This is the first in a series of follow-up blog posts relating to CDT’s July 2021 report, Warning: Bossware May Be Hazardous to Your Health. The report noted that the key laws governing workers’ health and safety apply only to workers who are classified as employees, not those who are classified as independent contractors.
This post expands on that point by explaining why the use of bossware can make it difficult, if not untenable, for companies to classify workers as independent contractors.
The term “gig economy” has become overused to the point of cliché over the course of the past two decades. The pervasiveness of smartphones has fueled the rise of companies that provide platforms through which numerous workers — from delivery and ride-sharing drivers to software engineers to plumbers — can connect with consumers in need of their services.
Some of the companies behind gig economy platforms also pioneered automated systems that monitor and supervise their workers. In recent years, those “bossware” systems have become more pervasive, more intrusive, and less expensive, even as they have increased risks to health, safety, privacy, and more for workers.
Even though technology now allows gig economy companies to monitor their workforces in unprecedented detail, those companies should think twice before deploying bossware. The control bossware affords companies over workers, combined with the tests U.S. courts use to classify workers, greatly increases the probability that a company’s workers will be classified as employees rather than independent contractors. This change triggers significant legal rights for workers as well as significant legal obligations for companies.
The rules governing employee/contractor classification
Most employment laws — including those relating to health and safety obligations and workplace discrimination — apply only to employees and not to independent contractors. Consequently, many employers attempt to classify their workers as contractors in an effort to avoid the legal obligations that arise from the employer-employee relationship.
American courts have developed several tests to determine whether a worker should be classified as an employee or as an independent contractor. The first test, commonly called the “right to control” test, examines whether the company has a right to control the worker’s schedule, the time and manner in which the worker performs tasks, and other aspects of the worker’s time and the relationship between the company and the worker. If the company exercises a significant degree of control over the worker — or retains the right to do so — then the worker should be classified as an employee.
The broader and more worker-friendly “economic realities” test, which courts have traditionally used in cases brought under the federal Fair Labor Standards Act (FLSA), examines both the right to control and the degree to which a worker is economically dependent on the company.
The “ABC” test is the hardest test for companies to meet. To classify a worker as a contractor under the ABC test, the company must demonstrate the absence of control and two other elements: that the worker’s tasks are outside the ordinary course of business and worksites of the company, and that the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed.
Using bossware makes it harder to argue that workers are truly independent contractors
Companies with large numbers of workers classified as contractors have devoted considerable resources to ensuring that state and federal laws make it as easy as possible to maintain that classification. When California’s legislature adopted the ABC test in 2018, a coalition of companies that operate gig economy platforms poured hundreds of millions of dollars into a successful campaign to pass a ballot proposition overturning the law and reinstating the right-to-control test. Those companies are now pushing both federal regulators and Congress to ensure that the right-to-control test is the standard under federal law as well.
But when companies use bossware to intensively monitor and manage their workforce, they risk forfeiting their ability to classify workers as independent contractors even under the more permissive right-to-control test. Installing location trackers, cameras, and digital monitoring equipment and software that continuously track the worker’s activities and assess their performance dramatically increases a company’s right (and practical ability) to control the timing and manner in which workers complete their tasks.
Companies that use bossware can exert intrusive and pervasive control over workers’ activities on a scale — and in work settings including workers’ own vehicles and homes — that previously was not possible. The use of bossware can thus dramatically tilt the scales in favor of classifying the tracked worker as an employee, regardless of which classification test a state uses.
According to a 2020 Intuit report, more than 80% of large corporations plan on substantially increasing their use of contractors and other contingent workers in the coming years. Given the wide range of settings in which contingent workers operate, and the prohibitive expense that would be associated with hiring enough human managers to meaningfully supervise them, companies will be greatly tempted to use technology to monitor and direct those workers’ activities. But if companies give into that temptation and deploy bossware systems to intrusively supervise workers, their ability to classify those workers as independent contractors will become ever more tenuous.
For these reasons,companies should avoid deploying bossware in settings where they seek to classify workers as contractors. Gig workers should document any intrusive uses of bossware that they experience, and workers’ advocates should prominently cite such uses of bossware in worker classification disputes. As for the courts, they should treat an employer’s use of bossware to monitor or manage gig workers as a major and perhaps determinative factor when deciding worker classification disputes.
Companies should not be able to have their cake and eat it too by deploying bossware to minutely monitor and control their workers, while sidestepping the rights and responsibilities that such control entails.