Center for American Progress questions whether gig workers are paid enough
- In a report on the state of the gig economy, the Center for American Progress, a left-leaning public policy research and advocacy organization, says that independent workers face an uncertain economy with generally low pay, few pay guarantees and no benefits and therefore need legal protections similar to those of employees.
- With economic uncertainty and no legal protections, gig workers should be able to negotiate wages that exceed what employees doing similar work earn, the report notes. Instead, it claims, independent workers tend to be very low wage-earners. The Center’s view is that large companies are driving down gig workers’ wages by shedding their role as “employer” and contracting gig workers’ services directly or through staffing agencies.
- According to the Center, employers can save up to 30% of their labor costs by classifying workers as independent contractors, leading many businesses to do so illegally. Workers have indeed filed lawsuits against companies for misclassifying them as contractors while maintaining employer-like control over their work.
Among the highest profile lawsuits involving gig workers classified as independent contractors are Uber and Lyft drivers who sought to reverse their classification, claiming they were treated as employees. So far, drivers haven't achieved any huge successes, though a few drivers were granted unemployment in New York.
Not all independent workers are gig-style workers like Uber drivers; in fact, an increasing amount of contracted work even includes C-suite positions. An MBO Partners, Inc. survey says that more independent workers are earning six-figure paychecks as companies look for highly skilled contractors with long-term experience.
Either way, these issues are unlikely to disappear. The number of independent workers, freelancers, contractors and consultants could outnumber employees by 60% as soon as 2027, or 50% by 2020. Lawmakers have met to address policy changes in labor laws to accommodate the growing gig economy, including plans for portable benefits and other protections for workers.
Employers looking for guidance on classification can look to the U.S. Department of Labor's six-point test, in addition to applicable appeals court precedent.
- Center for American Progress Raising Pay and Providing Benefits for Workers in a Disruptive Economy