Legally Classifying an Elusive Workforce

Introduction

A contentious labor issue has sprung up during a significant historical context, one which U.S. law has occasionally wavered to keep up with. This discussion addresses wage theft among an evolving body of workers—app-based rideshare drivers who are misclassified as independent contractors. Through a lens of law and economic development, this analysis will follow a theoretical framework proposed by lawyer and international trade economist, Yong-Shik Lee (“Lee”).[1]

In the first segment, the discussion will address the sudden introduction of a rapidly evolving workforce. The conversation will then turn to a primary legal issue faced by this independent workforce and the entities that pay them. Finally, the examination into this relevant labor issue will step readers through the theoretical framework proposed by Lee.[2] The application of the general theory of law and development begins by addressing the design of relevant regulations and their affects. Within this specific topic, the discussion will touch on the primary objectives for making law, the organization of legal mechanisms, and the socioeconomic conditions in which these mechanisms apply. Then, overall compliance will be examined. Finally, quality of implementation of the relevant legal mechanisms will be explored, including government capacity and political will. Once this step-by-step analysis is complete, it is my hope readers will have a better understanding of the legal dilemma that workers and employers currently face.

Background

A.   The Modern Independent Workforce

This discussion begins with an introduction into independent contract work and comparable labor arrangements. The classification of some workers as independent contractors is an established operational strategy, envisaging an equitable commercial exchange between two business-like entities. This group of workers perform as contractors, consultants, and freelancers, and vary in age, skill, and income.[3] Commonly, independent contractors are involved in temporary employment.[4] Modern day, the advent of mobile apps has allowed individuals to complete quick on-the-side “microtasks” for money.[5] It is estimated one in three workers has engaged in independent work as a supplement to their primary occupation.[6] This economic subset, sometimes referred to as the “gig” economy,  encompasses modern independent work opportunities, easily accessible by laborers via mobile technology.[7]

Uber and Lyft are rideshare mobile app giants who came into existence just over a decade ago.[8] Uber was founded in 2008 and kick-started a revolutionary shift in personal transportation.[9] Since Uber’s creation, it has grown substantially in driver availability and market share. Present day, Uber offers rideshare services in major metropolitan areas internationally, with a total market value of around $70 billion.[10] In 2019, 36% of U.S. adults used a rideshare app, up from 15% just four years earlier.[11] Data suggests rideshare passengers are not brand loyal in regards to rideshare app.[12] In 2018, Uber had a 70% market grip, while competing app, Lyft, claimed 30%.[13] Presently, some 122 million people use Uber regularly.[14] In 2019, 111 million people reported using Uber at least once per month.[15] Comparatively, Lyft had 22 million users per month.[16] Research indicates urban users are more likely to use rideshare apps on a weekly basis than are suburban or rural users.[17]

Rapid rideshare growth was impacted by the COVID-19 pandemic. However, usage numbers have again climbed and now surpass pre-pandemic levels.[18] Additionally, some users utilize rideshare apps not only for personal transportation but for food delivery services as well.[19] Though usage rates stifled some in 2019, an increase for demand of food delivery via mobile apps has seemingly added a new area of growth. Research indicates the food delivery industry saw its largest ever expansion as a result of the pandemic.[20] Delivery app, Doordash, currently has 57% of the market share in the U.S. with 25 million users.[21] Uber Eats has just 26%.[22] Overall, Uber maintains a formidable market share both globally and in the U.S.[23] In May of 2019, Uber took its shares public and according to the company’s Form S-1, 80% of the company’s gross bookings came from revenue generated by its rideshare offerings.[24] The remainder of bookings came from Uber Eats.[25] According to the company’s 2021 Form 10-K, roughly a quarter of all Uber bookings occurred in just five cities: Miami, New York City, London, São Paulo, and Chicago.[26]

The dramatic increase in demand in the last decade for rideshare and food delivery came with a sudden, substantial need for drivers. One million workers earned income on the Uber app in 2019.[27] Independent workers who drive for rideshare companies make up a substantial segment of the overall independent workforce. In whole, independent workers generated $1.28 trillion in revenue, or about 6.2% of the U.S. GDP in 2019.[28] One key economic growth source is rideshare and food delivery via mobile apps.[29] Impacting this growth are economic, societal, and legal structures.[30] To be discussed later, economic factors drive an independent worker’s desire to turn to independent work. Additional considerations like job security, earning potential, offered benefits, flexibility, and autonomy are also taken into account. Even within economic conditions that ordinarily shrink the independent workforce, many workers nonetheless turn to independent employment for entirely personal reasons, like supplementing traditional income for savings goals or unexpected expenses. Thus, surges within this unique economy are not always predictable.[31] Broad overall growth has resulted in a commitment to properly classify the workforce that drives it.

