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A Structural-Purposive Interpretation of 'Employment' in the Platform Economy

53 Pages Posted: 3 Apr 2017 Last revised: 19 Sep 2017

E. Gary Spitko

Santa Clara University - School of Law

Date Written: April 2, 2017

Abstract

The considerable growth of the platform economy has focused attention on the issue of whether a provider who is engaged through a transaction platform should be classified as an employee of the platform operator within the purview of workplace protective legislation or, rather, as an independent contractor outside the scope of such legislation’s protections. This Article focuses specifically on whether the operator’s reservation of the right to impose quality control standards on the provider ought to give rise to employment obligations running in favor of the provider and against the operator. This narrow issue is of great importance to the future of the platform economy. Quality control standards promote trust between platform consumer and provider and, thus, enable leveraging of network effects, to the benefit of the platform operator, consumer and provider. Yet, if the law considers the operator’s right to impose quality control standards on the provider as a factor that will weigh in favor of finding that the provider is an employee of the operator, the operator is more likely to forego the right to impose such standards.

With respect to much workplace protective legislation, neither the statutory language nor the legislative history is even minimally helpful in defining “employment.” Thus, this Article engages in a structural-purposive inquiry into the definition of employment as applied to the platform economy. The analysis proceeds in three steps. First, the Article explores the structure of workplace protective legislation generally and identifies a “control bargain” implicit in that structure pursuant to which the state imposes a scheme of workplace protective regulation on the firm only if the firm retains a certain type and degree of control over its worker. Second, the Article examines the nature of the platform economy and the function of quality control standards within that economy. From this examination, the Article concludes that the nature of the platform economy suggests that the platform operator’s retention of the right to impose quality control standards on providers should be seen as outside the scope of the control bargain and, therefore, should not weigh in favor of finding an employment relationship. Finally, the Article considers case law addressing the meaning of employment in the similar context of the franchisor-franchisee relationship. This case law supports the Article’s principal conclusion by demonstrating that the control bargain allows for exceptions to the rule that the firm’s retention of control over a worker weighs in favor of finding that the firm employs the worker, that the firm’s reservation of the right to impose quality control standards can be such an exception, and that such an exception can be discerned from the nature of the relevant workplace structures.

Keywords: platform economy, gig economy, sharing economy, Uber, worker classification, employer, employee, independent contractor, quality control standards, code of conduct

JEL Classification: J83, J71, J41

Suggested Citation

Spitko, E. Gary, A Structural-Purposive Interpretation of 'Employment' in the Platform Economy (April 2, 2017). Florida Law Review, Vol. 70, 2018; Santa Clara Univ. Legal Studies Research Paper No. 6-17. Available at SSRN: https://ssrn.com/abstract=2945130

E. Gary Spitko (Contact Author)

Santa Clara University - School of Law ( email )

500 El Camino Real
Santa Clara, CA 95053
United States
408-551-1771 (Phone)

HOME PAGE: http://www.scu.edu/law/FacWebPage/Spitko/

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