The Gig Economy: Is There A Way To Make It Work?

By: Eric M. Lloyd

Seyfarth Shaw LLP hosted Work: The Future, a gathering of business and industry leaders focusing on the future of work for employers, on June 21, 2017 in San Francisco.  During the event, Seyfarth Labor and Employment partner Camille Olson and Jeremy Gottschalk, the General Counsel and Board Secretary of SitterCity, guided attendees through an interactive discussion regarding the business and legal landscapes facing “gig economy” companies.

Growth of the Gig Economy

The gig economy is exploding -- accounting for nearly $1.1 trillion of revenue during 2016 -- and it shows no signs of slowing down.  As Ms. Olson and Mr. Gottschalk discussed, the rise of the gig economy, in which workers are paid “by the gig,” is the result of the convergence of technology, the demand for innovation, and workers’ desire for flexibility.  Research cited by Ms. Olson and Mr. Gottschalk indicates that more than 75% of independent workers -- of which there were anywhere between approximately 54 million and 68 million last year -- plan to remain independent and that the majority are independent by choice.

Uncertainty Abounds

Despite its popularity among consumers, businesses and workers alike, the gig economy is mired in uncertainty, largely due to antiquated laws and regulatory schemes concerning worker classifications.  Ms. Olson and Mr. Gottschalk took attendees through the existing legal tests for employment and explained that change may be in the works given the Trump administration’s retraction of Obama-era guidelines on joint employment and the D.C. Circuit’s upcoming decision in Browning-Ferris Industries of California Inc. v. National Labor Relations Board, which also concerns the test for joint employment.  This uncertainty has given rise to a flood of lawsuits concerning worker classifications -- particularly in California, which comes as no surprise to this Golden State employment litigator -- often seeking relief for unreimbursed business expenses, overtime and minimum wage violations.  In fact, as Ms. Olson and Mr. Gottschalk discussed, in 2016, independent contractor misclassification cases comprised three of the top ten wage and hour class action settlements in the country last year.  Adding to the confusion is that there is often little consistency among courts in different jurisdictions facing worker classification questions -- even where these courts are ruling in cases involving the same company.

The Way Forward

Ms. Olson and Mr. Gottschalk closed the discussion by pivoting to potential solutions benefitting both businesses and workers that may be on the horizon.  Ms. Olson, drawing on her experience as Chairperson of the U.S. Chamber of Commerce’s Equal Employment Opportunity Subcommittee, shared that there is momentum in Washington for legislation preempting state and local employment laws in some worker classification cases.  In addition, Ms. Olson and Mr. Gottschalk mentioned the possibility of expanding federal laws prohibiting racial discrimination in contractual relationships to cover additional protected classes in order to provide gig economy workers with additional protections.

The gig economy has arrived.  Continued growth will require lawmakers to match the innovation of companies and workers with equally innovative legislation.