As California grapples with legal challenges over the classification of gig workers, Massachusetts has launched its own trial on the same issues this week.
The dispute over whether gig workers should be classified as independent contractors or employees is a key contention in the modern gig economy, named for its reliance on independent contractors.
A new approach
Research led by Northeastern University suggests that both workers and platform companies could benefit from moving away from the independent contractor model to standardized employment.
The researchers examined the behavior of Deliv, a U.S.-based package delivery platform that handles last-mile deliveries between retailers and consumers. They discovered that when workers shifted from independent contractors to employees, their flexibility remained, while the company’s operational efficiency improved.
Following the enactment of California Assembly Bill 5 (AB 5) in 2020, which reclassified workers from contractors to employees, Deliv implemented this change. The company operates in cities such as San Jose, Santa Monica, San Francisco, Chicago, Atlanta, Boston, and Houston.
The company saw potential benefits in the transition. “They actually thought there might be some operational advantages to moving from contractual work to employee status in terms of planning, scheduling, and reliability,” the authors note.
New classification
The operational data analyzed included hours worked per shift, scheduled hours, number of packages delivered, paid hours per driver, and driver tenure. Researchers also conducted interviews with workers and management, comparing data post-AB 5 implementation in California with data from cities where drivers remained contractors.
The comparison was vital to distinguish changes specific to California from those influenced by the COVID-19 pandemic, which saw a surge in same-day delivery services due to stay-at-home orders.
In November 2020, California passed Proposition 22, backed by Uber and Lyft, overriding AB 5. The California Supreme Court is currently reviewing Prop 22’s constitutionality.
“Our approach helps to fill an important void in the literature: there are few data-driven assessments of the merits of the arguments for or against treating workers as employees,” the researchers write.
The challenges of the gig economy, from profitability to worker treatment, span multiple disciplines. The researchers highlight how the rise of smart devices coincided with the 2008 financial crisis, prompting many Americans to seek new forms of employment. On-demand digital platforms emerged, and by 2011, the app-based business model began to transform the services sector and the economy.