B.   Misclassification and Wage Theft of Rideshare Drivers

In the last quarter century, the U.S. experienced dramatic growth within the independent economy.[32] This growth has subsequently led to rampant misclassification of workers as independent contractors, carried out by naïve employers struggling to adapt to a changing workforce, or as a means for avoiding benefits and wage mandates in order to cut operating costs.[33] Misclassification also allows businesses to evade payroll tax obligations since independent contractors are not subject to withholding or unemployment taxes.[34]

Bad faith misclassification is the primary form of wage theft.[35] Common examples of employer conduct affiliated with wage theft includes paying less than minimum wage, refusing to pay overtime or tips, and labeling workers as independent contractors but otherwise treating them as hourly wage employees.[36] According to a study conducted by the National Employment Law Project, corporations that mislabel workers as independent contractors often deprive workers of rights and protections like minimum wage, overtime pay, Social Security contributions, collective bargaining rights, workers’ compensation, unemployment compensation, and discrimination protections.[37] Employers who hire independent contractors may save up to 30% in payroll expenses through such classification, regardless of whether in bad faith.[38] But bad faith employers who label workers as independent contractors in order to evade liability, such as paying into unemployment and workers’ compensation funds, are said to be illegally engaging in wage theft or payroll fraud.[39] It is important to note, however, in some instances independent contractor classification is equitable for both the contractor and contractee. Some businesses genuinely transact with workers possessing a specialized skill, who retain a unique autonomy and flexibility beneficial to all contracting parties. These contractors may also set their own schedules, rates, terms, and deadlines.[40] In these instances of independent contracting, the contractor may be thought of like any other business entity. But abuses of misclassification are particularly prevalent in certain industries.[41] The app-based independent economy is one persistent area of alleged and proven bad faith misclassification.[42] Other non-app-focused industries which will not be the focus of this paper include home care, trucking, and construction.[43]

At the outset, it must be noted there are some who believe (including some workers) that the treatment of rideshare drivers as independent contractors is in the best interest of workers.[44] Some labor groups argue independent contractor classification is needed to keep rates and charges affordable.[45] These groups have pointed to the fact that in cities where new legislation enforces pay increases and wage protections, higher app prices adversely impacted drivers’ income by pricing drivers out of the market.[46] In response to city-wide legislation that extends hourly wage employee protections to independent contractors, one driver pointed out, “I make far more than minimum wage as a driver … and [I] am able to write off my expenses in my taxes at the end of the year.”[47]

Arguments aside, it is estimated U.S. employers evading minimum wage enforcement are estimated to cause workers to lose $15 billion a year annually.[48] And between 2015 and 2016, only $2 billion was actually recovered by workers.[49] The following three years saw only $558 million in total recovery.[50] Many workers alleged wrongdoing by their employers, then filed complaints with labor authorities in their respective states.[51] Other means of recovery by workers include complaints with attorneys general offices, and class action litigation.[52]

Beginning with state complaints, an investigation is typically initiated based on a complaint or tip, followed by remedial orders and charges for uncovered violations. Labor departments, with the aid of the state’s attorneys general or similar authorities, bring charges against violative businesses under labor law statutes, which may require repayment by the employer to the wronged worker, a monetary penalty to the government authority, or both.[53]

