State of the States: "Marketplace Contractor" Laws Increasingly Used to Ensure Independent Contractor Classification of Gig Economy Workers

May 11, 2018

Many states are seeking to address the uncertain status of gig economy workers with so-called “marketplace contractor" laws that preclude them from being considered employees, as the left-leaning Center for American Progress releases a new report touting a slew of state policy ideas—including expanded paid leave, wage boards, subsidized jobs programs, and Medicaid for all—in anticipation of a "blue wave" in the upcoming November elections. 

A "marketplace contractor” is defined under a new Tennessee law as any individual, corporation, partnership, sole proprietorship, or other business entity that: 

(A) Enters into an agreement with a marketplace platform to use the platform’s online-enabled application, software, website, or system to be given an assignment, or otherwise receive connections, to third-party individuals or entities seeking its services in this state; and

(B) In return for compensation from the third-party or marketplace platform, offers or provides services to third-party individuals or entities upon being given an assignment or connection through the marketplace platform’s online-enabled application, software, website, or system.

Be on the lookout for further such legislation in the next legislative session.  Already, similar bills have been enacted in Indiana, Kentucky, and Utah, and a related measure is pending in California, according to the Workplace Policy Institute's State of the States report

Uncertainty at the state and local level continues to beguile employers despite these efforts and others seeking to provide regulatory relief.  Littler's seventh annual Employer Survey found that sweeping changes on the policy front—not to mention cultural and technological changes—have challenged employers to quickly adjust their policies and strategies to address them.

"Bold Ideas for State Action," the Center for American Progress' new report, advocates that independent contractors be allowed to collectively bargain through state legislation—among a great number of other policy ideas that could drastically change the policy landscape for employers. 

"Change must come from the states and it is up to us to lead the way," Governor Jay Inslee (D-WA) said in praising the report. 

Why it matters: Coming from one of the most prominent left-leaning think tanks, the Center for American Progress' report could amount to the progressive game plan for the next few election cycles—especially if Democrats take a few state legislatures come November.