- Legal Frameworks for Gig Workers
The evolution of the gig economy has fundamentally reshaped the nature of employment relationships, challenging traditional frameworks and prompting a re-examination of labor laws and protections. The rapid growth of digital platforms such as Uber, DoorDash, and Fiverr has created new opportunities for flexible work but has also exposed significant gaps in worker protections. This necessitates a critical discussion on redefining employment relationships to better accommodate the realities faced by gig workers. Employment relationships have been anchored in long-term contracts that guarantee job security, regular wages, and a host of benefits such as healthcare, pensions, and paid leave. Employers have legal obligations to their employees, including protections against unfair dismissal and safe working conditions. This model, however, is increasingly at odds with the gig economy’s operational structure. Gig work typically classifies workers as independent contractors rather than employees. This means gig workers are not entitled to the same legal protections and benefits afforded to traditional employees[1]. They often operate on a task-by-task basis, with pay linked to completed jobs rather than hourly wages[2]. While this model offers flexibility and autonomy, it also leaves gig workers vulnerable to income instability, lack of access to social security benefits, and minimal legal recourse in cases of exploitation
The classification of gig workers as independent contractors raises critical questions about the nature of their work and the power dynamics between platforms and workers. Many gig workers, though technically “independent,” are subjected to algorithmic management, which dictates their assignments, pay rates, and even work schedules. Platform algorithms often function as de facto managers, using data-driven performance evaluations and automatic deactivations to control worker behavior. This blurs the boundaries between employment and self-employment, complicating the legal distinctions between contractors and employees.Furthermore, gig workers frequently experience economic dependency on a single platform, despite their nominal independence. For instance, ride-hailing drivers may rely heavily on a particular app for their primary source of income, making it challenging to switch platforms without financial repercussions. This dependency undermines the traditional notion of an “independent contractor” who has multiple clients and full control over their work. As a result, there is an urgent need to redefine employment relationships to reflect these hybrid realities. The existing binary classification—where a worker is either an employee or an independent contractor—fails to capture the nuances of gig work. Policymakers, labor advocates, and legal scholars have begun exploring alternative models to bridge this gap.
One proposed solution is the creation of a third employment category that recognizes gig workers as “dependent contractors.” This intermediate status acknowledges that while gig workers may not fit the traditional definition of employees, they also lack the full autonomy associated with independent contractors. Countries like Canada have adopted this approach, granting dependent contractors certain rights, such as collective bargaining and protection against unjust dismissal, without fully classifying them as employees. Another innovative model is the introduction of portable benefits schemes. Portable benefits are tied to the worker rather than the employer, allowing gig workers to accumulate benefits such as health insurance, retirement savings, and paid leave across multiple platforms. This model has gained traction in the United States, where proposals like the “Portable Benefits for Independent Workers Pilot Program Act” seek to create a flexible benefits system tailored to the gig economy’s dynamic nature[3]. Collective bargaining rights also play a crucial role in redefining employment relationships. Traditionally, labor unions have negotiated wages and working conditions on behalf of employees, but gig workers have often been excluded from such protections due to their contractor status. Recent efforts, however, have aimed to extend collective bargaining rights to gig workers, enabling them to form associations and negotiate with platform companies[4]. For example, in the United Kingdom, the Supreme Court ruled in 2021 that Uber drivers should be classified as “workers,” entitling them to minimum wage, holiday pay, and collective bargaining rights.
Algorithmic transparency is another critical aspect of redefining employment relationships. Since many gig platforms use algorithms to allocate work and determine pay, it is essential that these processes are transparent and accountable. Workers should have the right to understand how their performance is evaluated, how pay rates are calculated, and how algorithmic decisions affect their employment status. Greater transparency would empower gig workers to challenge unfair practices and ensure more equitable working conditions. Globally, various countries have taken steps to address the precarious status of gig workers. The European Union has proposed a directive aimed at improving working conditions in the gig economy. This directive seeks to ensure that platform workers are granted employment rights unless the platform can prove their self-employed status. The legislation also mandates greater algorithmic transparency and protects workers from arbitrary dismissals[5].