In Illinois, between 2017 to 2020, $15 million was recovered on behalf of workers citing minimum wage violations.[54] This estimate places Illinois in sixth place nationally for total unpaid minimum wage recovery during those years.[55] In major cities like Chicago, attempts at shaping law mechanisms have cropped up as a result of alleged worker misclassification. In 2022, Chicago drivers joined suit and brought a challenge in a U.S. District Court, citing willful violations of the Fair Labor Standards Act and the Illinois Minimum Wage Law.[56] Other drivers have sought the aid of policy advocates, unions, and other regional labor organizations in an effort to pass legislation that offers them the traditional benefits of hourly wage employment.[57] Advocates’ arguments frequently focus on compensation disparities resulting from bad faith misclassification.[58] In many instances, at issue are pay schemes or compensation structures which don’t account for vehicle expenses regularly incurred by rideshare drivers.[59] It is reported that Uber and Lyft take up to 60% of a driver’s fares, while relying on the driver to front vehicle expenses like insurance and gas.[60] And in the case of app-based food delivery, restaurants like Naty’s Pizza respond by pointing out that drivers willingly accept individual deliveries on disclosed terms.[61] Restaurants argue worker discretion to turn away unfavorable terms supports the inference that these drivers are simply independent contractors.[62]

There are arguments to be made both for and against independent contractor classification for app-based rideshare and delivery drivers, and it is thus readily apparent that reshaping the relevant law is the goal. The following discussion will refer to the law in this context as legal frameworks and institutions (“LFIs”). The purpose of LFIs is to facilitate efficient cooperation between labor authorities, businesses, and workers.[63]

C.   The General Theory of Law and Development: Regulatory Impact Mechanisms

According to the law and development general theory (“the theory”), regulatory impact mechanisms are the structures through which law impacts development.[64] Under the theory, the analysis starts with regulatory design and evaluates how optimally law is designed to achieve its regulatory objectives.[65] Next examined is compliance with the regulatory impact mechanisms.[66] Finally, the theory examines quality of implementation considerations.[67]

1.    Regulatory Design of Misclassification Laws

The theory’s regulatory design analysis includes an evaluation of three related sub-topics.[68] The first sub-topic takes a look at anticipated policy outcomes, referring to whatever policy outcome(s) the particular law is expected to deliver.[69] The next sub-topic is the organization of law, legal frameworks, and institutions (“LFIs”).[70] Finally, the last sub-topic considered is the laws adaptation to socioeconomic conditions.[71]

a.    Anticipated Policy Outcomes

The specific, anticipated outcomes for the implementation of labor regulations and policies will be discussed in this section. The expected anticipated policy outcomes differ depending upon the particular view of the stakeholder who is seeking to implement the policy.[72]

Starting broadly at the federal government, labor protections have long been a part of U.S. history.[73] The Fair Labor Standards Act (“FLSA”), the most broad body of federal legislation governing wages and employment, was passed in 1938, out of a concern for labor rights protections.[74] The FLSA remains law today and is enforced by the U.S. Department of Labor (the “DOL”).[75] In October 2022, the DOL published a Notice of Proposed Rulemaking, proposing to revise guidance in order to determine whether a worker is an employee or an independent contractor under the FLSA.[76] The proposed rulemaking is a result of the DOL’s growing concern “that employees are misclassified as independent contractors.”[77]

A 2009 report by the Government Accountability Office estimated independent contractor misclassification resulted in a loss of federal tax revenues of $2.72 billion in 2006.[78] A 2000 study commissioned by the DOL found that up to 30% of employers misclassified their workers, with the actual percentage likely higher due to the fact that regulatory bodies generally audit less than 2% of all employers.[79]

Once a general awareness of the issue became more widespread, local government bodies initiated their own studies and investigations.[80] According to the National Employment Law Project’s 2020 Policy Brief, 29 states have created some form of inter-agency task force focused exclusively on employment misclassification, likely due to credible research demonstrating states lose millions of dollars in unpaid employee withholding, including employer-mandated payments for workers’ compensation, unemployment insurance, and income tax.[81] Nationally, a regional effort to create task forces addressing misclassification was in part a consequence of reported misclassification and projected lost tax revenues.

A trend of states initiating their own auditing processes in order to identify wage theft has grown and evolved in recent years. Many states facilitate random audits of employers, citing those not found in compliance.[82] Attempts at identifying problematic industries enables states and local regulatory bodies to deter future violations and administer recovery for past-due wages and withholding mandated by law.[83] Such state-led efforts are carried out to achieve compliance industry-wide.

