As new platform companies like Uber and Lyft have people talking about the nature of work in the gig economy, the concept of employment has become more difficult to define. Recent research has shown that the number of workers who aren’t technically employees has increased significantly in recent decades. While this might not seem like a bad thing on its face, employment status has traditionally been tied to important protections and benefits, which may be eroding as these shifts affect a growing group of workers. While new tech companies get most of the attention as we debate the changing nature of work, it’s also important to realize that they are only playing a small part in larger trends. Read on to see how employment is changing, who is affected, and what that means for workers.

How Many People Are We Talking About?

While platform companies like Uber have gotten most of the attention lately, particularly in the context of labor disputes, it’s important to look at the scope of employment trends and the role that technology companies, and many others, currently play. Unfortunately, there isn’t a lot of available data on the growth of individuals with what are called “alternative work arrangements”–temporary workers, on-call workers, freelancers, contract workers, and independent contractors. What’s notable about these work arrangements is that they differ from traditional employment status, as they are typically less stable and include fewer protections and benefits.

The Bureau of Labor Statistics hasn’t conducted its Contingent Worker Survey (CWS) since 2005, which is where we would traditionally look to for a better understanding of how many Americans have non-traditional employment situations. However, economists Alan Krueger and Lawrence Katz sought to make up for the gap in data by partnering with the Rand Corporation to conducting a survey of their own, which could be compared with past versions of the CWS to see how things have changed.

Krueger and Katz designed their survey to mirror the CWS so that they could accurately track how the share of workers with these alternative work arrangements has changed over time. In their research, they find a significant growth in the number of these workers from 2005 to 2015 in terms of their share of the total labor force–from about 10 percent in 2005 to nearly 16 percent in 2015.

Importantly, the researchers note that the increase in workers with alternative arrangements, 9.4 million between 2005 and 2015, is actually larger than the total increase in total employment (9.1 million). This means that the number of people who have traditional jobs actually decreased slightly over the last decade, while the number of people who work as independent contractors increased–by a lot. As Katz and Krueger put it, “A striking implication of these estimates is that all of the net employment growth in the U.S. economy from 2005 to 2015 appears to have occurred in alternative work arrangements.” In 2015, the total number of these workers had grown to 23.6 million.

All Because of Uber?

While online platforms that match workers with temporary gigs–like Uber, Lyft, Task Rabbit, etc.–have brought the issue of nontraditional employment into the forefront, these companies actually play a relatively small role in the overall trend. In fact, Katz and Krueger estimate that these companies accounted for just 0.5 percent of the total workforce, or about 600,000 people, in 2015. While it’s likely that as these companies have grown that share has increased, they remain a small part of the shift toward alternative work arrangements.

Although technology platform companies account for a small share of alternative employment they have been at the center of the debate. Some see these companies as a great opportunity for people to use the resources that they have to easily and quickly make some money on the side or even full time. Others see the rise of companies like Uber as a problem–attributing their success to their ability to skirt or work around employment laws, not a triumph of new technology. There’s a notable segment of the population who may have an opinion about the quality of these services but haven’t given much thought to what they mean for their workers. Finally, it’s important to note that a significant percentage of people haven’t experienced or aren’t familiar with these services. According to a Pew Research Center survey from 2015, only 15 percent of Americans had used ride-hailing apps like Lyft and Uber, and one-third of Americans hadn’t even heard of them. While those numbers include important caveats–they focus on ride-hailing apps, not the gig economy as a whole, and more people have likely become familiar with these services since then–it’s important not to overstate the size of this phenomenon.

While the share of workers rose for all four of the alternative work arrangement classifications, there was a notable increase in workers hired by contract firms and temporary help firms, which according to Katz and Krueger account for more than half of the total increase between 2005 and 2015. Independent contractors still account for the largest percentage of people in these work arrangements at an estimated 8.4 percent of the labor force.

What Does it Mean to be an Employee?

In light of all of this, we should take a look at the differences between employee status and independent contractor status. Workers who have formal employee status with their employer are entitled to a range of benefits and are protected by several workplace-related laws. They can also collect unemployment benefits, disability insurance, and workers compensation. Contractors typically do not have these same protections and benefits and are responsible for the full share of their payroll taxes, while employers pay half of the tax burden for employees.

Being an independent contractor has its benefits, notably more control over your work, but that comes with fewer protections and benefits. There are several ways to determine if you are an independent contractor or an employee, but a lot of it boils down to how much control your employer has over what you do. Some people may prefer the freedom provided by contract work and freelancing, while others might prefer the stability and benefits involved with traditional employment.

