In an attempt to maximize profits and cut labor costs, corporations are skirting labor laws to classify their workers as independent contractors rather than employees. Replacing direct employees with independent contractors reduces labor costs for companies because contractors do not receive the same benefits and protections as employees, including employer-sponsored health care, Social Security benefits, and unemployment insurance. This trend shows no sign of slowing down; In fact, the rise of app-based workers in the United States economy tripled between 2017 and 2021. According to IRS data, five million taxpayers reported income from an app-based platform company. Digital platform companies such as Uber, Lyft, and Instacart have relentlessly mounted federal, state, and local campaigns to erode worker rights and consumer protections further. They aim to legislate permanent carve-outs for their workers, allowing corporations to deny workers employee benefits and minimum wage and misclassify them as non-employees.

App-based workers such as ridehail (commonly referred to as “rideshare”) and delivery drivers are disproportionately people of color. According to a survey by Pew Research Center, Hispanics are more likely than other racial or ethnic groups to have done platform work, with 30 percent of Hispanic adults having earned money through an online app-based platform. These jobs are precarious by design, harmful to workers’ health and financial security, and exacerbate racial inequities. In a survey by Center for Law and Social Policy (CLASP) and Data for Progress, 50 percent of app-based workers reported feeling overworked and say their jobs are physically exhausting, and 56 percent of app-based workers say that knowing their employer tracks them worsens their mental health. Compared to non-app-based workers, app-based workers are 13 percent more likely to say that the pace of work makes them exhausted.

In this report, CLASP outlines a set of principles to provide a framework for policymakers and advocates that uses an economic and racial justice perspective to assess a range of proposals on the intertwined issues of low wages, less benefits, and fewer protections for workers in these jobs, including temp and franchise workers. There are no set definitions of “gig” work or the “gig” economy. Some experts define it as workers who “earn money from an online employment platform across industries, such as ridehailing, online tasks, and cleaning,” while others have applied “gig” to all sorts of nontraditional labor, such as “contingent labor,” “temp labor,” or the “precariat,” as in the precarious nature of the type of work.

The scope of this CLASP report includes app-based workers, as they are a large group of workers misclassified as independent contractors rather than employees. This report also includes temp workers, who are largely considered contractors to the companies they are temping for since they are employed by temp or staffing agencies. Finally, this report also discusses franchise workers, whose ability to organize and bargain with the parent company that controls their employment is greatly undermined.

In offering the following principles, CLASP draws on our expertise about policy that reduces poverty, improves the lives of people with low incomes, tears down systemic barriers that hold back Black people and people of color, and advances racial and economic justice. Within that context, we propose the following principles to improve the work and lives of app-based workers, temp workers, and franchise workers:

1. Policymakers should center the voices and experiences of workers in their decisions about how to regulate digital labor platforms, including but not limited to ridehail and delivery workers, temp workers, and other independent contractors. In order to do this, policymakers should prioritize meeting with worker centers and labor unions.
2. Employment and labor law must be strengthened to widen the benefits that app-based workers receive in order to reduce poverty and inequality.
   • Policymakers should support the U.S. Department of Labor’s final Independent Contractor Rule, which will more effectively ensure that all workers, including misclassified app-based workers, have access to work protections such as federal minimum and overtime wages, employer-sponsored health insurance, worker’s compensation, and anti-discrimination protections.
   • Federal regulations should be in place on deactivation policies such as Just Cause termination or suspension in order to protect workers from being wrongfully deactivated from app-based platforms, which can lead workers to not having an income.
   • At the federal level, NLRB regulations such as the Joint Employer Rule should be protected in order for all workers – including workers in temp agencies, franchise models, and subcontractors – to hold employers responsible for labor rights violations.
3. Comprehensive policies to protect app-based workers’ rights should include regulations on corporations and establishing corporate accountability.
   • Regulators such as the Federal Trade Commission (FTC) should aggressively crack down on corporate and monopoly power by enforcing laws on price fixing and worker misclassification.
   • Congress should enact legislation to increase data transparency on app-based platform companies in order to seek a better understanding of the gig economy and its app-based workers.

>>Read the full report