In California, a 2018 inspection concluded more than $7.8 million in lost wages resulted from noncompliance and misclassification by businesses.[84] That same year, Tennessee estimated over $3 million in lost wages was a result of misclassification.[85] Together these state-led misclassification units, created by legislators, instituted hundreds of penalties against employers found not to be in compliance.[86] Other states like Utah and Washington carry out targeted audits based on business and industry.[87] In Maine, Massachusetts, Minnesota, and New York, certain industries have been identified as particularly prone to bad faith misclassification.[88] State-led units commonly found violations within the transportation industry (i.e. delivery drivers), as well as certain other industries not part of this discussion.[89]

In a 2012 to 2013 study carried out by the Illinois Department of Employment Security, some 20,000 workers were misclassified, resulting in unreported taxable wages of $250 million.[90] Because of these initial findings, the Illinois General Assembly created the Worker Protection Unit, “dedicated to combatting businesses that underpay their employees, force their employees to work in unsafe conditions, and gain an unfair economic advantage by avoiding their tax and labor responsibilities.”[91] The Illinois General Assembly believes businesses that misclassify their employees “put a greater burden on taxpayers by hurting the State’s ability to provide critical services,” and impermissibly “evad[e] their responsibilities” under the relevant employment tax laws.[92] After the legislature’s creation of the Worker Protection Unit, an additional taskforce was created with the purpose of, inter alia, “protecting the State’s workforce,” “facilitat[ing] … sharing of information … relating to suspected worker exploitation,” “promot[ing] refinement of targeting methods and … strategies to systemically investigate worker exploitation,” and “work[ing] cooperatively with labor and community organizations, businesses … and other advocacy groups to increase public awareness … in an effort to promote fairness, combat discrimination, and protect the welfare of the State.”[93] Additionally, the Illinois Attorney General’s office has established a Workplace Rights Bureau, which investigates and prosecutes violations.[94] The Workplace Rights Bureau has declared their efforts are made in part to protect immigrant populations and vulnerable residents, a concern shared by various other Illinois stakeholders.[95]

In Illinois, the Shriver Center on Poverty Law (“SCPL”) has proposed immediate policy priorities to address misclassification, such as extending to independent workers paid time off, access to paid family and medical leave, minimum wage pay, overtime pay, health insurance coverage, and access to other benefits typically offered to hourly wage employees.[96] SCPL acknowledges anticipated outcomes of such policies are aimed at protecting misclassified workers.[97]

Misclassification and related wage violations have been documented among rideshare and app-based drivers, nationally and in Illinois.[98] In regards to pay, economic and policy researchers have concluded app-based drivers’ receive low net earnings.[99] Compensation formulas for rideshare drivers are typically complicated, and companies employing drivers may not publicly disclose the full details of their compensation schemes.[100] In general, rideshare drivers are compensated by a base amount per fare, plus additional variable amounts depending on fare time and miles driven.[101] During peak demand, surge bonuses may be offered.[102] In Chicago, rideshare drivers earn $23.23 in gross earnings per hour.[103] However, rideshare drivers bear after-tax vehicle expenses and payroll taxes.[104] Net, a rideshare driver in Chicago earns an estimated $15.09 per hour in wages, an amount lower than the city’s mandated minimum wage.[105] In Seattle, drivers earn $21.50 per hour in gross earnings.[106] Once expenses were deducted, drivers merely earned $9.73 per hour.[107] Some labor advocates and organizations argue after-income-tax vehicle expenses should be borne by, at least in part, employers of rideshare drivers.[108]

In California, in response to rideshare driver misclassification, state legislators proposed a ballot initiative called Proposition 22.[109] This initiative, led by app-based companies Uber, Lyft, and DoorDash, proposed legislation to classify rideshare drivers as independent contractors under the law.[110] The ultimate result of California’s Proposition 22 was less than celebratory.[111] Immediately upon its enactment, drivers saw pay decreases despite the companies’ claims of guaranteed earnings.[112] Then, companies immediately had the law stripped away when the California Superior Court struck the initiative down as violative of the State’s constitution on separation of powers grounds.[113] Thus, any efforts to institute comparable legislation in Illinois has readily been protested by critics who cite the demise of California’s Proposition 22.[114] Critics advocating for rideshare driver labor protections in Illinois argue the proper policy approach is a straightforward classification of drivers as employees, rather than enacting specific nominal income thresholds, reimbursements, and restrictions.[115] Illinois advocates and policymakers argue pay increases associated with rideshare employee classification would reduce workforce reliance on Medicaid and Affordable Care Act marketplace plans.[116] Additionally, data indicates Chicago rideshare activity is prevalent in higher-income, central and northside neighborhoods, but drivers travel in from historically-poorer neighborhoods looking for fares.[117] Thus, some argue an increase in wages for Chicago rideshare drivers would offset commuting costs for poorer drivers and spread incomes among the city equitably.[118]

