Introduction
'Gig' was a word mostly used in the entertainment industry to express temporary/incidental employment. Gig economy can be defined as the ex ante specified, paid tasks carried out by independent contractor (or workers? or employees?) and is still small but expected to grow. The growth has accelerated since COVID-19 pandemic mostly via online platforms that mediate flexible labor, so much so that "platform economy" has become a common term as well. Most popular platforms are Uber, AirBnb, Glovo, Deliveroo, TaskRabbit, Didi. Though it has been subject to interest of scholars, unions and policymakers, there is not an agreed conceptualization and uniform framework. 1
With this article series, we will try to shed some light on one of the grey areas of gig economy: supply of the labor. Does the supply of labor concern independent contractors or employees? Or should a third category be considered for those work in gig economy. Since certain boundaries could not be drawn when needed, the policies and regulations have fallen behind court decisions.
Legal Debates, Most Recent Legislation and Court Decisions
Globally, the legal status of gig workers and question of whether they should be classified as employees are the most heated debates of gig economy. Because the result of such classification will have direct effect on rights/obligations of workers e.g., minimum wage, health care, annual leave, overtime pay, retirement plans, adherence to health and safety workplace requirements etc.
While gig workers fight to be classified as employees, or at the very least to benefit from same rights, gig economy entrepreneurs stand firm against the idea justifying that main value of gig economy lies with its independent agents2. Considering the economic advantages they stand to gain if their workers are classified as independent contractors, it is easy to emphasize with their stand3.
However, such advantages bring together danger of worker mistreatment. Regardless of what both sides claim, relationship of subordination seems to be considered main criteria for classification by courts. In this series of four articles, legal status of gig workers in different jurisdiction regions will be studied in the order below:
-California Labor Law, Especially AB5 and Uber initiative Prop.22
-UK Supreme Court Decision Regarding Uber Drivers
-the EU Regulations and Developments in Turkey
California Legislation, AB5 and Uber
According to U.S. employment law one can be either an employee or an independent contractor, there is no in-between. The distinction depends on the amount of control the employer has over workers and if once classified as an employee, one can benefit from protections projected by Fair Labor Standards Act, National Labor Relations Act and Family and Medical Leave Act4.
On September 18, 2019 in California Assembly Bill 5 ("AB 5") was passed. AB 5 seeks to apply labor law protections to a wider group such as freelancers in gig economy. It establishes a set of rules and those who pass these criteria are regarded as employees, thus need protection and shall have rights same as employees such as minimum wage, holidays, health care etc.
Proposition 22 ("Prop. 22") was campaigned by UBER with two other companies and passed with support of %58 of voters in California last year. Prop. 22, also known as most expensive campaign with 200 million dollars, states that UBER, Lyft and Doordash are exempted from AB 5.
UBER, claiming that such approach would harm gig economy businesses irrevocably, affect costs in customer level, wrote up a proposition with Lyft and other companies in order to be exempted from AB 5. They went as far as to threaten the voters with leaving the country. A study in Australia shows that Uber could be right about cost issue. The study examines a set of data and asks if consumers would pay to improve worker' conditions. The results is a bit disappointing because while a significant proportion was willing to more, most consumers prioritized price5. The approvement of Prop. 22 means that app-based drivers will be treated as independent contractors rather than employees.
However, drivers and the Service Employees International Union ("union") filed a suit in the California Supreme Court alleging that Prop. 22 was unconstitutional. California Supreme Court denied the petition while stating a lower court lawsuit could be filled. On February 11, 2021 the union filed a suit in Alameda County Superior Court alleging that the gig-company founded ballot measure violates state constitution, ignores worker rights.
What does it mean for employers in the U.S. and what should be done?
We strongly believe capitalism should never have such a direct effect on legal institutions especially when vulnerable group of people, such as workers are at risk. Regardless of our opinion, it is in employers' best interests to be prepared for any and all results of appeal decision. Such preparation should be mainly consisted of finding common ground. We believe that could either happen with providing certain rights for gig workers or asserting less control over workers and giving way to freelancing as it was intended in the very beginning.
Footnotes
1. Conceptualizing the Gig Economy and Its Regulatory Problems; Nikos Koutsimpogiorgos, Jaap van Slageren, Andrea M. Herrmann, and Koen Frenken
2. The gig economy in the UK: a regional persptective; Geraint Johnes; Journal of Global Responsibility, Bol.10 No:3, 2019.
3. Killing the Goose That Laid Golden Egg: Outdated Employment Laws Are Destroying the Gig Economy; Emily C. Atmore, Minnesota Law Review
4. Accountability for Employers or Independence for Contractors? Accomplishing AB5's Labor Classification Goals in the Gig Economy; Chelsea Rauch, Seattle University Law Review, Vol. 44)
5. Consumer "app-etite" for worker' rights in the Australian 2gig2 economy; Brett Smith, Caleb Goods, Tom Barrett, Alex Veen, Journal of Choice Modelling 38 (2021)
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
