There’s no debate. The way the world works is changing.
The gig economy plays a critical role not just for Arise’s Service Partners, but for many Americans. According to Statista, it is predicted that the gig economy will hit nearly 87 million workers by 2027 and make up over 50 percent of the workforce. Despite this, records show that governing bodies have not caught up with the times. While there is growing recognition that the old concepts of employee vs. independent contractor are antiquated and need to be updated, the Courts are struggling with how to apply old-fashioned tests in a new economy. Case in point: Arise’s legal matter with the Department of Labor. This case, now resolved, was focused on our business model – specifically how we classify our Service Partners and their Agents. Critically, during this case, the Court ruled that, as a matter of law, Arise had a good faith basis for classifying Service Partners and their Agents as independent contractors. In addition to Su v. Arise Virtual Solutions Inc., there are other legal cases where companies have encountered challenges regarding the use of the independent business owner model:
- “The test the … courts have developed over the 20th Century for classifying workers isn’t very helpful in addressing this 21st Century problem. Some factors point in one direction, some point in the other, and some are ambiguous.” Cotter v. Lyft, Case No. 3:13-cv-04065-VCSlip Op. at 19 (N.D. Ca.).
- “With the advent of the gig economy, and the creation of a low wage workforce performing low skill but highly flexible episodic jobs, the legislature may want to address this stark dichotomy. In the meantime the Court must answer the question one way or the other. Based on what the Court observed at trial and the facts found … the Court finds that during the four months Mr. Lawson performed delivery services for Grubhub he was an independent contractor.” Lawson v. Grubhub, Case No. 3:15-cv-05128-JSC, Slip Op. at 33 (N.D. Ca.).
- “The question presented, whether UberBLACK drivers are properly characterized as employees or independent contractors under the Fair Labor Standards Act and its Pennsylvania law counterparts, is an intractable one. It has become clear to the Court this ‘either-or’ determination simply does not comport with the nature of the gig economy, at least as it pertains to UberBLACK.” Razak v. Uber Technologies, Case No. CV 16-573 (E.D. Pa.).
Given the critical role of the independent contractor for both Arise and the broader American economy, we are monitoring developments in this space and taking a leading role in educating policymakers and regulators about the benefits offered by the independent contractor model. We look forward to sharing more on this topic as updates occur.
