Disrupting the Employee and Contractor Laws

Labor law and related regulations were created long before the current growth of the on-demand economy and the associated innovation in provision of goods and services. The current labor law structure contains only two primary categories of employment classifications—workers are either employees or contractors. Within this binary structure, the status of workers providing services in the on-demand economy is unclear and subject to ongoing litigation, creating an uncertain operating environment for on-demand companies. In this paper, I argue that these jobs in the on-demand economy represent a form of labor relationship not well captured by the current employee/contractor model. Forcing these on-demand workers to become clearly employees or clearly contractors would, in either case, be replacing the current services with distinct and quite likely inferior services from those offered in the on-demand economy today. I conclude that the preferred resolution of the current uncertain legal and regulatory environment surrounding employment in the on-demand economy would be through modification of the classification scheme to reflect this new alternative type of labor relationship, rather than by forgoing the value created by the on-demand economy.