A Third Worker Classification? Don’t Bet On It

UberLately, there’s been a steady drumbeat of accusations that on-demand startups are unfairly wringing profits out of independent contractors. The concern: no one is withholding their taxable wages for them, they aren’t being given health care, and they have almost none of the same protections as full-time employees. In fact, one of the only protections independent contractors are provided under federal law is from race discrimination. In 2008, California’s Fair Housing and Employment Act was amended to give independent contractors protection against sexual discrimination, but many states don’t even go that far.

Maybe it’s no wonder that, to deflect such criticisms, a growing number of on-demand management teams and investors have begun suggesting that a third classification of worker – one poised to enjoy both flexibility and greater worker protections – is around the corner.

During a panel that StrictlyVC moderated in May, Simon Rothman of Greylock Partners, whose bets include the food-delivery startup Sprig, told attendees, “I personally think the 1099 [tax classification] framework is broken. It existed in a world of monolithic, centralized corporations, not in a world of distributed companies, so I think there needs to be a third class of worker [and that we’ll eventually have one], though it will take a while.”

Longtime employment attorneys say not to count on it.

For more of this story, read on.

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