Miriam A. Cherry – SLU Law, Saint Louis Antonio Aloisi – Bocconi University, Milan Currently many on-demand economy companies are facing litigation over how their workers are classified -- including Uber, which recently settled a worker misclassification lawsuit for $100 million. In response to this litigation, there have been calls for the creation of a hybrid category of worker in between employee and independent contractor. However, the intermediate category is not new; other legal systems have implemented a third category with varying results. In this talk, we will first briefly describe the features of work in the on-demand economy. Next, we will use a comparative approach to review the experiences of Canada, Italy, and Spain. Finally, we use these lessons to evaluate the need for an intermediate category for gig workers in the United States.

1. +
Saint
Louis
University,
Law
School
Center
for
International
and
Comparative
Law
“Dependent
Contractors”
in
the
Gig-­‐Economy
A
Comparative
Approach
Miriam
A.
Cherry
–
SLU
Law,
Saint
Louis
Antonio
Aloisi
–
Bocconi
University,
Milan

2. +outline
21. The
gig-­‐economy
I. An
attempt
at
classification
II. Legal
implication
(labour
law)
III. The
scope
of
the
On-­‐Demand
Economy
2. Crowdwork
I. Legal
Standards
for
Determining
Status
II. The
Uber
Litigation
and
Settlement
3. A
third
category
between
employee
&
independent
contractor?
I. Proposals
for
an
intermediate
category
4. An
historical
and
global
context,
with
various
and
mixed
results
I. Canada
II. Italy
III. Spain
5. Lesson
learned
I. Our
answers

3. 3
‪www.forbes.com
Transportation Finance Consumer Goods
Professional ServicesPersonal ServicesSpace

4. +The gig-economy
An
attempt
at
classification
n Crowd-­‐employment
(Amazon
Turk,
Clickworker…)
n Work
on-­‐demand
via
apps
(Uber,
Lyft,
TaskRabbit,
Handy)
n A
variety
of
performances
n Virtual
/
concrete
work
n Global
/
local
execution
n Selection
/
competition
n Payment
(bid/defined
rate)
n Vertical
vs.
horizontal
platforms
n Content
of
task
and
control
power
4
Differences
have
a
strong
impact
on
legal
issues
such
as
liabilities
and
employment
reclassification

5. 5
CROWD
EMPLOYMENT
Some
processes
of
“micro-­‐labor”
involve
computer-­‐based
work
that
is
performed
wholly
in
cyberspace,
where
work
is
broken
down
[taskified]
into
its
smallest
constituent
parts
(coding,
describing,
or
tagging
the
thousands
of
items).
WORK
ON-­‐DEMAND
is
aided
by
cellphone
“apps”
or
websites,
and
they
rely
on
technology
to
deploy
workers
to
perform
tasks
in
the
real
world
(such
as
driving,
grocery
delivery,
or
home
repair)
for
requesters,
with
the
app
or
platform
keeping
a
percentage.
The Context of Crowdwork
The
scope
of
the
On-­‐Demand
Economy
Technology
is
reshaping
the
future
of
work

6. 6
Does
the
U.S.
legal
system
need
a
new
hybrid
category
between
employee
and
independent
contractor
to
be
more
responsive
to
the
practices
associated
with
on-­‐
demand
gig
work?
Proponents
advocate
that
an
intermediate
category
is
not
only
necessary
for
modern
economic
and
technological
realities,
but
also
a
completely
new
innovation,
created
out
of
whole
cloth
and
appropriately
formulated
for
the
era
of
digital
work.
The
issue
of
classification
is
not
merely
an
academic
or
philosophical
one.
?

7. 7
Classification
as
an
employee
is
a
gateway
to
determine
who
is
deserving
of
the
protections
of
the
labor
and
employment
laws
(the
right
to
organize,
minimum
wage,
and
unemployment
compensation)
Increasingly
work
is
becoming
casualized,
outsourced.
Workers
are
being
managed
by
and
through
algorithms,
and
many
sectors
are
seeing
the
rise
of
the
just-­‐in-­‐time
workforce.
Rather
than
create
a
special
classification
category
just
for
the
gig
economy,
any
category
that
would
be
created
should
ideally
ameliorate
conditions
for
other
forms
of
precarious
work.
!

