Contractor or Employee?
That's the central legal question facing today's startups at the forefront of the "gig" economy. Think TaskRabbit, Doordash and of course, Uber that are revolutionizing different service sectors. These startups' business models are based on having independent contractors offer services through their app,. The contractors get access to a steady stream of clientele plus flexibility and decent wage rates. The startups charge a healthy commission for bridging the contractor - client gap. A win-win scenario, right? Well, not to some who view the tactic to classify workers as contractors as a naked ploy to get around guaranteeing income for workers as well as providing benefits and other protections.
The California Labor Commission ruled in June that at least one contractor(driver) is an employee. Uber is appealing the decision, which doesn't compel Uber to re-classify its drivers anyway but if the ruling stands, it could set a legal precedent for other drivers to sue.
Meanwhile, Instacart has moved to voluntarily reclassify a large portion of its contractors into employees. One reason was to reduce the churn rate of workers. Similarly, Shyp, which offers courier services, recently announced that it was planning to reclassify courier as employees. These seem to be pre-emptive attempts to forestall possible future legal cases.
How will it all end? Its uncertain, but at this point, Uber in particular, still looks pretty solid.