The “gig economy,” where people take jobs on an as-needed basis, may be unfairly denying people the benefits of being employees. Those benefits include things like paid health insurance, workers’ compensation, unemployment insurance, shared payment of payroll taxes, the minimum wage and the overtime premium.
If employers are using the gig economy model to get contractors to do the work of employees, they could be in violation of the Fair Labor Standards Act (FLSA). For covered workers, the question of whether they are employees or contractors is not answered by the employer’s preference, but by a legal test used by the Department of Labor. The test takes into account issues such as:
- The degree of control over the worker exercised by the employer
- The ability of workers to use their own managerial skill to increase profit
- The permanency of the relationship between the worker and the employer
- The extent to which the work is integral to the employer’s business
The tech journal Gizmodo just did an exposé about the “last mile” of Amazon’s delivery system. Once an order reaches a warehouse in the destination city, the final deliveries are made by a host of independent contractors who get work through an app-based program, much as do drivers for Uber or Grubhub. They work through a program called Amazon Flex and earn an average of $20.50 an hour — high by gig economy standards. They do not receive any benefits and appear to lack meaningful access to dispute resolution.
Some legal experts question whether Amazon Flex violates employment and labor laws like the FLSA. It seems Amazon’s Flex model might not meet the FLSA’s independent contractor test. For one thing, Amazon seems to exert significant control over the details of the work. It holds drivers to strict terms of service and terminates them for apparently minor violations. It also “suggests” driving directions to each delivery. Some drivers work for Amazon Flex for years, indicating a relatively permanent arrangement. Certainly, the delivery of Amazon packages to customers seems integral to Amazon’s business.
If Amazon Flex workers are misclassified as independent contractors, there could be serious consequences. Legally, employees are entitled to be paid for every hour they work. Amazon Flex will not pay if drivers work longer than their allotted block of hours, which routinely happens. Their hours are also capped at 40 per week — no overtime is paid.
Do you think Amazon Flex has been misclassifying employees as independent contractors? We recommend reading the entire piece by Gizmodo. In the meantime, if you work in a gig economy arrangement and are concerned that you may be misclassified, we encourage you to contact an attorney experienced in employment law.