8. +
n Under
U.S.
law,
whether
a
worker
is
an
employee
or
independent
contractor
is
determined
through
various
multifactorial
tests
dependent
on
the
facts
of
the
relationship
n The
“control”
test
derives
from
the
case
law
and
decisions
on
agency
law,
and
focuses
on
a
principal’s
right
to
control
the
worker
n Economic
realities
of
the
relationship:
whether
the
worker
is
exhibiting
entrepreneurial
activity,
or
whether
the
worker
is
financially
dependent
upon
the
employer
n The
label
(and
the
intentions)
affixed
to
the
relationship
is
a
factor
in
the
outcome,
but
it
is
certainly
not
dispositive
8
The Context of Crowdwork
Legal
Standards
for
Determining
Status

9. +
n With
Uber
some
of
the
factors
in
the
control
test
point
toward
an
employee
relationship
while
others
are
reminiscent
of
an
independent
contractor
relationship
n Crowdworkers
have
some
flexibility
to
set
their
own
schedules
and
can
sign
on
and
off
the
app
readily
n Crowdworkers
also
use
their
own
cellular
telephones,
computer
equipment,
Internet
connections.
n Further,
EULAs
label
crowdworkers
as
“independent
contractors”
forcing
them
to
click
“I
agree”
in
order
to
access
n The
tests
are
notoriously
malleable,
difficult,
and
fact-­‐dependent,
even
when
dealing
with
what
should
be
a
fairly
straightforward
analysis
9
The Context of Crowdwork
Legal
Standards
for
Determining
Status

10. +The multi-part test
Criteria
for
the
analysis
10
n This
multi-­‐part
test
scrutinizes
the
presence
of
the
following
factors:
I. whether
there’s
a
right
to
control
how
the
worker
does
his
job;
II. whether
a
worker
has
set
hours
or
can
work
whenever
he
or
she
wants;
III. how
the
worker
is
paid
i.e.,
by
the
hour
(which
points
toward
employment)
vs.
by
the
job
(which
points
toward
an
independent
contractor
relationship;
IV. whether
the
business
provides
the
tools
to
perform
the
job;
V. whether
a
written
agreement
exists
classifying
the
worker
+
intentions;
VI. the
permanency
of
the
relationship,
with
an
indefinite
term
pointing
toward
employment
and
a
defined
term
pointing
toward
an
independent
contractor;
VII. whether
the
services
rendered
are
an
integral
part
of
the
employer’s
business;
VIII. whether
the
work
requires
a
special
skill.

11. +
n In
the
largest
of
these
suits,
pending
in
the
Northern
District
of
California,
400,000
were
certified
as
a
class-­‐action
to
seek
employee
status
and
redress
under
the
FLSA
for
minimum
wages
and
overtime
pay
n O’Connor
v.
Uber,
3:13-­‐cv-­‐03826-­‐EMC
(N.D.
Cal.)
n In
May
2016,
O’Connor
v.
Uber
settled
for
a
$100
million
payment
to
the
workers
and
an
agreement
to
send
worker
dismissals
to
an
arbitrator
n (i)
transparency
about
the
internal
algorithm,
(ii)
disclosure
of
the
deactivation
procedures,
(iii)
creation
of
an
appeals
panel,
(iv)
promotion
of
a
driver
association
n While
this
was
a
brokered
compromise,
the
settlement
failed
to
bring
about
any
definitive
resolution
to
the
classification
problem
à
“on/off”
toggle
of
employee
status
11
The Context of Crowdwork
The
Uber
Litigation
and
Settlement

12. +
n The
gateway
question
is
as
of
yet
left
unresolved
(“all
or
nothing”
scheme).
Proponents
cite
innovation
and
the
novelty
of
these
forms
of
work
and
organization
as
a
reason
for
special
treatment
n “Innovative
business
models
cannot
survive
if
overly
regulated”
1. Harris
&
Krueger,
A
Proposal
for
Modernizing
Labor
Laws
for
Twenty-­‐First-­‐Century
Work:
The
“Independent
Worker,”
The
Hamilton
Project
2. Professor
Benjamin
Sachs
has
authored
a
series
of
blog
posts
debating
the
merits
of
creating
a
third
category,
and
has
approached
the
concept
with
some
skepticism
3. ‘Washington
Post’
discussed
the
possibility,
but
ended
critically,
noting
that
gig
workers
were
unlikely
to
receive
the
protection
they
needed
4. Senator
Mark
Warren
of
Virginia
has
recently
begun
discussing
the
need
for
legislation
12
Proposals for a Third Category
Focused
on
the
Gig
Economy

