More Contractual Opt-Out: The Gig Race to the Bottom Rolls on to Georgia and Back to the 19th Century

Updated: I have learned from Georgia attorney Tom Holder that this legislation was not brought to the floor. It appears there was the right kind of pressure at the right time. In this lawyer's opinion, this is a very good outcome.

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I have recently analyzed a Tennessee statute purportedly originated by Handy, Inc. and currently enacted in almost identical form in five other states throughout the country: Indiana, Utah, Kentucky, Florida and Iowa. Tennessee made six.  And now Georgia is about to be seven. I will not bother analyzing the Georgia bill (it is essentially the same as the other transparently coordinated laws), but you will find its text here.

Reduced to its essence the situation boils down to this. Suppose I run my business “online” and direct workers to a customer. If those workers agree in writing that they are independent contractors, and if I am not personally on site to supervise the workers, the workers are deemed independent contractors as a matter of law.

The impact of the laws is obvious. Given the fast and loose way in which they are written, any company that dispatches workers and supervises them remotely has effectively been permitted to opt out of workers’ compensation regulation. To confirm my claim, simply imagine any company that uses online dispatching (of virtually any kind) to route workers to customers. Then read any of these statutes and tell me why all such workers of that company could not be classified as independent contractors.

Proponents of such legislation say the laws will simplify the independent contractor analysis. They sure will!  As an aside, I doubt very much that the spread of these laws is being funded by a handyman company. So, I invite my readers to “follow the money.”  Let me know what you find out.

The universal salve for the wounds occasioned by this species of de-regulation seems to be that the employer and employee have agreed to a de facto waiver of rights. Freedom of contract, it seems, cures all ills. It was precisely struggles over “contracting out” that lead to abandonment of employer liability statutes and establishment of the English Workmen’s Compensation Act of 1897. The labor movement of that day, having only recently obtained the widespread right to vote (the U.K.'s embrace of anything resembling democracy came later than many imagine), would only agree to allowance of contracting out under the liability laws if an employee received adequate additional consideration beyond mere employment. David G. Hanes, The First British Workmen's Compensation Act, 1897 37-41 (Yale University Press 1968). So fractious were the debates over contracting out that the door to workers’ compensation was opened and has remained open in Anglo-American law for almost 120 years. Remarkably, we are having--under the guise of opt-out, compulsory arbitration, independent contractors, and gig laws--a debate that raged, and was apparently not resolved, in the late 19th century.

Mark my words – if the pulverizing of the expanding class of contract workers continues, large consequences will follow. This is a bona fide race to the bottom.

Michael C. Duff