This classification combines the flexibility of independent contractors while providing some of the benefits and protections of workers.
The existing legal framework in the United States recognizes two statuses for workers: employees and independent contractors.
In their report “A Proposal for Modernizing Labor Laws for Twenty-First-Century Work,” researchers Seth Harris of Cornell University and Alan Krueger of Princeton University suggest a need for a change in status for workers to reflect new forms of work in society, like gig work. They propose that Congress and state legislatures enact legislation to define and establish a third legal category of workers, which they call “independent workers.”
Using ride-seek drivers as an example, they found that much like an independent contractor, these workers can determine whether to work, how many hours to work, and when to work. But much like an employee, the online gig economy worker is typically integral to the business of the company, and the company often controls aspects of the work.
It’s a relationship that doesn’t fit neatly into either of the two statuses for workers that exist currently under existing employment, labor, and tax laws. In their policy proposal, Harris and Krueger propose allowing independent workers to maintain the flexibility of setting their work hours and load, while providing them many, but not all, of the benefits awarded typically just to employees. It’s a creative new concept that might prove attractive to a lot more workers in today’s economy.
The benefits that could possibly accrue to “independent workers” that are currently not available to contractors would include:
Ability to Organize – This would require a change in America’s anti-trust laws, but giving gig workers the freedom to organize and collectively bargain would eliminate any incentive to misclassify employees as independent contractors as a way to keep them from organizing.
Ability to Pool – Companies could offer independent workers a range of employer-provided benefits at a lower cost and higher quality than the workers could obtain on their own in the private market. Such benefits could include disability insurance, auto insurance, health insurance, banking and savings products, retirement products, and liability insurance.
Civil Rights Protections – While employees benefit from a variety of protections provided through federal antidiscrimination statutes, independent contractors do not have access to the same protections. Harris and Krueger propose modifying federal employment discrimination laws to cover independent workers.
Tax Withholding and FICA Contributions – Harris and Krueger would require companies to provide taxwithholding services, arguing that such a benefit would help gig workers avoid the quarterly payments and relevant paperwork they need to file and increase tax compliance, leading to greater revenues for the federal and state governments.
