Legislating the Gig Worker Economy

By Liz Farmer

June 25, 2020

Part One of this series will address the legislative approach to protecting gig workers’ rights in California and other states. Part Two looks at efforts to protect gig companies. Part Three looks at how the COVID-19 economic crisis might influence the gig economy and labor policy going forward. 

How State Lawmakers Are Approaching Gig Workers

The ever-expanding reach of technology into our daily lives has the quixotic result of both liberating us in many ways, yet holding us hostage in others. Many of us no longer have to be in the office to do our work―but that means work can follow us anywhere outside the office. The same is true with the way businesses are approaching their relationships with workers in the gig economy.

By some estimates, more than one-third of US workers―57 million people―participate in the gig economy, either through their primary or secondary jobs. These modern, on-demand jobs mean the flexibility to work when and where workers choose―but at the cost of traditional employer protections and benefits.

The economic recession caused by the COVID-19 crisis rapidly exposed this vulnerability for gig workers, who are essentially freelancers or independent contractors with one or more companies. Over the last decade or so, their use has increased as dozens of companies have taken jobs that already exist―such as taxi drivers or home repair people―and created gig jobs out of them via an app-based platform like Uber or Handy.

When social distancing mandates were put in place to stop the rapid spread of disease, it also abruptly halted the incomes of these workers who were previously ineligible for unemployment insurance. The federal CARES Act, passed in late March 2020, took the unprecedented step of expanding unemployment insurance to independent contractors and other gig workers―an acknowledgement of the need to provide a safety net to a labor category that is becoming an increasingly larger part of our economy.

At what point does the gig economy begin to harm overall economic growth factors like wages and job growth? Or does it ever? And will companies with traditional jobs start feeling left behind?

As state lawmakers return to work, they will be rethinking current worker protections in light of the weaknesses exposed by COVID-19. When the crisis began, two types of laws at opposite ends of the political spectrum were circulating in state legislatures. In Democratically-led states, legislators have been looking at how to guarantee more traditional protections and benefits for these nontraditional workers. In Republican-led states, legislatures are passing bills that clarify the limit of companies’ legal liabilities to their gig workers.

“There is a very dichotomous situation going on,” warns the California Labor Federation’s Steve Smith. “If we go five or ten more years of seeing this business model expand without legislative action, any change after that point might be too late.”

Part 1: Protecting Workers

Part 2: A New Legislation Model for Gig Companies

Part 3: Pandemic Exposes Vulnerability—and Size—of the Gig Workforce