13. +
n “Independent
workers”
would
gain
n rights
to
organize
and
bargain
collectively
under
the
NLRA
n anti-­‐discrimination
protections
under
Title
VII
n NO:
payment
for
overtime
and
minimum
wage
arrangements
n the
gig-­‐economy
business
model
does
not
allow
anyone
for
tracing
hours
or
even
for
attribution
of
hours
to
any
particular
platform
n an
hours-­‐based
rate
of
pay
does
not
make
sense
when
dealing
with
work
that
is
paid
by
the
gig.
n This
stance
has
been
criticized
for
ignoring
the
role
of
big
data
in
the
on
demand
economy
(constant
tracking
of
data)
13
Proposals for a Third Category
Harris
and
Krueger
“dependent
worker”

14. 14
Situating
the
“dependent
contractor”
category
within
an
historical
and
global
context,
other
countries
have
already
experimented
with
an
intermediate
category,
with
various
and
mixed
results.
These
legal
reform
efforts
pre-­‐dated
the
platform
economy,
but
arose
in
response
to
a
perceived
lack
of
coverage
by
the
binary
switch
that
is
the
hallmark
of
the
worker
misclassification
issue.
Comparisons
of
the
experiences
of
Canada,
Italy,
and
Spain
þ

15. +
n 1950s:
principle
of
vicarious
liability
for
torts
+
“fourfold”
test
(1)
control;
(2)
ownership
of
tools;
(3)
chance
of
profit;
(4)
risk
of
loss.
n “Merely
different
ways
of
expressing
the
same
ultimate
question
of
whose
business
is
it?”
n 1965:
Arthurs
seized
on
the
idea
of
a
3rd
category
as
a
reaction
to
a
trend
that
created
injustice
for
certain
groups
of
Canadian
workers.
n That
small
tradespeople,
artisans,
plumbers,
craftsmen,
and
the
like
were
increasingly
structuring
as
separate
business
entities.
n These
putative
independent
businesses
were
often
almost
wholly
dependent
on
the
patronage
of
a
larger
company.
n “Insofar
as
dependent
contractors
share
a
particular
labour
market
with
employees
…
they
should
be
eligible
for
unionization.”
15
The Canadian Experience:
Harry
Arthurs:
“Dependent
Contractors”

16. +
n Arthurs’
academic
work
resulted
in
substantial
law
reform
and
the
extension
of
the
employment
laws
to
a
group
that
had
previously
been
subordinate
but
that
had
received
few
protections.
n As
the
court
in
Fownes
Construction
v.
Teamsters
noted
this
was
“one
law
review
article
which
has
had
an
impact
on
the
real
world.”
n The
government
has
“introduced
this
intermediate
category
into
statutes
in
order
to
extend
the
reach
of
the
statute
beyond
typical
employees.”
n The
effect
was,
in
the
words
of
subsequent
commentators,
“beneficial
for
a
significant
number
of
workers
formerly
excluded
from
the
ambit
of
collective
bargaining
laws.”
n There
have
been
no
Canadian
decisions
on
ridesharing
services
like
Uber,
one
would
have
to
reason
by
analogy
to
earlier
cases
involving
taxicab
services,
limousines,
and
cars
for
hire.
16
The Canadian Experience:
Harry
Arthurs:
“Dependent
Contractors”

17. 17
Independent
CONTRACTOR
The Canadian Case 1/2
EMPLOYMENT
Traditional
binary
divide

18. 18
The Canadian Case 2/2
Arthur’s
article
Independent
CONTRACTOR
“DEPENDENT
CONTRACTOR”
EMPLOYMENT
ECONOMICALLY
DEPENDENT
SELF-EMPLOYMENT

19. +The Italian Case:
Lessons
of
Unintended
Consequences
n The
definition
of
Article
2094
CC
is
apparently
circular:
“an
employee
agrees
to
collaborate
with
an
employer
in
exchange
for
remuneration,
performing
intellectual
or
manual
labour
in
the
employment
of
and
under
the
direction
of
the
entrepreneur.”
n The
self-­‐employed
worker
contract
is
not
even
a
part
of
the
chapter
of
the
Civil
Code
devoted
to
labour.
Article
2222
CC:
“a
person
who
performs
services
for
remuneration,
mainly
by
means
of
his
own
labour
and
in
the
absence
of
a
relationship
of
subordination
vis-­‐a-­‐vis
the
client.”
n A
judge
may
be
allowed
to
disregard
the
contractual
label
whenever
the
concrete
relationship
contains
legal
indicia
of
employee
status
(“primacy
of
facts”
principle).
Subsidiary
indicators:
1. the
requirement
that
the
worker
follow
reasonable
work
rules;
2. the
length
of
relationship;
3. the
respect
of
set
working
hours;
4. salaried
work;
5. absence
of
risk
of
loss
related
to
the
production.
19

