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The Latest on Worker Classification in the Gig Economy

Sep 10, 2015 11:29:04 AM

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Whether you love or loathe Uber and its emulators driving the rise of the so called “Gig” or “Sharing” economy, one thing is abundantly clear.  The rise of these new, technologically-enabled business models is having a significant impact on the nature and composition of the modern American workforce.  And while independent contractors have been around for decades, the proliferation of ICs unleashed by the advent of the sharing economy has added significantly to the debate about the actual nature and definition of what it means to be an independent contractor. 

While it seemed for a while like the Ubers of the world had succeeded in defining the debate, the inevitable backlash – mostly driven by dissatisfied ICs – is now making its way through the courts. The results will have profound effects on how IC classification is defined and that has ramifications for HR professionals everywhere.  Here are the latest developments.

It began as a trickle of single plaintiffs filing suits against Uber for paying those who supply the equipment (cars) and manpower (drivers) that propel their businesses as independent contractors, while saddling them with the work expectations of employees.  More recently, it has coalesced into a class action thanks to the efforts of employment lawyer, Shannon Liss-Riordan. Liss-Riordan is currently involved in numerous lawsuits aimed at other gig economy companies like Uber-competitor, Lyft, housekeeper-sourcing app company Homejoy, and several others. The breakthrough for Liss-Riordan was the recent ruling by a federal judge certifying the individual Uber driver-complainants as a class. Uber fought that ruling and lost, although they’ve sworn to appeal.

This development has added significant momentum to the forces fighting to rein in what they claim are abusive employment practices masquerading as technology companies, neutral to any discussion about employers and employees.  Uber fought to prevent the courts from granting class status to the individual claimants on the grounds that many of their ICs were not interested in litigating and were happy with their classification. However, the judge determined these proponents were but a small subsection of the tens of thousands of drivers for Uber who are affected. 

Once this class action case finally goes to trial, a ruling in either direction will have a significant impact on all the companies leveraging the sharing economy according to Stanford law professor Bill Gould.  Gould notes that the question of misclassification of employees, particularly with respect to IC status, is an issue arising with greater frequency.  nextSource leadership continues to monitor the situation closely. Whichever way the courts rule, our experts will provide expert direction to workforce management professionals to ensure compliance with emerging legal precedent is observed and all implications are fully synthesized into all customer programs.


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