Gig is up: Uber agrees to pay $100 million in dispute over drivers’ employment status

There’s a growing tendency for workers to request mobility in the labor market. Coupled with this is a growing tendency for businesses to classify workers as independent contractors instead of employees. This phenomenon has been dubbed a “gig” economy. Recently, Uber agreed to pay $100 million to the state of New Jersey to settle a dispute over how it classified its workers. Wisconsin employers should take note.

What is a ‘gig’ economy?

A gig economy is an environment in which temporary positions are common and organizations contract with independent workers for short-term engagements. A gig worker includes independent contractors, online platform workers, contract firm workers, on-call workers, and temporary workers. They enter into formal agreements with on-demand companies, like Uber, to provide services to the company's clients.

There’s no doubt that a gig economy has begun. Currently, 36% of American workers are independent contractors—or at least classified as such. That’s roughly 57 million workers.

With the increased tendency to classify workers as independent contractors, it’s been more difficult for states to collect employment taxes. In addition, gig workers don’t receive some important benefits based on their classification (i.e., no overtime pay or paid time off).

How has Wisconsin responded?

In April 2019, Wisconsin Governor Tony Evers created the Joint Enforcement Task Force on Payroll Fraud and Worker Misclassification. It released its most recent report in the summer of 2022.