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Debate Emerges Over Sharing Economy Workers

Sharing economy companies, like Uber, Lyft, and TaskRabbit, connect people looking for goods or services with those offering them. These companies usually classify their workers, who typically work flexible schedules, as independent contractors. This classification is now being debated.

Today’s labor laws and regulations differentiate between employees, who are under the control of the employer, and independent contractors, who are more autonomous. The distinction is important: employees are entitled to benefits that independent contractors are not, such as workers’ compensation and unemployment.

Many prominent sharing economy companies classify their workers as independent contractors. For example, Uber drivers provide their own cars, set their own hours, and can work for competing companies. Some argue companies use the independent contractor label to increase their own bottom line. “By calling certain staff members independent contractors … the boss is suddenly free from many of the financial burdens — but not the benefits — of having employees,” wrote Caroline Fredrickson, for the Los Angeles Times. Others contest the validity of the classification in the first place: “[The companies] give them rules, they tell them how they want them to act, and they monitor their behavior,” said Attorney Shannon Liss-Riordan.

This debate is beginning to play out in courts, administrative offices, and even Congress. In California, Uber and Lyft drivers filed two separate class action lawsuits alleging that they should be considered employees instead of independent contractors. Since both presiding judges could not determine the proper classification for these drivers, both cases will go to juries. The Florida Department of Economic Opportunity has also considered the issue, finding that a former Uber driver was an employee, and is thus eligible for unemployment. (The one-sentence decision did not provide any reasoning.)

Senator Mark Warner recently argued that the government’s definitions of employment are not flexible enough to provide security for new economy workers. He has proposed creating an “hours bank,” that would administer employment benefits to sharing economy workers based on the number of hours they worked, although he has not yet proposed formal legislation. “I don’t know the answer yet. I’d actually like to hear more from the community. But I don’t think this is something that we should just throw up our hands and leave to the courts,” said Warner.

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