In India, the Code on Social Security, 2020[6], marks a significant step towards recognizing gig and platform workers. The law extends social security benefits, including health insurance and retirement funds, to gig workers, signaling an acknowledgment of their economic contribution and the need for enhanced protections. Meanwhile, in the United States, California’s Assembly Bill 5 (AB5)[7] attempted to reclassify many gig workers as employees by applying a stricter test for determining employment status. Although the bill faced considerable opposition and was later modified by Proposition 22[8], it sparked a nationwide debate on gig worker rights and inspired similar legislative efforts across other states.
To address the complexities of gig work and create a fairer labor market, the following policy recommendations are proposed:
- Establish a third employment category: Introduce a “dependent contractor” classification that captures the intermediate status of gig workers, providing them with core labor rights without eliminating flexibility[9].
- Implement portable benefits: Develop systems that allow gig workers to carry their benefits — such as health insurance, retirement savings, and paid leave — across platforms, ensuring continuity and security regardless of where they work.
- Ensure collective bargaining rights: Enact laws that empower gig workers to form unions or associations, granting them the ability to negotiate wages, work conditions, and protections collectively.
- Enforce algorithmic transparency: Require platforms to disclose how their algorithms assign work, calculate pay, and assess performance, enabling workers to understand and contest decisions affecting their livelihoods.
- Guarantee minimum standards: Set minimum wage laws, work-hour caps, and basic health and safety standards tailored to gig work, ensuring baseline protections for all platform workers.
- Create social security schemes: Develop government-backed programs that extend unemployment benefits, health coverage, and pension plans to gig workers, reducing economic insecurity.
- Establish dispute resolution mechanisms: Implement accessible, unbiased processes for gig workers to resolve conflicts with platforms over pay, deactivations, or unfair practices.
- Promote worker education: Launch initiatives to educate gig workers about their rights, legal protections, and available resources, empowering them to advocate for themselves.
- Encourage platform accountability: Introduce legal obligations for platforms to contribute to social security funds or benefit schemes, ensuring they share responsibility for worker welfare.
- Monitor and evaluate reforms: Regularly assess the impact of new laws and policies, adapting them to evolving gig economy dynamics and worker needs.
Redefining employment relationships in the context of gig work is not merely a legal necessity but also a moral imperative. As the gig economy continues to expand, it is crucial to develop inclusive labor frameworks that balance flexibility with security. Emerging models such as dependent contractor status, portable benefits, collective bargaining rights, and algorithmic transparency offer promising pathways to achieving this balance. The goal should be to create a fair and adaptable employment system that protects gig workers’ rights while preserving the innovative spirit of the gig economy. Policymakers, platform companies, and worker organizations must collaborate to build a future where employment relationships reflect the realities of modern work, ensuring that gig workers are not left behind in the pursuit of progress.
[1] Jeremias Prassl and Martin Risak, “Uber, Taskrabbit, and Co.: Platforms as Employers? Rethinking the Legal Analysis of Crowdwork”, 37 Comparative Labor Law & Policy Journal 619, 620, 646 (2016).
[2]Benjamin Sachs, “Do We Need an ‘Independent Worker’ Category?”, On Labor (Dec. 8, 2015), available at: https://onlabor.org/2015/12/08/do-we-need-an-independent-worker-category. (last visited on Feb 23, 2025).
[3]Benjamin Sachs, “A New Category of Worker for the On-Demand Economy?”, On Labor (June 22, 2015), available at: https://onlabor.org/2015/06/22/a-new-category-of-worker-for-the-on-demand-economy. (last visited on Feb 23, 2025).
[4]Jonathon Hall and Alan Krueger, “An Analysis of the Labor Market for Uber’s Driver-Partners in the United States”, 2015, available at: https://s3.amazonaws.com/uber-static/comms/PDF/Uber_Driver-Partners_Hall_Kreuger_2015.pdf. (last visited on Feb 23, 2025).
[5]Valerio De Stefano, “Negotiating the Algorithm: Artificial Intelligence and Labor Rights”, 9 World of Work Journal (2020), available at: https://onlinelibrary.wiley.com/doi/pdf/10.1002/wow3.167. (last visited on Feb 23, 2025).
[6]ibid
[7]Ibid
[8]ibid
[9]66 Am. U. L. Rev. 635 (2017)