A critical examination of a third employment category for on-demand work

Abstract

A number of lawsuits in the United States are challenging the employment classification of workers in the platform economy. Employee status is a crucial gateway in determining entitlement to labor and employment law protections. In response to this uncertainty, some commentators have proposed an “intermediate”, “third,” or “hybrid” category, situated between the categories of “employee” and “independent contractor.” After investigating the status of platform workers in the United States, the authors provide snapshot summaries of five legal systems that have experimented with implementing a legal tool similar to an intermediate category to cover non-standard workers: Canada, Italy, Spain, Germany, and South Korea. These various legal systems have had diverse results. There has been success in some instances, and unintended consequences in others. Accordingly, we recommend proceeding with caution in considering the creation of a third category. That is due to the risk of arbitrage between the categories, and the possibility that some workers will lose rights by having their status downgraded into the third category. Cherry and Aloisi posit employee status as the default rule for most gig workers. The authors propose an exception for those working on a de minimis basis or those engaged in volunteerism for altruistic reasons.