Today’s “independent contractor” may be tomorrow’s employee

Some gig workers say forced arbitration fails them because rulings don’t set standards for proper workplace treatment.
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· 3 min read

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As Plato once pondered while waiting for his AthensEats delivery, “What makes someone an employee?” I hope you’ve had your coffee, because today we’re getting philosophical about the nature of work and how forced arbitration has become the latest battleground in the war between labor and management.

To be or not to be (classified as an employee)? As many as 51 million Americans currently work in the gig economy, an increase of 34% over 2020, according to a report from MBO Partners. Companies ranging from Uber to TaskRabbit contract gig workers to perform on-demand services and often classify them as “independent contractors.” Critics point to obvious financial incentives for doing so: companies usually don’t have to foot the bill for employee benefits and independent contractors are usually entitled to more limited workplace protections than full-time employees.

Forced arbitration clauses are an overlooked component of the worker classification conversation. As of 2016, two-thirds of gig workers had arbitration clauses in their contracts that basically say, “If you have a problem with your boss, you agree to negotiate in a private setting—not sue.”

Statistically, arbitration is stacked against workers: employers are favored, workers receive smaller awards than in court, and, crucially, it doesn’t lead to improved workplace standards. This is a huge problem for gig workers hoping to use the legal system to access employment benefits and rights.

“If workers get a good decision in arbitration, [due to confidentiality] it sits there, and it doesn’t do anything to reform the overall industry,” Nicole Moore, an activist with Rideshare Drivers United, explained.

Now some gig workers are taking legal action against companies including Amazon, DoorDash, and Uber, demanding their complaints be heard (these companies did not respond to HR Brew’s request for comment). Moore said that, if successful, these cases—and subsequent legal proceedings they’d allow—have the potential to change the industries.

“[Arbitration] doesn’t help overall accountability. It’s just a one-time payment,” Moore told HR Brew. “So, these lawsuits [are] a way that [workers] can both fight back and set precedent moving forward.”

Zoom In: So far, the courts have been mixed in their response, ruling against Amazon in its bid to compel Flex Drivers into arbitration and elsewhere siding with Uber. In hearing the arbitration suits, two big questions loom: Can workers pursue claims and damages outside arbitration, and, if they can, will the courts begin to award employment rights to gig workers?

People ops should watch these evolving cases closely. (SHRM offers advice on independent contractors here.) As employment attorney David Pryzbylski told HR Brew, “The best defense is a good offense. Take a look at where the tide is flowing and talk to your legal counsel, it’s always better to be ahead of the curve than behind.”—SV

Do you work in HR or have information about your HR department we should know? Contact Susanna Vogel via the encrypted messaging apps Signal and Telegram (@SusannaVogel) or simply email [email protected]

HR is challenging. HR news doesn’t have to be.

HR Brew keeps you effective in the fast-changing business environment.