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The gig economy has transformed the nature of work. Millions of people seeking short-term, flexible jobs through digital platforms that promise unlimited earnings and a “be your own boss” structure have encountered the reality of long hours for little pay and work instability.[1] This reality raises significant legal and policy questions regarding workers’ rights and protections for gig workers.[2] This blog post compares the United States’ treatment of gig workers with Australia’s, analyzing the positives and negatives of each system and evaluating whether the U.S. should adopt an alternative model.
The Internal Revenue Service (IRS) defines “gig work” as “… certain activity you do to earn income, often through an app or website” and lists activities ranging from “driving a car for booked rides or delivery” to “[p]rovi[ding] other temporary, on-demand or freelance work.”[3] This definition was introduced in 2020 as part of the IRS’ Gig Economy Tax Center launch, which was intended to help gig workers fulfill their tax responsibilities.[4] Prior to this, gig workers were recognized under tax law as “business owners,” and with this classification came tax schemes that were more complicated to navigate. [5]
Another area where the problem of worker classification in the gig economy is most prominent is in the realm of labor and employment law.[6] The inconsistency of legal protections stems from the ongoing issue about whether gig workers are considered independent contractors or employees.[7] In litigation, gig workers stand on one side claiming they are employees, while service companies, such as Uber and Lyft, argue that their drivers are independent contractors.[8] Jurisdictions have grappled with this classification issue while trying to apply traditional employment law to the new gig economy.[9]
Under traditional employment law, an “employee,” according to Black’s Law Dictionary, is “a person in the service of another under any contract of hire, express or implied, oral or written, where the employer has the power or right to control and direct the employee in the material details of how the work is to be performed.”[10] In contrast, an individual qualifies as an independent contractor when the entity receiving services has control only over the final outcome of the work, without dictating the specific methods or processes used to achieve it.[11]
In Australia, as in the U.S., gig workers are mostly treated as independent contractors.[12] Australia’s approach to classifying gig workers involves a multi-factor test.[13] This test sets out particular circumstances where:
The platform provider exercises significant legal authority over the on-demand worker, including control over their working hours and the type of tasks they perform.[14]
The existence of limited ability to refuse work.[15]
Near or total exclusivity of work for or with that platform[16]
The gig worker wears a uniform of the platform.[17]
Satisfying the above principles may grant a gig worker certain employment rights, but this is also largely dependent on specific factual circumstances.[18] However, the country’s Senate Inquiry Committee is making strides toward the government’s amending of the Fair Work Act to extend some employment protections to gig workers. Recently, a bill by the Albanese government gave the Fair Work Commission “the power to set minimum standards” for “employee-like workers.”[19] Also, in states like Victoria, gig workers in high-risk industries are afforded workers’ compensation benefits.[20] Unlike the U.S., another way in which Australia has provided better protections to gig workers is by not allowing individuals to contract out their legal rights in favor of private arbitration mechanisms.[21]
While both systems are imperfect, what is apparent is that the U.S. prioritizes business flexibility and economic innovation as opposed to protecting workers from significant risks.[22] Australia has demonstrated the possibility of extending some employment protections without disrupting the gig work model. The question about whether the U.S. should rethink its approach to the protection of gig workers remains.
Atalya Santos is a Staff Editor at CICLR.
[1] Alexandrea J. Ravenelle, Hustle and Gig: Struggling and Surviving in the Sharing Economy (University of California Press 2019).
[2] Jason Taliadoros, Rebecca Tisdale & Jane Kotzmann, Application of Work Health and Safety and Workers’ Compensation Laws to on-Demand Workers in the Gig Economy: The Need for Legal Clarity, 42 Adel. L. Rev. 431 (2021).
[3] Internal Revenue Service, Gig Economy Tax Center | Internal Revenue Service, https://www.irs.gov/businesses/gig-economy-tax-center [https://perma.cc/84D2-5PJZ] (last visited Feb. 14, 2025).
[4] EY Payroll Newsflash, IRS Launches Gig Economy Tax Center to Help Gig Workers and Digital Platforms Meet Their Tax Obligations, https://taxnews.ey.com/news/2020-0193-irs-launches-gig-economy-tax-center-to-help-gig-workers-and-digital-platforms-meet-their-tax-obligations [https://perma.cc/63QS-9SJE] (last visited Feb. 14, 2025).
[5] Kathleen DeLaney Thomas, Taxing the Gig Economy, 166 Univ. Pa. L. Rev. 1415 (2018).
[6] Rachel Childers, Arbitration Class Waivers, Independent Contractor Classification, and the Blockade of Workers’ Rights in the Gig Economy, 69 Ala. L. Rev. 533 (2017).
[7] Edward Leyden, NY Uber Driver a Covered “Employee” for Unemployment Insurance Purposes; CA Prop. 22 Provides Limited Employment Benefits to Gig Workers; U.S. Labor Dept. Defines “Independent Contractor” At Court, 40 A.B.A. Tax Times 19 (2020–2021).
[8] Childers, supra note 6.
[9] David Kaplan, Consumer Rights Are Gig Workers’ Rights? Regulating the Gig Economy at the Intersection of Consumer Protection Law and Employment Law Comments, 53 Seton Hall L. Rev. 281 (2022).
[10] Employee, Black’s Law Dictionary (6th ed. 1991).
[11] Internal Revenue Service, Independent Contractor Defined | Internal Revenue Service, https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-defined [https://perma.cc/9FDM-T7NZ] (last visited Feb. 14, 2025).
[12] Anthony Forsyth, Playing Catch-Up but Falling Short: Regulating Work in the Gig Economy in Australia, 31 King’s L. J. 287 (2020).
[13] Taliadoros et al., supra note 2.
[14] Hollis v. Vabu [2001] HCA 44 (Austl.).
[15] Id.
[16] Id.
[17] Id.
[18] Taliadoros et al., supra note 2.
[19] Paul Karp, Australia’s Gig Economy Workers Set to Benefit from Minimum Pay and Protection against ‘Unfair Deactivation,’ The Guardian (Aug. 30, 2023), https://www.theguardian.com/australia-news/2023/aug/31/australias-gig-economy-workers-set-to-benefit-from-minimum-pay-and-protection-against-unfair-deactivation [https://perma.cc/54ZU-RTTZ].
[20] Vic. St. Gov., Safety and Injury Information for Gig Workers, https://www.vic.gov.au/safety-injury-information-gig-workers [https://perma.cc/PMK9-X9XX] (last visited Feb. 14, 2025).
[21] Ron McCallum, Joellen Riley & Andrew Stewart, Resolving Disputes over Employment Rights in Australia, 34 Comp. Lab. L. & Pol’y J. 843 (2013).
[22] Kaplan, supra note 9.
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