Potential Challenges

While some may be willing to make the tradeoffs when opting for an alternative work arrangement, not everyone has that choice. In an effort to keep costs lower and more predictable, many companies have started to outsource tasks that would traditionally be done by employees to independent contractors. As a result, people looking for traditional employment may only be able to find contracting jobs, creating greater uncertainty for workers. While Katz and Krueger approximate that the shift to alternative work arrangements has been larger for high-income workers, examples of low-wage contracting abound and further research needs to be done to identify how the shifts contribute to wage inequality.

Work simply isn’t as steady and as reliable when you are freelancing or working as a contractor, and importantly, it is much more difficult for contractors to get benefits that are widely available to employees. These workers are also not protected by minimum wage and overtime laws and are typically unable to collectively bargain. And when businesses need to cut costs, they are more likely to reduce contracting expenses before they fire employees.

Many people actively decide to forgo those protections in order to have more control over their schedule and work, but given that this change has occurred during a period of high unemployment, workers may be taking these positions out of necessity rather than choice. While we don’t know exactly what prompted these larger trends, it’s fair to question whether workers in alternative arrangements would prefer to be traditional employees if they had the option.

Addressing Changes in the Nature of Work

As more and more people find themselves without the benefits and protections of traditional employment, many advocates and policymakers have proposed solutions to protect these workers. Some have called for the creation of an intermediate classification to help workers that are not considered employees. Alan Krueger, this time with Seth Harris, proposed a new classification that they call the “independent worker.” Sitting in between the existing classifications, independent workers would be able to take advantage of some, but not all, of the protections provided to employees. They would be allowed collective bargaining rights and could pool together to fund insurance programs. They would also be able to benefit from tax withholding in their paychecks and would have their employer pay its half of their payroll taxes. While this classification would give them civil rights protections, minimum wage and overtime laws would not apply to them. Proponents argue that amending employment laws could give employers more flexibility while still ensuring important benefits and protections to workers.

Absent a new classification, some local governments have already made efforts to expand certain protections to independent contractors. In 2015, the Seattle City Council passed legislation to expand collective bargaining rights to drivers who work for transportation network companies as well as online platforms like Uber and Lyft. This allows drivers in the city to form unions and negotiate for better wages and benefits with the companies that they work for. However, that legislation was temporarily blocked by the courts before it took effect.

Other proposals focus on creating portable benefits, which are not tied to employment status. An example of this came from the Affordable Care Act, which created exchanges for individuals to buy health insurance on their own. The law also provides premium subsidies to reduce costs for those with incomes below 400 percent of the federal poverty line. Additional efforts like President Obama’s proposed MyRA program would allow people in alternative work arrangements to have access to a simplified retirement account untethered from an employer. There is a range of proposals that would create systems for contract workers to buy benefits on their own or with the help of their employer.

Conclusion

As more and more people find themselves in alternative work arrangements, the traditional concept of employment  is changing. Many workers now have to manage work that is less stable and provides fewer benefits and protections relative to traditional employment. While these shifts likely reflect, at least in part, the changing preferences of workers, as people desire more flexibility and control, it is also likely that many people would prefer traditional employment.

Most of the recent discussion of these trends have focused on the rise of technology platform companies, which allow individuals to find short-term gigs as a new form of work. But that debate tends to mask the larger trend, as technology companies still account for a small share of the total labor force. In order to address this shift help the affected workers, policymakers will need to rethink how employment is connected to important benefits and protections. Proposals ranging from an entirely new employment classification to portable benefits, seek to address the needs of workers while ensuring that new companies have the flexibility they need to grow.

Kevin Rizzo

Kevin Rizzo is the Crime in America Editor at Law Street Media. An Ohio Native, the George Washington University graduate is a founding member of the company. Contact Kevin at krizzo@LawStreetMedia.com.

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Clothing company Abercrombie & Fitch is no stranger to legal trouble due to its alleged discriminatory practices against both workers and customers. The brand came under fire for its refusal to hire a young woman in Oklahoma because she wore a religious head covering. On June 1, after much deliberation, the Supreme Court ruled 8-1 in favor of Samantha Elauf, the prospective employee who was denied a job because of her hijab.

Court rules in favour of Muslim woman who failed to get job after wearing scarf to interview http://t.co/wSiVAgsGvL pic.twitter.com/zagHX1Usdv

— The Independent (@Independent) June 2, 2015

Abercrombie is known for making clothing marketed toward young, preppy, attractive people. Many past employees have claimed that the company discriminated against them for their body type, religious practices, or race. The company has also been known to only market its clothing toward thinner people, as it refuses to make clothing for plus-sized women.

According to Politico, the company paid $50 million to Latino, African American, and Asian job applicants who claimed that there was a lack of diversity in the company. Elauf’s victory in this case has set a precedent for all future employers to follow, which will greatly benefit all potential employees.

