Corporate & Securities Blog

Gig Work Laws Aim to Catch Up with Industry Innovations

Gig work rapidly evolved into a fixture of the job market, with constant innovation from the businesses operating in the space. Popular gig work roles expanded beyond ride-share and delivery drivers to graphic designers, freelance writers, mobile shoppers, fitness trainers, online tutors, virtual assistants and social media content creators.

As the world of gig work continues to evolve, so does the legal landscape. The gig economy offers flexibility, but it also lacks many of the basic worker legal protections afforded to more traditional occupations.

The classification of gig workers as independent contractors continues to be a key financial driver for the gig economy, as contractor status comes with lower business costs and flexibility. California’s Assembly Bill 5 (AB 5), which effectively presumes most workers are employees entitled to enhanced legal rights unless they meet specific criteria, remains controversial, with one recent study finding that AB 5 adversely impacted the California job market overall while other economists disagreed. The U.S. Department of Labor recently implemented its own independent contractor status rule, which does not go as far as AB 5 but renders contractor classification more challenging; court cases and efforts by lawmakers to overturn the rule remain pending.

New York City adopted its own Freelance Isn’t Free Act applicable to most gig workers, while also requiring minimum pay standards for some delivery workers. Ride-share companies recently reached a settlement that includes enhanced protections and benefits for drivers across the entire state. Many other states and some cities, such as Chicago and Seattle, also have current or pending regulations aimed at providing more legal rights to gig workers.

What does this evolving legal landscape mean for business?

  • Compliance Uncertainty. Whether operating in the gig economy or simply using a gig worker occasionally, businesses face challenges when navigating changing regulatory requirements and varying federal, state and city regulations.
  • Collective Bargaining. Current labor laws allow unionization by employees, not independent contractors. The movement to expand those legal rights to gig workers continues to gain momentum.
  • Business Model Changes. As the law continues to evolve, companies should anticipate the potential need to reclassify certain gig workers as employees or change their pay practices.

 

Meet the Author

A. Nicole Stover

Nicole Stover is a strategic business partner to corporate and non-profit clients in all areas of employment law, including mergers and acquisitions, discrimination and harassment, competition and trade secrets, and compensation and benefits.

nstover@stradley.com | 856.321.2418

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