What's Happening?
The increasingly popular approach to regulating gig work is 'third-category' legislation, which purports to resolve the tension between gig work and employment. Under third-category laws, gig workers are neither employees nor standard independent contractors but a 'third category' of worker who forfeits employment in exchange for narrow benefits like minimum-pay protections and paid sick leave. Despite the name, third-category laws universally enshrine gig workers as independent contractors.
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Why It's Important?
While third-category laws offer immediate, limited support to gig workers, they ignore the central dilemma of misclassification: firms retain extreme control over working conditions while shirking the responsibility of employment. This approach reinforces existing labor market inequalities and solidifies independent contractors as low-status workers. The experience of California gig workers post-Prop 22 highlights the ultimate third-category scam, where promised benefits are virtually unenforceable without employment.
Beyond the Headlines
Organized labor has supported third-category laws in many instances, but this piecemeal approach is ultimately ill-fated. Wage-and-hour protections and collective-bargaining rights are both necessary to protect and empower workers. Policymakers must consider flexible employment laws that guarantee employees' flexibility, addressing the frustration that drives workers into the informal gig economy.
