From Workforce, Adam S. Whitman and Adam J. Smiley of Seyfarth Shaw describe the challenges facing tech companies that can provide services quickly, at any hour of the day and cheaply by engaging with contract workers. They write:
“The on demand economy is growing — fast.
This type of commerce, largely driven by tech startups, allows consumers to quickly and easily buy goods and services with their computers, tablets and smartphones. Dinner can be ordered online; a car ride is available through an app; house cleaners can be hired in minutes; and groceries can be ordered without leaving the couch. Snoop Dogg is even getting into the action as an investor in a delivery app for medical marijuana.
The speed of delivery is possible because a fleet — literally or figuratively — of contract workers is available to provide these goods and services 24/7. These workers have the flexibility to accept many jobs per day as a primary source of income, or just a few per week as a secondary source. This model creates a fluid but deep pool of workers who are classified under the law as independent contractors. These workers may freely pick and choose when and where they perform work for these online or app-based companies.
Employers have long faced difficulties classifying workers as independent contractors in more traditional industries. Lawsuits challenging the classification under the Fair Labor Standards Act and state law are common, with plaintiffs seeking significant back wages and liquidated damages.
More recently, there has been a rash of litigation involving unpaid interns, another nontraditional job arrangement that shares many similarities with the independent contractor analysis. Interest groups for independent workers and freelancers are growing in strength and visibility, and these organizations may embolden workers to challenge their classification status. Compounding the risk are the increased efforts of the U.S. Labor Department, Internal Revenue Service, and state agencies to crack downon worker misclassification.Labor
The first wave of on demand lawsuits has already arrived, with lawsuits filed in California and New York against online or app-based firms that provide car rides, house cleaning and home repair, and personal assistant services.
In short, the on-demand economy appears to be the newest front of wage and hour lawsuits targeting nontraditional and independent employment arrangements.
So how is a business supposed to know if a worker can be designated as an independent contractor?….”
Read the full story at Tech Companies Targeted for On-demand Independent Contractors