The Shoe Is about to Drop for the Platform Economy: Understanding the Current Worker Classification Landscape in Preparation for a Changed World

76 Pages Posted: 18 Nov 2021 Last revised: 16 May 2022

Date Written: February 1, 2022

Abstract

Whether a worker is an independent contractor or employee is of great significance in many countries, including the United States. This label drives whether a worker is entitled to many protections and benefits, including, minimum wage, overtime, workers’ compensation, unemployment compensation, anti-discrimination protection, NLRA protection, etc. The difficulty inherent in accurately classifying workers as either independent contractors or employees cannot be overstated. First, there are so many tests spanning all levels of our government. Second, there are so many ways that people work and with the increased popularity of app-based work, classification becomes even more difficult. Simply, some of the tests have not been working well when applied to precarious app-based work. As a result, policymakers are forced to finally bring these issues to the forefront.

Worldwide policymakers and leaders are implementing changes to protect app-based workers. In the United States, the federal government is evaluating whether these changes in the workforce require changes in national labor and tax laws. While campaigning, President Biden pledged to establish a uniform worker classification test for purposes of all federal labor, employment, and tax laws. Subnational governments – states and cities – are also evaluating and making changes in their policies and laws.

In order to make these decisions, policymakers will need to be familiar with the current landscape of tests and statutes. Policymakers should evaluate the approaches that currently are being used and how they have fared so that they can decide whether to strike out with a novel test or adopt one already in use. Although prior articles have considered worker classification laws, and the benefits associated with various classification approaches, things have evolved so quickly that in some respects most of those articles are at least partially out of date. And, having all of this information in one place is critical for ease in policymaking research and deliberations.

This Article fills the current knowledge gap by providing an up-to-date compendium of the current state of worker classification laws. The Article starts with a segment on instabilities and health issues experienced by app-based workers. Then it covers the latest on worker classification laws around the world including the EU Commission's Proposed Directive. It then turns to tests that the U.S. is using, which include traditional tests and new tests from both the state and city levels. The Article explains how these tests are used and summarizes commentary about the strengths and weaknesses of each of these tests. As national, state, and local policymakers consider how best to move forward in regulating the app-based economy and its workers, they are likely to find the information in this Article useful to their deliberations.

Keywords: gig economy, sharing economy, shared economy, platform economy, worker classification, worker protections, uber, lyft, doordash, prop 22, marketplace contractor laws, handy laws, abc test, ab5, irs twenty factor test, economic realities, united kingdom, spain, rider law, deliveroo, european union

Suggested Citation

Prince, Samantha J., The Shoe Is about to Drop for the Platform Economy: Understanding the Current Worker Classification Landscape in Preparation for a Changed World (February 1, 2022). 52 University of Memphis Law Review 627, Available at SSRN: https://ssrn.com/abstract=3942057

Samantha J. Prince (Contact Author)

Penn State Dickinson Law ( email )

150 S College Street
Carlisle, PA 17013
United States

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