There has been an explosion of application-based companies fueling the gig economy in recent years. But while these app-driven companies may entice workers with the promise of freedom and flexibility that traditional full-time jobs usually lack, they are creating an enormous workforce of people often deprived of the basic rights and benefits of traditional employees, not to mention the stability that full-time employment offers.

What is a Gig Economy?

While some people may not be familiar with the term “gig economy,” chances are everyone has heard of Uber, Lyft,, and a spectrum of other on-demand companies that offer services such as pet care, house cleaning, and grocery and meal delivery, to name just a few.

Those who provide services through these gig economy companies are generally self-employed and thus do not have access to all the benefits of traditional full-time employees. Consider Uber Freight, which is staging a revolution in the commercial trucking industry by establishing a network of self-driving tractor-trailers and short-haul truckers that can be ordered and managed from a smartphone. Many, if not most, of these Uber Freight drivers will be independent, yet they will still provide long hours on the road for Uber in much the same way as drivers who work for its original ride-hailing service.

How does this affect workers?

Often employers will classify workers as independent contractors when they are, by law, regular full-fledged employees. This practice allows companies to shed themselves of the responsibilities of providing overtime, health insurance, paid vacation and sick days, and other benefits to which traditional full-time employees are entitled.

According to the Center for American Progress, the latest estimates show that “40 percent of the American workforce is working for temporary staffing agencies, as independent contractors, or as part-time workers.” This practice allows companies to save up to 30 percent on labor costs.

Making matters worse, many gig economy workers are employed in some of the most dangerous industries. Take for instance the example of Uber Freight. Commercial truck drivers by default have one of the riskiest occupations because they spend long hours behind the wheel. Drivers who work for Uber’s ride-hailing service may also work 12-hour days on the road, without the rights and benefits that traditional taxi-cab drivers enjoy. In the case of accidents or illness, these independent contractors are on their own.

Illegally misclassifying employees as independent contractors also has a very troubling effect on the overall economy. It gives on-demand companies a sharp and unfair advantage over competitors that provide their employees with secure salaries, livable wages, and all the benefits and protections workers should have. Are gig economy companies becoming a model for other employers and setting a precedent for competitors to follow?

To some extent, the answer is yes; but the drift toward more unstable, low-wage jobs can be stemmed with rules that would both protect workers and ensure that more ethical “high-road” companies “can thrive without being undercut by those who fail to meet minimum standards for their workers,” the Center for American Progress said.

“Technology should help us improve work systems and work design, not facilitate a race to the bottom of deskilling of work and lowered wages,” one analyst told Law 360.

Communities both in the U.S. and abroad are starting to do just that. According to the Center for American Progress, “While the federal government is unlikely to act to improve conditions for gig workers in the near term, progressive state and local governments are beginning to adopt policies to provide benefits and a voice on the job for these workers.”

Individuals are also fighting back. Many workers have filed lawsuits against gig economy companies alleging that they are “contractors in name only” and “that their contracting companies do not provide sufficient independence to justify their classification as independent contractors.”

Lance Gould, Beasley Allen Attorney
Lance Gould

Lance is working on cases related to whistleblower laws and Fair Labor Standards Act.

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