20. +
n 1973:
Italian
Law
sought
to
extend
certain
procedural
protection
to
the
weakest
of
the
independent
contractors,
and
incidentally
brought
about
the
genesis
of
the
third
category,
deemed
“lavoratore
para-­‐subordinato”
n Sub-­‐set
of
self-­‐employed
workers
(Co.Co.Co.),
workers
“collaborating
with
a
principal/buyer
under
a
continuous,
coordinated
and
predominantly
personal
relationship,
not
of
subordinate
character.”
n Consequently,
the
lavoratore
parasubordinato
category
was
used
to
hide
bona
fide
employment
relationships
n “a
gradual
erosion
of
the
protections
afforded
to
employees
through
jobs
that
are
traditionally
deemed
to
constitute
master-­‐servant
relationships,
progressively
entering
the
no
man’s
land
of
an
inadequately
defined
notion”
20
The Italian Case:
The
Legislation
on
“para-­‐subordinazione”

21. +
1. 2003
–
“Biagi
Law”:
many
workers
that
functioned
as
employees
were
incorrectly
classified
as
quasi-­‐subordinate
by
businesses,
the
legislature
required
the
[collaboration]
be
linked
to
at
least
one
“project”
n A
new
definition:
“lavoro
a
progetto”
à
to
check
the
validity
(questionable
tecnique)
n To
reduce
the
number
of
precarious
forms
of
employment
leading
to
illicit
work
and
evasion
of
social
insurance
contributions
2. 2015:
the
“Jobs
Act”
fundamentally
eliminated
the
concept
of
project
work
that
had
its
genesis
in
the
2003
Biagi
law
and
limited
the
scope
of
Co.Co.Co.
n This
was
intended
to
reduce
the
use
of
atypical
contracts
and
to
establish
the
principle
that
the
“natural”
or
default
category
is
that
of
employee.
n “Moving
as
many
employment
contracts,
in
a
gradual,
from
the
uncertain
grey
area
of
atypical
employment
to
the
area
of
salaried
employment”
21
The Italian Case:
“Para-­‐subordinazione”
and
the
project

22. 22
Independent
CONTRACTOR
The Italian Case 1/6
EMPLOYMENT
Traditional
binary
divide

23. 23
PARA
SUBORDINATION
Independent
CONTRACTOR
The Italian Case 2/6
EMPLOYMENT
1973

24. 24
PARA
SUBORDINATION
Independent
CONTRACTOR
The Italian Case 3/6
EMPLOYMENT
…
hiding
bona fide
EMPLOYMENT

25. 25
Independent
CONTRACTOR
The Italian Case 4/6
EMPLOYMENT
2003
–
Biagi
Law
+ PROJECT
PARA SUBORDINATION
countering
the misuse of
the scheme
limit
control
power

26. 26
Independent
CONTRACTOR
The Italian Case 5/6
EMPLOYMENT
2012
–
Fornero
Law
+ PROJECT
Sanction for an
improper or
absent project
PARA SUBORDINATION
discouraging
the 3rd
category

27. 27
Independent
CONTRACTOR
The Italian Case 6/6
“former”
PARA
SUBORDINATION
EMPLOYMENT
(default contract)
PARA
SUBORDINATION
2015
–
Jobs
Act
PARA SUBORDINATION
presumption

28. +
n 2007:
the
Spanish
legislature
enacted
a
new
law
aimed
at
regulating
non
standard
forms
of
work
comprehensively.
n The
law
gave
the
rise
to
a
new
classification:
“Trabajador
Autonomo
Economicamente
Dependiente”
(“TRADE”).
n TRADE
workers
were
granted
some
legal
protections
such
as
n minimum
wage,
n annual
leave,
n severance
for
wrongful
termination,
n right
to
suspend
work
for
family
or
health
reasons
n collective
bargaining.
28
The Spanish Case
Economic
Thresholds
for
the
3rd
category
%

