What Happens When Gig-Economy Workers Become Employees
Ever since the emergence of companies like Uber and Lyft, businesses and labor advocates have engaged in an endless, largely theoretical debate about whether classifying workers as independent contractors—responsible for setting their own hours and paying for their own insurance, mileage, and other expenses—helps or hurts them.
On one side are gig-economy employers, who say workers like the flexibility of being an independent contractor, and prefer working when and if they please. On the other are labor advocates, who argue that gig-economy companies push much of the cost of their business onto workers, who don’t receive worker protections that were once standard, such as minimum wage and overtime protections.
The debate intensified in California in late April, when a state Supreme Court ruling found that employers must use a narrow test to determine how to classify employees, raising the likelihood that more companies will have to categorize gig workers as employees. Gig-economy companies lobbied the state to override the ruling, claiming that workers would lose their jobs, while labor advocates predicted that it would ensure that fewer people would have to rely on the state safety net. As usual, many of the people engaged in the debate about what’s best for workers were not the workers themselves.
But while the policy debate rages on, a real-world experiment has been testing what, exactly, happen if companies had to switch a large swath of their workers from independent contractors to employees. As of January 1 of this year, cannabis-delivery workers are mandated by state law to be classified as employees. These rules, adopted after Californians voted to legalize marijuana in 2016, are a way for law enforcement to ensure that dispensaries take responsibility for their product, and that it is being handled by trained employees. Since they were enacted, dispensaries around California have started the process of switching delivery drivers, and in some cases other workers as well, from independent contractors to employees. Their experience highlights, more than any hypothetical debate, how there is no one easy answer for how to best structure the gig economy.
