The Use of AI in Legal Systems: Determining Independent Contractor vs. Employee Status

Abstract

The use of artificial intelligence (AI) to aid legal decision making has become prominent. This paper investigates the use of AI in a critical issue in employment law, the determination of a worker's status---employee vs. independent contractor---in two common law countries (the U.S. and Canada). This legal question has been a contentious labor issue insofar as independent contractors are not eligible for the same benefits as employees. It has become an important societal issue due to the ubiquity of the gig economy and the recent disruptions in employment arrangements. To address this problem, we collected, annotated, and structured the data for all Canadian and Californian court cases related to this legal question between 2002 and 2021, resulting in 538 Canadian cases and 217 U.S. cases. In contrast to legal literature focusing on complex and correlated characteristics of the employment relationship, our statistical analyses of the data show very strong correlations between the worker's status and a small subset of quantifiable characteristics of the employment relationship. In fact, despite the variety of situations in the case law, we show that simple, off-the-shelf AI models classify the cases with an out-of-sample accuracy of more than 90%. Interestingly, the analysis of misclassified cases reveals consistent misclassification patterns by most algorithms. Legal analyses of these cases led us to identify how equity is ensured by judges in ambiguous situations. Finally, our findings have practical implications for access to legal advice and justice. We deployed our AI model via the open-access platform, MyOpenCourt.org, to help users answer employment legal questions. This platform has already assisted many Canadian users, and we hope it will help democratize access to legal advice to large crowds.

Keywords: Employment Law, Artificial Intelligence, Predictive Models, Decision-Support Legal Systems