Gig Economy: Who’s Responsible for Worker Health and Safety?

What is Gig Work?

In the gig economy, independent contractors or service providers depend on web-based platforms and smartphone apps to connect with consumers. They provide work-related services for organizations like office-based employees do, but sometimes it can be hard to know who’s responsible for their work-related health and safety.

Other non-standard work arrangements have similarities but may not rely as much on communications technology for transactions. They may be referred to, for example, as temporary, contract, contingent, part-time, on-call, direct-hire, on-demand or freelance jobs. Self-employed professionals who are retained to provide specific expertise fall into yet another category, often for tax reasons.

Independent Contractors

Service providers working for a virtual marketplace company (VMC) operating in the gig economy are independent contractors, not employees, according to an opinion letter issued by the Wage and Hour Division of the U.S. Department of Labor (DOL) on April 29, 2019.

In its response to an unidentified company’s request for guidance, the DOL opinion, which is not legally binding, defines the VMC as a referral source that “empowers service providers to provide services to end-market consumers.” It finds that these service providers “are not working for the employer’s virtual marketplace; they are working for consumers through the virtual marketplace.”

In the letter, the DOL says the “touchstone of employee versus independent contractor status has long been ‘economic dependence.’” When determining economic dependence, the Wage and Hour Division considers six factors derived from U.S Supreme Court precedent:

1. Nature and degree of the potential employer’s control.
2. Permanency of the worker’s relationship with the potential employer.
3. Amount of the worker’s investment in facilities, equipment or helpers.
4. Amount of skill, initiative, judgment or foresight required for the worker’s services.
5. A worker’s opportunities for profit or loss.
6. The extent of integration of the worker’s services into the potential employer’s business.

“More business-friendly than similar opinions from the Obama-era administration, this opinion is helpful to any employer engaged in the gig economy and/or web-based operations,” said Rebekah Ramirez, an attorney with Faegre Baker Daniels LLP, a global business law firm. She interprets the guidance as broad enough to be referred to by any employer to help ensure contracts and work arrangements accurately reflect an independent contractor relationship.

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