The new proposed rules issued by the US Department of Labor (USDOL) regulating gig workers and the approach to those same workers by the Israeli Labor Court (in cases involving Uber and others) threaten to destroy the gig economy and derail millions of gig workers. Both here in Israel, gig workers are being threatened with being declared employees of their various platforms, whether Fiverr in the US and Israel or Uber or even independent business lawyers on InsideOutsideCounsel. Gig workers and the gig economy are tailormade for independent contractors, professional people who like doing their specialized jobs on a project or part-time basis. And remotely, rather than in a traditional office setting. This is a boon for people — all over the world, including in the US and Israel — who otherwise wouldn’t find work easily, matching skilled people to those who need their skills quickly, easily, and above all inexpensively by cutting out the overhead and using the advantages of the internet and electronic communication.
By declaring these independent professionals to be “employees” of platforms like Fiverr and Uber and InsideOutsideCounsel, the cost to those platforms of marketing their services increases prohibitively. So next time anyone wants to order a gig worker, doing so will be prohibitively expensive, and the gig economy will collapse. This will derail some of the best platforms that pair skilled people to projects and will have as a side-effect a negative impact on the economy and indeed on the Start Up Nation in particular. To prevent this, we need a definitive declaration of independence for those gig workers and their gig economy.
The History of Workplace Safety and Minimum Hour Laws
To understand why this legal attempt to turn gig workers into employees is badly planned overreaching, we need to understand where these kinds of laws come from. Originally, labor and employment laws were about genuine exploitation of employees bordering on slavery. Originally, these laws were promulgated to protect those perceived as vulnerable groups of employees. Historically, this wasn’t just socialist rhetoric. In the United States, there were “company towns” in which workers lived in company housing, shopped at company stores, and worked around the clock in dangerous conditions. Employees in those “company towns” were treated far worse than biblical slaves, and conditions like these prompted the cataclysmic and fundamentally wrong and misguided vision of Karl Marx in what he regarded as his masterwork, the verbose and unpleasant-to-read Capital, that “capitalism” inevitably would result in the impoverishment of vast masses of humanity and an inevitable workers’ resolution. That didn’t happen, though tyrants throughout history ranging from Lenin to Mao to Pol Pot to Castro used his atheistic religion to enslave their peoples in a manner far worse than the “capitalists” Marx railed against and excoriated. But in most places, instead of communism, excesses often led to laws attempting to temper those excesses. Tragic events affecting (among others) the Jewish community like the Triangle Shirtwaist Fire in Manhattan killed almost 150 people due to poor fire hazard planning and working conditions, spurred labor and employment laws including safety measures in the workplace, maximum hour, and minimum wage laws. A reasonable argument can be made that some of those laws — many dating back a hundred years — are beneficial and did solve some of the more egregious “company-town” kinds of legal slavery situations.
Why Gig Workers Are Not Enslaved But Freed
The current efforts by the US Department of Labor and the Labor Court to regulate the so-called gig-economy, in which gig workers have for many years now accepted projects as independent contractors, is the very opposite of mitigating semi-slavery. By eliminating the ability of people to work as independent contractors — while solving their marketing challenges by providing them an easy-to-use marketing platform to do, for a very small platform fee — the new rules about treating these workers as employees is actually destroying their source of income at its source. These workers are making a decent living with zero overhead and doing so most often from the freedom and privacy of their own homes or the comfort of their own cars in the case of Uber. This makes them the very opposite of the kind of vulnerable employees sitting in the Triangle Shirtwaist Factory that the labor and employment laws were originally designed to protect. These workers are not enslaved but freed. They are using modern technology and communications to free themselves from the bonds even of a daily commute. On the other hand, if these gig workers are transformed into employees, they won’t be employees but simply unemployable. That’s because the $5 fee that a platform like Fiverr may be earning on a particular gig will never make it worthwhile for Fiverr to actually employee a gig worker as an employee, and indeed that platform — an example of the Start Up Nation’s innovation — would likely close its doors to any gig worker from the US or Israel if this new initiative gears up as currently threatened in both the US and Israel. The test applied for whether a gig worker is to be deemed an employee is admittedly a multi-factor test. But the standards are too broad and too unclear to provide a safe harbor for platforms that are providing their gig workers marketing help without a significant risk of being slapped down as “employers.”
This is nothing short of a terrible idea. When the global economy generally and that of the US and Israel in particular are showing the strains of inflation and a retrenching of the tech sector, the last thing we want to do is kneecap the gig economy. It’s not too late to reverse the trends and the administrative and judicial actions that have been taken until now. We need a definitive declaration of independence for gig workers.