The Gig Economy’s False Promise

Credit...Kim Ryu






The use of independent contractors is hardly an innovation. Traditional businesses like garment factories, construction companies and trucking have often misclassified employees as contractors to avoid offering benefits, paying payroll taxes and abiding by labor laws. What makes this different is that gig economy businesses are arguing that their use of the independent contractor model is in fact better for workers.

Increasingly workers, and government agencies are pushing back. Seattle passed an ordinance in 2015 allowing drivers for Uber, Lyft and other ride-hailing apps to unionize. A federal judge temporarily blocked that law on Tuesday after the U.S. Chamber of Commerce and some conservative groups filed lawsuits against the city. Workers have also sued various gig economy companies to seek overtime pay, reimbursement for expenses and other damages. Lyft recently agreed to pay $27 million to settle a class-action lawsuit brought by drivers in California.

Legislation and lawsuits might ensure that traditional labor laws are applied to the gig economy. But a few smaller companies, like Hello Alfred, which dispatches people to do household chores, and Managed by Q, which provides office maintenance and cleaning services, are taking steps on their own, by treating workers as employees. They say that this lowers turnover and improves the quality of their services. Over time even bigger companies like Uber, many of which lose money and rely on investors to keep pouring in billions of dollars of capital, might find that it pays to treat workers better and even make some of them employees.
