Should Workers in the App-Based Gig Economy be Regulated as Employees?

Written By: Matthew Azevedo

The number of gig workers in Canada are by no-means negligible. In 2016, the most recent figure available, approximately 1 in 10 Canadians participated in gig work, and recent events related to Covid-19 has likely made this figure even higher (1).

However, the emergence of gig-work reflects a kind of grey area that does not completely fit into the usual notion of freelance work nor traditional employee-based work. To keep the benefits of the freelance aspect of gig-work and provide workers with stability, we need to recognize this new category of work, and regulate accordingly. Nomenclature matters here, because it has major implications for the kinds of wages and benefits gig-workers receive. 

But what is gig-work, and how does it differ from traditional work? Definitions vary because gig-work can entail anything from drivers of rideshare apps to software engineers. Here, I am focusing on gig-workers who are online demand workers, such as rideshare drivers and delivery drivers for food apps, as they have been the major focus of the ongoing debate. This type of gigwork entails flexible hours, high turnover rates, and most notably, low wages: in 2016, the median net income for gig-work was $4,303 (1). 

Typically, freelance workers can set their own hours and take clients as they please, which is generally true for most app-based gig-work. However, aside from flexibility, a key difference is that gig-apps have significantly more control over their workers than a typical “employer” does. For instance, gig-workers have no say in rates earned per task, as it is set by the company. This is an important difference, because gig-workers cannot negotiate what they receive with clients or the online platform that pays their salary (3). If companies are fixing the price of the services their workers provide, then they are indirectly determining their wages. In effect, such companies are exploiting a regulatory loophole under the guise of “freelance” work to avoid paying less than the minimum wage. For these reasons, workers need protections which are not entailed by prexisting regulations on freelance work. 

On the other hand, classifying app-based gig workers as employees is not an entirely accurate representation of the relationship between such workers and the company. There is a great deal of flexibility in work hours, and workers may suddenly leave the app and easily rejoin after a long period of time. A lack of barriers to entry into the gig-economy may be desirable in times of an economic downturn, and to workers who have recently become unemployed and need income. Workers are also under no obligation to accept clients at any given time. If gig workers are enjoying these benefits, then it may not be desirable to fully classify such workers as employees. 

A “one-size-fits-all” regulatory approach will therefore not suffice to help app-based gig workers. This is especially apparent when we consider the heterogeneity of gig workers: approximately half have other sources of income, while the other half rely primarily on gig-work (1). Those who utilize gig-work only to supplement their income be disadvantaged by an “employment” classification, while the those who rely on gig-work as a primary source of income may benefit from the stability of an employer-like relationship. At a minimum, all types of workers would likely benefit from earning at least minimum wage. 

Given the likelihood of gig-work of becoming more predominant into the future, regulating them appropriately to keep the benefits while providing stability is crucial for a healthy labour market. As such, we need to recognize a new category of workers that is not entirely freelancers nor employees. 


Works Cited

(1) Sung-Hee Jeon, Huju Liu, and Yuri Ostrovsky. “Measuring the Gig Economy in Canada Using Administrative Data.” Government of Canada, Statistics Canada. December 16, 2019. 

(2) Goulart, Ruben. “Opinion | Bill 88 Is a Step Forward for Ontario Gig Workers, but There’s an Opportunity to Go Further.” March 21, 2022. 

(3) Russon, Mary-Ann. “Uber Drivers Are Workers Not Self-Employed, Supreme Court Rules.” BBC News, February 19, 2021, sec. Business.

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