According to the Illinois Economic Policy Institute (“Illinois EPI”), classifying rideshare drivers as regular hourly wage employees instead of independent contractors would result in a per-driver tax contribution of $2,600 in payroll taxes, $500 in federal income taxes, and $700 in state income taxes.[119] Per driver classified as employee, an estimated additional $500 would be added in Illinois workers’ compensation premiums, plus $300 in unemployment insurance.[120] The Illinois EPI estimated there were 29,000 active Uber and Lyft drivers in Chicago in 2021.[121] An estimated $21 million in Illinois income taxes would be generated if rideshare drivers were classified as traditional, hourly wage employees.[122] At the federal level, the Illinois EPI estimates over $14 million would be generated in income taxes and $76 million in Medicare and Social Security taxes.[123] Critics, however, note these tax revenue increases would largely be borne by businesses.

States like Illinois looked to Seattle as a model for evaluating policy outcomes. In late 2020, the Seattle City Council voted unanimously in favor of a new pay formula intended to extend the City’s minimum wage pay rate to independent workers.[124] As enacted, the effective minimum pay rate of $16.39 per hour applies both to wage workers and rideshare drivers classified as independent contractors.[125] The Seattle Office of Labor Standards is granted investigative and enforcement authority.[126] Their mission is “to advance labor standards through thoughtful community and business engagement, strategic enforcement, and innovative policy development with a commitment to race and social justice.”[127] Upon uncovering a wage violation, the Seattle Office of Labor Standards require employers to pay unpaid wages plus damages to the employee, in addition to City-imposed civil penalties, fines, and interest.[128] Although the city-mandated legislation was passed merely in an effort to extend the same pay to rideshare drivers as a form of labor protection, some drivers actually opposed the new minimum wage law.[129] Seattle drivers who criticized the new legislation cited company responses in New York City, where similar legislation was enacted out of the same growing concerns.[130] There, Uber and Lyft actually refrained from hiring new drivers, or restricted driver access to app use unless certain criteria were met, making it more difficult for drivers to secure rides overall.[131] The companies’ response in New York City was perceived as punishment for the enacted minimum wage law.[132] Others, both in Seattle and New York City, argued the new mandates forced Uber and Lyft to look for ways to maintain fewer drivers on the road in order to achieve efficient “utilization” rates (per-minute and per-mile payments made to drivers).[133] In the eyes of Uber and Lyft, fewer drivers on the road meant it was more likely at any point in time that a driver actually had a passenger (i.e. was “utilized”). Thus, it would be less likely the companies would have to pay drivers whose vehicles were unoccupied. Prior to enacting this minimum wage legislation in New York City, rideshare companies would not actually incur costs if drivers weren’t busy.[134]

Last, beyond regional wage concerns within metropolitan areas in the U.S., broad, global policy concerns have emerged and developed. According to a study undertaken by MBO Partners (“MBO”), incorporating independent workers into the workforce improves business flexibility.[135] Additionally, a global change in workforce classification and economic structure has forced international companies operating within the U.S. to accommodate independent workers in order to keep up with competition.[136]

b.    Organization of LFIs

Under the law and development theory, the next sub-topic concerning regulatory design is the organization of LFIs.[137] LFI coordination is fundamental to effective law mechanisms.[138] The same law may have a different impact on development depending upon the makeup of the institution administering and enforcing the law.[139] LFIs also influence anticipated policy outcomes and therefore the two topics should not be considered in isolation.[140] When interpreting proposed and enacted policies aimed at counteracting bad faith classification, relevant LFI schemes broadly include government agencies, localized enforcement bodies, state and federal statutes, and civil and criminal legal structures.

