Jobs & Economy Gig Work & Worker Classification

Gig Work & Worker Classification

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Grounded in 8 cited sources spanning left · center-left — each linked below, so you can judge them yourself.

This is the fight over whether app drivers for Uber, Lyft, and DoorDash are employees with full job rights, or independent contractors who run their own small business.

What it is

An app-based driver picks up rides or delivers food using a phone app, and a big legal question is how to label these workers. If they are "employees," the law gives them things like a minimum wage, overtime pay, and unemployment pay. If they are "independent contractors," they run their own tiny business -- more freedom, but far fewer protections. California has tried both. In 2019, a law called AB 5 made most workers count as employees; a company can only call a worker a contractor if it passes three hard tests. In 2020, voters passed Proposition 22, which let app drivers stay independent contractors but added a partial safety net: drivers get at least 120% of the local minimum wage for time spent driving (waiting time does not count), plus help paying for health insurance and insurance for on-the-job injuries. Voters approved Prop 22 by 58%, and California's highest court upheld it in 2024. Most people do not do gig work -- about 9% of U.S. adults are current or recent gig workers, and for most of them it is not their main job. Experts genuinely disagree about the trade-offs, and the evidence points in different directions. On pay, one study of drivers under Prop 22 counted their waiting time and car costs and found many earned less than the minimum wage -- most would be paid more as employees. On jobs, a study of AB 5 found it did not simply turn contractors into employees; instead, self-employment and overall work fell. So the core trade-off is real: employee rules add protections, but they can cut into the flexible, low-cost work many drivers say they want.

How it works

"Employee" and "independent contractor" are two ways the law can label a worker. Employees get protections that cost the company money: a minimum wage, overtime pay, the employer's share of Social Security, workers' compensation if hurt, and unemployment pay if let go. Independent contractors get none of these by default -- in return, they set their own hours and can work for several apps at once. California's AB 5 (2019) made it much harder to call a worker a contractor. It uses the "ABC test," which assumes every worker is an employee unless the company can prove all three of these: (A) the worker is free from the company's control; (B) the work is outside the company's normal business; and (C) the worker has their own independent trade. For a ride-hailing driver, part B is hard to meet, since driving is the company's main business. App companies like Uber, Lyft, and DoorDash did not want to make drivers employees, so they spent more than $200 million to back Proposition 22 (2020), which freed them from AB 5. In exchange, they gave drivers the partial benefits above. Why the fight? Money and values. Using contractors instead of employees lets a company skip payroll taxes and benefits, saving real money. One side sees contractor status as a loophole that strips workers of basic rights; the other sees employee rules as a threat to the flexible, part-time work many drivers choose. The California Supreme Court upheld Prop 22 in 2024, so the contractor model stands for now.

The debate — equal weight, both sides

The case for treating app drivers as employees

Most often made by labor unions, worker-rights groups, and the political left.

Call a worker a "contractor" and you erase a century of hard-won rights -- the minimum wage, overtime pay, workers' compensation, unemployment pay, and the employer's share of Social Security that come with employee status. Independent contractors lose all of that, so when a company labels its drivers contractors, it shifts these costs and risks onto the worker. Supporters say Prop 22's "benefits" are thin. Its pay floor only covers time spent driving, not the hours drivers wait for the next ride. Count that waiting time, plus gas and car costs, and real pay often drops below the minimum wage: one study of five metro areas found a typical California passenger driver earned about $5.97 an hour before tips, and confirmed most drivers would be paid more as regular employees. There is a fairness angle too. App driving leans heavily on workers of color -- Black and Latinx workers are about 29% of the U.S. workforce, but 42% of drivers on platforms like Uber and Lyft -- so weaker protections hit them hardest. The strongest version of this case is simple: a real job comes with real rights, and no company should be able to opt out just by typing "contractor" into an app.

The case for keeping app drivers as independent contractors

Most often made by app companies, business groups, and free-market conservatives and libertarians. Many drivers back it too, and voters approved it. So the split is partly cross-cutting.

For most drivers, this is a side gig, not a career -- about 9% of U.S. adults are current or recent gig workers, and most spend fewer than 10 hours a week on it, or skip it most weeks. What they value most is control. In one national survey, about half of gig workers gave setting their own schedule as a top reason for the work: contractors can log on and off when they want, and drive for several apps at once. Becoming an employee usually means fixed shifts and losing that freedom. Rules like AB 5 can backfire. When California made contracting harder, many jobs did not turn into employee jobs -- they simply vanished. A Mercatus Center study found that after AB 5, self-employment fell about 10.5% in affected jobs and overall employment fell about 4.4%, without the hoped-for growth in regular jobs. Surveys also find most independent workers prefer this setup: nearly 90% told researchers they were happier than in a traditional job. The strongest version of this case is simple. Prop 22 keeps the flexibility drivers say they want, and adds a pay floor, help with health insurance, and injury insurance. Voters weighed that trade-off and approved it by 58%. Forcing everyone into an employee box helps some workers, but it takes options away from many more.

Sources

Behind the summary

Cited by "The case for treating app drivers as employees"

Cited by "The case for keeping app drivers as independent contractors"

The two sides appear only when both are sourced, and every explainer is reviewed by a person before it goes live. We summarize what each side argues; we never tell you how to vote.