In 2008, 17-year-old Elauf applied to Abercrombie & Fitch to work as a salesperson. She did not ask the company to make a religious accommodation for her headscarf during her interview with assistant manager Heather Cooke, and so she was not given the job for two reasons. Firstly, Abercrombie claims that Elauf’s headscarf violated its “look policy,” due to the fact that it was black and considered prohibited headwear, although Elauf claims that she was never informed of this exact policy during her interview. Secondly, Abercrombie also claims that it had no liability since Elauf never identified her headscarf as a religious garment and also because the company did not want to automatically assume that it was being worn for religious reasons so that it doesn’t stereotype any potential employees.

On behalf of Elauf, the Equal Employment Opportunity Commission, a federal law enforcement agency, sued Abercrombie for discrimination. It was determined that the company did not actually discriminate against Elauf, although her rights were violated under Title VII of the 1964 Civil Rights Act. Abercrombie also has since changed its policies, as now it allows its workers to wear headscarves if they choose to do so.

According to Justice Scalia who wrote the majority opinion in the ruling, “an employer may not make an applicant’s religious practice, confirmed or otherwise, a factor in employment decisions.” The Guardian  also reports that multiple other religious groups were in support of Elauf’s case.

This ruling is a major step forward in terms of workplace equality, as it helps to protect the rights of not only minorities, but all people. Companies now cannot deny employment to any potential worker due to his or her religious observances, which will in turn increase the amount of opportunities available for religious minorities. This court decision also has the potential to completely change how American society views equal opportunity, religious freedom, and workplace discrimination.

Toni Keddell

Toni Keddell is a member of the University of Maryland Class of 2017 and a Law Street Media Fellow for the Summer of 2015. Contact Toni at staff@LawStreetMedia.com.

The post SCOTUS Rules in Favor of Muslim Women Against Abercrombie over Hijab appeared first on Law Street.

Where is the line between independent contractor and employee? That was the question presented in the case of Coleman vs Pink Poodle Enterprises, where 11 former exotic dancers at the Pink Poodle strip club sued their former employer for failing to pay them minimum wage and overtime or provide them with benefits. The club is located in San Jose, California and has been owned and operated by the Kuzinich family for the past 57 years.

The club got around these provisions in the California Labor Code by classifying the dancers as “independent contractors”, rather than “employees”, despite the fact that dancers had regular work schedules, specific dress codes, and were required to attend employee meetings the way a typical “employee” would.  As independent contractors, the dancers were ineligible for benefits such as Medicare and Social Security. This is the main legal argument that the Kuzinich family is using to counter the dancers’ claims: they are independent contractors, and therefore minimum wage and benefit laws do not apply. This is certainly a stretch, since “independent contractors” are not bound by employer guidelines the way that these dancers were.

Not only were the dancers deprived benefits, but some of them were not even paid for their labor at all. Instead, they were required to pay the club for the opportunity to dance there. This is referred to by many club owners as a “house fee” that the dancers must pay in order to get time on stage, similar to the way that a hairstylist can rent out a chair at a salon. However, hair stylists who do this are usually not bound to salon schedules or meeting times the way that these dancers were.

This is an issue that is being raised in clubs across the country, and it is not the first time that dancers are fighting back against their employers. Another lawsuit, filed in 2013 by Felicia Harmon and others against Foxy Lady, Inc. and Arthur Dillard, raised the same employment issues as the dancers at the Pink Poodle. In addition, dancers at the Foxy Lady were forced to pay a “bar fee” so that they could choose to work any shift and were required to pay a fine if they showed up to work late. Now I don’t know about you, but the idea of paying my employer to work seems outrageous. Regardless of one’s personal opinion towards exotic dancing as a profession, labor is labor.

There is an upside to being labeled as an independent contractor–tips. Since the dancers are not given an hourly wage, they are able to keep all (or the majority) of the tips that they make from their dances. According to an exotic dancer who goes by the name Menagerii, this can be between $500 and $1500 on an average night. In fact, many of the dancers didn’t even realize that they were being taken advantage of because they walked away with a decent amount of cash each night.  However, while $1500 may seem like a lot, when the fee to dance at the club and the cost of medical care are taken into account that number drops fast.

The majority of past cases have ruled in favor of the dancers, rewarding them with settlements of millions of dollars. In 2012, another club in California settled a similar lawsuit for $12.9 million and a third lawsuit settled in 2013 required the Penthouse Executive Club to pay $8 million to its dancers in wages and overtime. While we don’t know explicitly how much compensation the dancers from the Pink Poodle are seeking, past precedent shows that the dancers are likely to be victorious and receive a large settlement.

Featured image courtesy of [401(K) 2012 via Flickr]

Brittany Alzfan

Brittany Alzfan is a student at the George Washington University majoring in Criminal Justice. She was a member of Law Street’s founding Law School Rankings team during the summer of 2014. Contact Brittany at staff@LawStreetMedia.com.

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