Moving Beyond the Gig Economy: The Case for the Independent Worker

Workers in our growing gig economy are stuck in a regulatory grey area where they fit neither the standard legal definition of employee nor that of independent contractor. They don’t work for any specific employer; instead, they perform on-demand tasks for consumers of short duration (i.e., “a gig”), either hired directly or through a third party intermediary. In effect, gig workers work for themselves. The most well-known intermediaries today are online: ride-sharing apps Uber and Lyft, the taxi app Curb, or food delivery service GrubHub. Sign up to be an Uber driver and you can make money on-demand and on your schedule—without the ties that normally bind employees. In between rides, Uber drivers aren’t on call and don’t have to give up other jobs in order to work gigs.

The Trade-Off

Intermediaries’ (Uber, Lyft, GrubHub et al) success rests on workers accepting more gigs more often, since most collect a percentage on each fare or fee. Yet gig workers face a trade-off as they engage more heavily with intermediaries. Since they don’t fit the category of employee, they aren’t protected by anti-discrimination laws and don’t qualify for benefits accorded to that status. They also can’t enter into customer agreements or negotiate their own rates. The result is a quiet violation of the social contract that’s been in place in the U.S. since the early 20th century. Namely, workers are willing to give up their time and some of their freedom in exchange for fair wages, treatment, and equal opportunities.

Enter the Independent Worker

This lack of clarity for workers also hurts the growth of intermediaries like Uber, who is facing federal class action lawsuits from drivers who allege the company is acting like an employer when it penalizes them for turning off the app or not picking up enough rides in a specified time period. Unfortunately, companies have only two options for classifying gig workers and neither fits. The most common sense solution? Differentiate a new, third category of employment: the independent worker. The idea, according to a 2015 discussion paper by The Hamilton Project, is to create an independent worker status that’s neutral compared to employee status—offering gig workers many of the same protections and benefits, while allowing intermediaries to pool workers to lower the costs of purchasing or providing insurance or other benefits without risking the relationship turning into that of employer/employee.

Fast forward into the future of the independent worker by joining eCornell for a live online roundtable discussion on September 18, 2017 with Seth Harris, former Deputy Secretary for the U.S. Department of Labor and co-author of The Hamilton Project paper “A Proposal for Modernizing Labor Laws for Twenty-First-Century Work: The “Independent Worker,” alongside his Cornell University colleagues and experts in employment law. This webcast is included in a subscription to eCornell’s Human Resources WebSeries Channel, bringing Cornell’s expertise live and on-demand to HR professionals.