Stated earlier, the most crucial piece of legislation governing wage theft and misclassification is the FLSA. Passed by Congress in 1938, the FLSA establishes minimum wage, overtime pay, certain recordkeeping requirements, and youth employment protections.[141] Civil monetary penalties resulting from FLSA violations are enforced by government agencies, in coordination with the branches of government.[142] The DOL is charged primarily with enforcement of the relevant FLSA provisions.[143] Since the FLSA’s enactment, countless lawsuits have been brought under its various provisions.[144] The FLSA has frequently been amended to reflect the current U.S. labor state, as seen, for instance, in minimum wage rate adjustments and wage classifications.[145] Proposals to revise FLSA provisions that deal with independent contractor classification have been announced recently.[146]

Increasingly, a number of federal district attorneys and state attorneys general are prosecuting violations through enforcement in courts of civil and criminal law.[147] Additionally, unpaid wage recovery has been secured as a result of prosecutions under labor law provisions, class action lawsuits, and through settlements.[148] At the state level, various bodies charged with investigation and prosecution have been created to address misclassification.[149]

The shift to state attorneys for enforcement may be in part a result of insufficient federal resources.[150] Investigations into alleged violative employers may be facilitated more aptly by localized enforcement bodies.[151] Dedicated units have been created to proactively investigate and handle individual cases.[152] These entities, whose sole focus is identifying and prosecuting wage theft violations, have cropped up throughout the U.S.[153]

In Illinois, the state Attorney General’s office has created the Workplace Rights Bureau, comprised of special criminal prosecutors.[154] This special unit was a result of the Illinois General Assembly’s legislation creating a Worker Protection Unit.[155] This local task force consists of Assistant Attorneys General, appointed by the Illinois Attorney General, who are delegated power to “intervene in, initiate, and enforce all legal proceedings on matters related to the payment of wages … and fair employment practices.”[156] In addition to Attorneys General, the task force also includes the State Director of Labor, Director of Employment Security, Director of Human Rights, and the chairperson of the Illinois Workers’ Compensation Commission.[157] Illinois employers who willfully refuse paying wages can be found guilty of a misdemeanor, and in some instances charges are upgraded to a felony for employers who repeatedly offend.[158] A willful wage theft violation is considered a class B misdemeanor and can result in a $5,000 fine or jail time, and in extreme cases employers may be imprisoned for three years.[159] According to research, Illinois is among the leading states of wage theft claims exceeding the felony threshold.[160] In the last year there were 16,339 felony wage theft violations in Illinois, totaling nearly 70% of all claims within the state.[161] The Illinois Worker Protection Unit, tasked with overseeing violations, enforces provisions of pay-related legislation like the Prevailing Wage Act, Employee Classification Act, Minimum Wage Law, Day and Temporary Labor Services Act, and the Wage Payment and Collection Act.[162] The Worker Protection Unit has broad authority to initiate investigations into employers allegedly in violation of one of these labor provisions.[163] Upon the finding of a violation, Worker Protection Unit prosecutors are given broad authority to obtain remedies like monetary damages received by the state, back wages, restitution for the employee, equitable relief enjoining the employer from some conduct, or “any action as may be appropriate.”[164] Additionally, under the Worker Protection Unit, the legislature has granted enforcement bodies the power to impose both criminal and civil penalties.[165] Each year, the task force is also required under the legislation to submit a progress report to the Illinois Governor and the General Assembly.[166]

In other states, similar task forces or specialized units have been created, tasked with enforcing federal and state wage laws. In Minnesota, New Jersey, Connecticut, and Washington D.C., state attorneys general have created wage theft units similar to Illinois, each with varying authority and enforcement power.[167]

Many states have also passed their own legislation structured like the FLSA but tailored to their own unique, regional issues. In larger metropolitan areas such as Chicago, New York, and Los Angeles, wage theft claimants may report instances to local officials who are given authority investigate.[168] However, states like Alabama and Florida lack any state investigative or enforcement bodies that specifically oversee wage theft disputes, even when legislation exists.[169] Minnesota enacted a law in 2019 strengthening protections for wage theft victims and criminalizing wage theft, imposing prison sentencing of 20 years for serious violations.[170] Similar legislation was passed in New Jersey, subjecting employers to jail time if they refuse to pay employees or are otherwise in violation of state labor statutes.[171] Other states like California, Iowa, South Carolina, Ohio, and Colorado have passed legislation comparable to Illinois, with similar prevention and deterrent goals enforced broadly by state Attorneys General offices or localized enforcement bodies.[172]

