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Hastings Science and Technology Law Journal

Abstract

The on-demand economy emerged over the last decade as a new commercial model facilitated by the laws of online contracts. This article focuses on four specific categories of web-based services with common characteristics: (1) Marketplaces, (2) Contractor Marketplaces, (3) Gig Platforms, and (4) Service Platforms. Categorizing on-demand companies in this way highlights how the law is lagging behind technology in a near-calamitous fashion; existing classification rules address a black and white dichotomy (employee vs. contractor) where these marketplace realities warrant a more nuanced approach. This article discusses how traditional rules surrounding worker classification provide, or fail to provide, clear guidance on how to classify workers in the four categories. While Marketplaces, Contractor Marketplaces, and Service Platforms benefit from this guidance, Gig Platforms’ workers are not entirely well suited to classification as either independent contractors or employees. This lack of guidance from traditional rules for emerging ways of doing business creates confusion that acts to prevent on-demand economy companies from providing benefits they often want to provide for workers and creates apprehension around how to structure their relationships with workers. Given that classification assertions are required by the IRS in an entity’s annual tax filings, I propose a means to use updated versions of those tax filings to drive intelligent, custom-built legislation to govern worker classification in Gig Platforms. Such federal legislation could selectively negate clickwrap terms where justified by long-recognized public policy goals, and serve those public policy goals in the modern workforce by applying either existing employee or independent contractor rules to the freelancers who take work from Gig Platforms under certain preidentified circumstances.

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