If you work in the gig economy—picking up passengers, delivering packages, or dropping off groceries or take-out food, for example— you are most likely classified as an independent contractor rather than an employee. On the plus side, this classification means you can work when you want, taking or turning down jobs as it suits your schedule. Feel like earning some extra money? Open an app, accept a gig, and step on the gas. Need a few hours or days off? Just check in when you’re ready to work again.
A lot of gig drivers like this freedom—but it comes with significant downsides. Unlike employees, independent contractors aren’t covered by workers’ compensation if they get hurt on the job. Nor do they get unemployment benefits if they are let go. And the companies that hire them don’t have to pay a share of their Social Security and Medicare taxes, as they do for employees. Contractors are not protected by laws that prohibit workplace harassment and discrimination or regulate health and safety. They can’t join unions. And they aren’t protected by wage and hour laws, which guarantee employees the minimum wage and overtime pay.
Gig Workers Fighting for Employment Rights
The law gives employees more benefits because it presumes that they are more dependent on their employers. On the other hand, a traditional independent contractor—like a painter, electrician, or website designer—works for different companies, performing specialized tasks only as needed. Typically, contractors have the right and responsibility to:
- dictate their own terms, such as pricing and scheduling
- control how and when to do the work
- hire their own employees
- carry their own insurance, and
- handle their own taxes.
Against this backdrop, it’s easy to see why Uber and Lyft drivers, along with other gig workers, believe they should be classified as employees, rather than contractors. Ride-sharing companies like Uber and Lyft, for example, determine almost every aspect of their drivers’ work, including what they can charge, the cars they can drive, the app they must use, and much more. Drivers have relied on these facts to file lawsuits claiming that they are employees, entitled to organize unions, earn the minimum wage and overtime, and claim unemployment benefits.
Government Opinions Are Mixed
So far, government agencies and courts have mixed opinions on whether gig workers are employees or contractors. Under President Trump, federal agencies (including the Department of Labor and the National Labor Relations Board) have issued opinions finding that gig workers are independent contractors; these opinions overruled earlier guidance from the Obama administration on worker classification.
However, some courts have sided with the workers. In 2018, for example, the California Supreme Court decided that drivers for Dynamex Operations West, a document delivery company, were employees rather than contractors. The Court relied on the ABC test, which considers workers contractors only if all of the following are true:
(A) They are free from the control and direction of the hiring company in performing the work, both in contract and in fact.
(B) They perform work outside the usual course of the hiring company’s business.
© They are customarily engaged in an independently established trade, business, or occupation of the type they perform for the hiring company.
Gig drivers will rarely pass part (B) of the test; the company’s businesses are driving and deliveries, which is precisely what the drivers do. The California legislature plans to codify this holding, which would make many California gig workers employees. We’ll have to see whether other states follow suit.
To learn more about rights and protections for workers, see Legal Consumer’s wage and hour law learning center.