“Dependent Contractors” In the Gig Economy: A Comparative Approach

Summary

In recent years, lawsuits alleging the misclassification of workers as “independent contractors” rather than “employees” have become widespread in the United States. Determining employee status is important because such status is a gateway to many substantive legal rights. In response, some commentators have proposed an in-between hybrid category just for the gig economy. However, such an intermediate category is not new. In fact, it has existed in many countries for decades, producing successful results in some and misadventure in others. We use a comparative approach to analyze the experiences of Canada, Italy, and Spain with the intermediate category. In Italy, the quasi-subordinate category created an opportunity for arbitrage that resulted in less worker protection. The end result was confusion, and since 2015, the third category’s use has been extremely limited. Spain’s third category, the TRADE, was only made available to a small percentage of self employed workers because of the burdensome nature of its regulations and the high dependency threshold required for inclusion. As for Canada, the practical result of the “dependent contractor” category was to expand the definition of employee and to bring more workers under the ambit of labor law protection. We ultimately conclude that workable proposals for a third category must also encompass other forms of precarious employment. Working within the existing framework, one solution would be to change the default presumptions regarding the two categories that already exist. Above a minimum threshold of hours worked or income earned, the default rule would be an employment relationship for most gig workers except those that may fit into a “safe harbor” for de minimis amateurs or volunteers.

Keywords: gig economy, independent contractor, employee, employer, worker’s rights, employee protection