Increasingly, companies in the gig-economy utilize independent contractors, rather than traditional employees, as a means to cut costs and decrease employment related liability. These companies rely on independent contractors for work and retain control over work typically performed by employees. But there are significant legal distinctions between employees and independent contractors; namely employees are protected in ways that independent contractors are not. Traditionally, employees are defined as workers over whom an employer exerts or retains the right to control the manner and means of the work. While the traditional test to determine whether an individual is an employee is set forth in the Restatement (Second) of Agency, under this framework, courts struggle to characterize many of the non-traditional working arrangements utilized by the gig economy. This Note summarizes the seminal case law addressing the distinctions between independent contractors and employees. This Note then discusses Uber Technologies, a popular ride sharing application, to highlight the inadequacies of the current employment test. Specifically, this Note describes a growing problem where, different courts have analyzed Uber’s employment framework under the traditional test, yet reached opposite conclusions regarding driver’s employment status—even when predominately considering the same facts and circumstances. In light of the ever changing economy, this Note argues that the Restatement’s traditional test is insufficient to determine an individual’s working status. As a solution, this Note proposes both a new five factor test and legislative solution to prevent companies from improperly utilizing the independent contractor type worker. Without a revised standard to determine employment status, companies may be motivated to engage in a race to the bottom on wages and labor costs without the long-standing safeguards in place to protect employees.
Ben Z. Steinberger, Note, Redefining ‘Employee’ in the Gig Economy: Shielding Workers from the Uber Model, 23 FORDHAM J. CORP. & FIN. L. 577 (2018).