker is defined by a list of factors. Workers have more protections than an independent contractor but less than an employee. All workers and employees are entitled to minimum wage, maximum working week hours, paid holidays, mandatory breaks, whistleblower protections and discrimination protections, but they are not entitled to all of the rights that employees are. The test to classify employees from independent contractors is very similar to the United States. Employees are supervised and directed by an employer while independent contractors have more of their own control over their own work, and then workers. So workers are the third classification, and someone is considered a worker in the United Kingdom if they are not self-employed, they have a contract to work for a business that is their formal and actual employer; they perform work casually or irregularly for a business but are still on the payroll and have their taxes deducted from their paycheck; the work is non-, the work has to be done by them and directed by a manager at the company; the employer is not required to give the employer work. I’m sorry, the employer is not required to give the worker work and the worker is not required to accept the work; the worker is entitled to some benefits and protection such as minimum wage and paid holiday leave. In 2016, the Supreme Court of the United States held that Uber drivers should be classified as workers and not independent contractors. In Uber BV v. Aslam, before getting to the crux of the case, the Supreme Court had to answer a preliminary question - whether the Uber drivers were workers or independent contractors. They ruled that Uber drivers should be classified as workers. They emphasized the level of control that Uber exercises over their drivers and the drivers’ dependence on the platform, so as workers, Uber drivers in the UK became entitled to certain employment rights such as the national minimum wage, holiday pay and rest breaks. So just in sum, there’s obviously a lot of issues that are facing these gig economy workers. There’s a lot of changes going on to our economy and the workforce right now, so the United States could possibly benefit from utilizing a three-category employment classification similar to the United Kingdom or California. This can strike a balance between certain benefits and protections to gig economy workers while still allowing them to have that flexibility and reducing liability for employers as well, so it’s just important that whatever classification system that we implement, we want to carefully consider the interests of everyone, including workers, businesses and the overall economy.
ZBP
Great. Taylor, thank you, and Amari, thank you for co-hosting this episode with me. We greatly appreciate you guys participating, and make sure you listen to the rest of our episodes. Thank you.
TW
Thank you so much, Zach.