The gig economy is booming and politicians continue to take notice. To that point, Senator Mark Warner (D-Virginia) just introduced legislation designed to tackle tax issues that arise for gig economy workers.
Sure, there have been some high-profile legal setbacks for gig economy businesses in the area of misclassification lately; the Dynamex case was a punch in the gut for California businesses, and the Pimlico Plumbers case is a massive headaches for our brothers and sisters across the Atlantic. But by and large, when courts in the States are called upon to apply the standard “right to control” test in misclassification cases involving the gig economy, businesses have come out on top. And that’s exactly what happened late last week in New York as a state appellate court ruled in favor of independent contractor status for a former Postmates driver.
When are gig workers not independent contractors? A case decided earlier this month by Britain’s highest court may help to answer that question.
It’s impossible to ignore the reverberations that continue to shake the business landscape after the landmark April 30 Dynamex ruling introduced the notorious ABC test to the California gig economy industry. For those living under a rock the past few months, the ABC test adopted by the California Supreme Court now forces businesses to prove that each and every worker satisfies all three elements of the ABC test in order to properly classify them as independent contractors: (A) that the worker is free from the control and direction of the hirer in connection with the performance of the work; (B) that the worker performs work that is outside the usual course of the hiring entity’s business; and (C) that the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity. Given the significant difficulty a gig economy business would have in meeting this test for each and every of its workers, it has caused a seismic shift in the way gig companies structure the relationship with their workers.
It’s a small step, but at least it’s progress. Federal regulators made it easier this week for gig workers to obtain health insurance on a more cost-effective basis, which should help to shore up the ranks of gig workers and make freelance work a more attractive option for a larger pool of talent.
When considering the place of unions in the gig economy, many jump to the conclusion that the National Labor Relations Act does not apply because gig workers are usually independent contractors. While it is true that the NLRA does not apply to independent contractors, businesses should not discount the ability of gig workers to find ways to bargain for certain working conditions and get similar protections.
Worker misclassification is one of the biggest issues facing businesses in the gig space and elsewhere. As the demand for gig workers increases, businesses are thinking of creative ways to hire and retain great talent. Independent contractors are increasingly becoming savvier, too, and are using their collective power to push employers for benefits traditionally reserved for W2 employees. So, what is a business to do? Well, one company is offering traditional benefits to untraditional gig workers.
Is there nowhere that the gig economy can’t go? As gig workers expand into increasingly unlikely industries—including restaurants, hospitality, beauty, healthcare, and even science—it comes as no surprise that retail wants in on the action. Would-be retail workers are gaining access to open shifts in storefronts through companies like Snag Work, which offers an on-demand platform that connects workers with open shifts for sales, stocker, cashier, customer service positions, and other roles. Although Snag Work is only in a few cities on the east coast so far, companies like it are already cropping up across the country.
Traditional employers are continuing to discover that they can benefit from the gig economy through the utilization of external platforms to hire contract workers. Sometimes companies are caught off-guard by a sudden uptick in demand or an employee resignation and suffer from the detailed and drawn out process of hiring a long-term employee. Employers are increasingly eliminating staffing lag time by relying upon gig platforms to efficiently hire and onboard workers for short-term needs during peak demand cycles.
Headlines from mainstream news outlets are reporting that today’s Labor Department report on Contingent and Alternative Employment Arrangements shows that the gig economy is shrinking. “The gig economy is actually smaller than it used to be,” says Marketwatch. From the Washington Post: “There’s a smaller share of workers in the gig economy today than before Uber existed.” From the Los Angeles Times: “Share of Americans working as independent contractors dips.” And most dramatically from Quartz Media: “Everything we thought we knew about the gig economy is wrong.”