29. +
n TRADE
defined
according
to
a
threshold
of
economic
dependency.
1. the
performance
of
an
economic
or
professional
activity
directly
and
predominantly
vis-­‐
à-­‐vis
one
single
principal
and
2. a
dependence
on
the
principal
for
at
least
75%
of
the
worker’s
earnings.
n The
law
assumes
that
TRADE
workers
are
predominantly
working
for
one
business;
this
could
be
a
problem
for
platform
workers
who
are
working
for
multiple
platforms.
n Sadly,
“while
increasing
certainty
and
transparency
and
ensuring
a
minimum
level
of
[substantial]
protection
of
the
self-­‐employed,
such
requirements
could,
however,
have
the
effect
of
limiting
the
scope
of
these
contractual
arrangements.”
29
The Spanish Case
Economic
Thresholds
for
the
3rd
category

30. 30
EMPLOYMENT
Independent
CONTRACTOR
(unregulated)
The Spanish Case 1/4
Before
2007

31. 31
EMPLOYMENT
ECONOMICALLY
DEPENDENT
SELF-EMPLOYMENT
Independent
CONTRACTOR
The Spanish Case 2/4
2007
75% of income
from the same principal

32. 32
EMPLOYMENT
ECONOMICALLY
DEPENDENT
SELF-EMPLOYMENT
Independent
CONTRACTOR
The Spanish Case 3/4
…
75% of income
from the same principal

33. 33
EMPLOYMENT
Independent
CONTRACTOR
The Spanish Case 4/4
today
ECONOMICALLY
DEPENDENT
SELF-EMPLOYMENT
75% of income
from the same principal

34. +
n We
have
a
large
grey
area
to
be
interpreted
in
at
least
2
different
ways:
34
“types
of
work
that
do
not
fit
into
the
binary
system
as,
objectively,
they
display
employment
and
self-­‐
employment
features”
“certain
types
of
work
which
appear
to
be
self-­‐employment
but
which,
in
fact,
are
employment”
1
2
This
is
about
employment
performances
that
could
barely
classified
by
applying
existing
laws
or
criteria
and
tests
aimed
at
determining
the
worker
status.
Quite
clearly,
in
the
second
case,
we
confronted
with
illegitimate
practices
of
false
self-­‐employment.
What we have learned
from
these
three
experiences

35. +
n Nothing
new:
worker
classification
entails
legal
arbitrage,
as
a
shortcoming;
n The
uncertainty
is
genuine
because
of
the
combination
of:
n Control
vs
flexibility
n Organizational
dependency
vs
multicommissioning
n Economic
dependency
vs
voluntary
freelancing
n Geographical
disaggregation
vs
“attempts”
of
collective
voice
35
What we have learned
from
these
three
experiences

36. +
CANADA
the
“dependent
contractor”
has
essentially
resulted
in
an
expansion
of
the
definition
of
employee.
effectiveness
The
category
was
enacted
to
help
those
workers
who
were
in
need
of
labour
protections.
The
earlier
tests
were
rigid
and
made
it
difficult
for
small
business
workers
to
claim
benefits
and
protections.
ITALY
the
intermediate
category
was
used
to
disguise
bona
fide
employment
relationships.
formality
The
third
category
became
a
discounted
alternative
to
a
standard
employment
contract.
Reform
efforts
were
“somewhat
tentative
and
partial.”
The
grey
area
was
extended.
SPAIN
the
legal
arbitrage
shifted
TRADE
to
independent
contractor
because
of
the
level
of
burdensome
procedures.
substantiality
“While
increasing
certainty
and
transparency
and
ensuring
a
minimum
level
of
protection,
such
requirements
could
have
the
effect
of
limiting
the
scope
of
these
contractual
arrangements.”
36
What we have learned
A
preliminary
appraisal
cheap
heavy
g o o d

37. +
n Crafting
a
new
category
is
a
complex
legislative
exercise
n Innovation
cannot
be
hindered
or
stopped.
Also
innovation
should
not
consist
of
taking
advantage
of
a
legal
loophole
n Not
a
matter
of
mere
definitions.
Not
a
matter
of
interpretation.
n We
need
traditional
protections
for
2.0
work
arrangements
(like
CANADA)
An
effective
“3rd
category”
should
cover
ALSO
any
form
of
precarious
employment
A
progressive
expansion
of
the
definition
of
employee
in
order
to
cover
situations
that
are
not
covered
today
(unregulated
not
only
disguised)
37
Implications
From
Gig-­‐Economy
to
Precariousness

38. 38
INDEPENDENT
CONTRACTOR
The Gig-Economy Case
EMPLOYMENT
rights
&
benefits
Protection
Today:
“No
Man’s
Land”

39. +
Thank
you!
mcherry3@slu.edu
aloisi.antonio@phd.unibocconi.it
Q&A