GIg Economy

Lawyers looking to advise clients dabbling in the gig economy may have their work cut out for them, according to the “Succeeding in the Gig Economy” panel held on Friday at the ABA Tech Show.

According to some Federal Reserve statistics referenced during the presentation, 31 percent of working adults participate in the gig economy for an average of five hours per month.

Employers are happy because it means lower overhead and employees like the flexibility associated with being able to decide when and where they work—but those arrangements can still present all kind of legal complications.

“If you're treating your workers like employees, that's going to be an issue,” said Emily Wajert, an employment associate at Kramer Levin Naftalis & Frankel.

If that's the case, then how do you delineate an employee from an independent contractor? The answer differs from state to state and leaves plenty of room for interpretation.

Wajert and Basha Rubin, co-founder and CEO of Priori, laid out two of the more common approaches. The Economic Realities Test has been utilized by entities like the Department of Labor and by states like Pennsylvania. It looks closely at the nature of the work being performed filtered through the tenants of integrality, managerial skill, relative investment, permanence of relationship and degree of control.

The ABC Test, on the other hand, has been the source of great contention for companies reliant upon the services of independent contractors in California. It assumes that anyone is an employee if their work is a central part of the core business.

“It's more difficult for employers who want to categorize their workers as independent contractors to meet,” Wajert said.

However, there are things that attorneys can advise their clients to do to help make the distinction between employee and independent contractor less ambiguous. Job training, for example, should be administered separately between the two groups.

Previously employers may have avoided training non-employees altogether, but Wajert advised against this since companies can still be held accountable for the actions of their independent contractors.

Drafting the same employment contracts to use for employees and gig economy workers is also inadvisable. “You really need to have those distinctions. It's really important.” Wajert said.

Rubin pointed to the potential of the gig economy with regards to the legal industry, citing a CLIO study that shows small law firms achieving an average of 2.4 billable hours per day. The rest of their time is devoted to administrative work or marketing and collections.

Being able to farm some of that work out to independent contractors could free time for more lucrative activities. “That kind of model I think will increasingly touch lots of clients and industries,” Rubin said.