Workers in the “Gig Economy”: Employees or Independent Contractors?

By: Kenny Bishop, Associate, Atlanta

                The “Gig Economy” describes forms of contingent work arrangements that require digital platforms.  This name has been given to task-driven jobs, like Uber, Lyft, Thumbtack, and apps for getting groceries. When a Gig Economy worker is injured while performing a task, questions arise regarding their employment status. Is the person an employee of the individual requesting the task?  Are they an employee of who the company that owns the app?  Or are they independent contractors? Since the answer to this question can be murky, many state legislatures have been stepping in to provide clarity. 

                In 2018, six states have passed Gig Economy laws that have said that workers using portable service apps are independent contractors as opposed to employees. Those states are Indiana, Utah, Kentucky, Iowa, Tennessee and Florida. Georgia had a similar bill that passed the State House in February, but it was tabled by the Senate at the end of this year’s legislative session.  A similar bill was introduced in Alabama, but it has not yet passed either branch.

                As the Gig Economy continues to grow, Gig workers hoping for workers’ compensation coverage face an uncertain future.  Their employment status, or lack thereof, and therefore their eligibility for workers’ comp benefits is often determined by how tightly the Gig company controls their schedules and other aspects of their work.  In the California federal court case Lawson v. Grubhub Inc. et al., a judge ruled last month in favor of Chicago-based Grubhub Inc., an online and mobile food ordering company that allows users to receive deliveries from local restaurants. Raef Lawson, a former Grubhub delivery driver, alleged that he was an employee and should be compensated for unreimbursed expenses, while Grubhub argued that Mr. Lawson was an independent contractor. The judge ruled that since Grubhub did not control how Mr. Lawson made deliveries, his transportation, his appearance, or his schedule, he was considered an independent contractor. While the case centers on wage and hour issues, some experts say it is significant for the Gig Economy and the misclassification question, which could determine whether workers can receive workers’ compensation benefits. At this time, the comp industry has not engaged with the Gig Economy in any meaningful way and is mostly taking a wait-and-see approach.

                Last year, Uber Technologies Inc. began taking steps to provide a version of workers’ compensation coverage to its drivers. In some states, Uber drivers have access to an insurance program for workers injured on the job that would help pay medical bills and replace their normal earnings. The coverage would cost drivers less than four cents per mile; however, Gig Economy companies may be hesitant to provide similar coverage for their workers because it may place them in the category of Employer.

                Georgia’s bill, like those in the other six states, states it plainly: “The marketplace contractors performing services arranged through the marketplace platform’s digital network are independent contractors and are not agents or employees of the marketplace platform.”  The bill makes it clear that workers and the platform company would have to agree in writing that the worker is an independent contractor and that the platform could not unilaterally prescribe hours to be available for work and could not prohibit the worker from using other marketplace platforms. Legislators in Georgia and across the country are supporting legislation that focuses on creating a clear test for worker classification in the on-demand sector because this sector is not going away: it is the future.