American labor law offers two categories: employee or independent contractor. Employees get everything – health insurance, retirement, unemployment insurance, workers’ compensation, overtime, minimum wage. Independent contractors get nothing. There is no middle ground.

In Unbundling Employment: Flexible Benefits for the Gig Economy, published in the Drexel Law Review, I argue that this rigid binary is the worst possible framework for the gig economy – and that the fix comes from an unlikely source: securities law.

The irony of the binary

The employee/contractor classification was designed to protect workers. But in the gig economy, it produces the opposite result. Because classifying a worker as an employee triggers the entire bundle of obligations, platforms have an overwhelming incentive to classify everyone as a contractor. The result: millions of gig workers receive no benefits at all.

Adding a third category – “dependent contractor” or “gig worker” with a fixed set of benefits – does not solve the problem. It just creates a new rigid box that platforms will game to minimize obligations. The issue is rigidity itself.

The Form GW proposal

I propose borrowing a mechanism from securities regulation. When a company wants to sell stock to the public, it files a Form S-1 with the SEC disclosing what it is offering and on what terms. The SEC reviews for completeness and clarity, not for merit – it does not decide whether the stock is a good investment.

The analogous proposal: each gig platform would file a “Form GW” with the Department of Labor specifying which benefits it will offer its workers. Health insurance? Yes or no. Retirement matching? At what rate? Unemployment insurance? The platform chooses its own bundle.

Rather than adding a rigid third category, I propose a novel “gig worker” framework inspired by securities law: each gig platform would file a “Form GW” with the Department of Labor specifying which benefits it will offer.

The DOL reviews for compliance with minimum standards and clarity of disclosure – not for merit. Workers can then compare platforms not just on pay rates but on benefit packages. Competition among platforms replaces regulatory mandates.

The antitrust safeguard

One concern: in a non-competitive market, a dominant platform could file a Form GW offering minimal benefits and workers would have no alternative. I address this by borrowing another concept from securities and antitrust law: the DOL could deny a Form GW filing in markets with high concentration (measured by HHI), requiring more generous benefits where workers lack bargaining power.

The proposal unbundles the employment relationship – separating the question “does this person work for you?” from “which benefits do they receive?” – and lets market competition, constrained by minimum standards, determine the answer.

Read the full article: Unbundling Employment: Flexible Benefits for the Gig Economy, 11 Drexel Law Review 1 (2019).