Courts and legislatures are deciding whether your Lyft driver is an independent contractor or an employee. The classification is a big deal, affecting workers' protections through to retirement. This paper surveys the current state of the gig economy and how courts, tribunals and legislatures in North America and the UK are tackling the issue of employment classification.

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Whether in transportation, food delivery or graphic design, the emergence over the past decade of digital platforms that connect sellers of piecemeal goods and services with purchasers—known as the “gig economy”—is spurring an important debate about the definition of work.

For at least two centuries, parties have battled in the streets, in legislatures and in courts to shape the relationship between employer and employee and the obligations that flow from it. Now that fight has gone digital. Courts and legislatures in Canada and around the world are deciding whether your Lyft driver is an independent contractor or an employee. The classification is a big deal.

Whether gig workers are defined as employees or contractors determines their rights and the obligations of employers. If classified as employees, workers are entitled to statutory employment protections such as minimum wage and specific termination rights, which independent contractors do not receive. Traditional employee status gives workers greater job stability and protection—at a cost to employers.

In this respect, classification has an important bearing to the sustainability of certain companies, which may not have a viable business model if those providing the services—the workers—are found to be employees. In its recent filing for an initial public offering, the ride-sharing company Lyft disclosed that the classification of drivers as employees “may require us to significantly alter our existing business model” and warned of potential “monetary exposure.”

The gig economy is likely here to stay. People value the convenience of its services, on the one hand, and because platform companies are valued at billions of dollars, on the other. For workers, fast and easy access to piecemeal employment can bridge periods of un- or underemployment. For buyers, these platforms provide convenient, on-demand marketplaces of vetted vendors. Together, these factors are forcing a debate about whether the gig economy should reshape the way we think about employment classification today.

This paper surveys the current state of the gig economy and considers how some legislatures, courts and tribunals in North America are handling employment classification of gig workers. In this evolving area of company-worker relationships, it has fallen to courts and tribunals to interpret existing laws, with legislatures slow to take a position.

Unsurprisingly, given the size and power of the gig economy, there is little consensus on the path forward. This paper considers the nature and scope of the gig economy with these questions in mind:

  • Is the gig economy a new way of characterizing old relationships or a new way of organizing new relationships?
  • Should Canada advance a third way for gig companies to support those producing the work?
  • Could that involve classifying gig workers as contractors while new legislation allows (or even requires) companies to offer social benefits and protections, without catapulting them up the classification ladder?

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