In terms of class action lawsuits brought by employees directly to the judiciary, one notable instance occurred recently in Illinois. In February 2022, Chicago pizza delivery drivers alleged willful violations of the Fair Labor Standards Act and the Illinois Minimum Wage Law.[173] The drivers sought to recover unpaid overtime wages and the case was ultimately settled for an undisclosed amount.[174] The plaintiffs alleged their employer, a locally-owned pizza restaurant, Naty’s Pizza, required work beyond 40 hours per week yet refused to pay overtime wages, misclassifying them in order to circumvent FLSA requirements.[175]

Under the general law theory, optimal regulatory design depends on synergies among LFIs.[176] In practice, some state-led wage theft enforcement bodies are reportedly unsupportive of statutory enforcement and therefore lack enforcement power to make laws effective. Texas, for instance, has a state-led labor agency tasked with prosecuting wage theft violations, however, prosecutors frequently decline to pursue cases.[177] Out of nearly 150,000 wage theft claims filed in the state, Texas investigators dismissed more than half due to a cited lack of jurisdiction, evidence, false claims belief, or withdrawal by claimants.[178] Even in states where misclassification prosecution is abundant, reimbursement of stolen wages is not guaranteed. In some instances, the violative employer dissolves or disappears and avoids responsibility for court-ordered payments. As a result, some victims of wage theft seemingly accept their loss, while some pursue other civil remedies.

c.     Adaptation of Regulations to Socioeconomic Conditions

The final sub-topic of regulatory design is law’s adaptability to specific socioeconomic conditions, i.e. social, political, economic, cultural conditions, social and religious norms.[179]

From a rideshare drivers’ perspective, principles of individual autonomy drive the desire to participate in this type of employment.[180] Rideshare and similar app-based delivery work allows independent workers to independently generate income from their own driver seat.[181] Overall, research indicates the makeup of the independent workforce is constantly changing.[182] Shifts in participation are in part due to the low barrier of entry for rideshare apps like Uber and Lyft. Workers may easily download the respective phone app and register to drive. According to Uber, approval merely requires a state driver’s license number, vehicle registration information, and other documentation required by the specific city where the driver intends to work.[183] Lyft requires similar driver and vehicle documentation up-front.[184] Both rideshare companies subsequently review applications before granting drivers access. For drivers interested in signing up who don’t own transportation, alternatives exist, allowing drivers to lease a vehicle through the respective app provider.[185]

Additionally, fluctuating economic forces such as the payroll job market, wage growth rate, unemployment rate, and supply of available open positions drive the ebbs and flows in the independent, “gig” workforce.[186] Research shows during times of macroeconomic expansion (as was the case in the U.S. between 2011 and 2015), economic forces tend to pull workers away from full-time independent work and back into hourly wage or payroll positions.[187] However, stagnant wage growth—which has largely been a factor in more recent years, tends to drive an increase in independent work, even if on a part-time basis for supplemental income generation.[188] Due to an increase in layoffs and a decrease in available jobs resulting from the COVID-19 pandemic, many workers who face economic security shifted labor efforts toward rideshare and independent delivery work.[189] A majority of independent workers say rideshare employment allows them more autonomy than traditional employment.[190]

During periods of stagnant wage growth and unprecedented price inflation, many workers look to independent work through the use of rideshare apps in order to make up for income shortfalls, concurrent with rising health care and housing costs.[191] Educational expenses are also a factor. 40% of full-time independent workers have, at a minimum, a 4-year college degree.[192] The remainder of independent workers, however, lack educational accreditation and are thus limited to low-wage employment outside of rideshare driving.[193]

Research indicates demographics are a powerful socioeconomic force impacting the independent employment landscape.[194] As with independent workers taking on “gig” work in other industries, demographics vary greatly and change frequently.[195] Some rideshare drivers of historically marginalized communities argue the proliferation of app-based independent work has actually exacerbated marginalization.[196] Some workers of color laboring as rideshare drivers allege benefits of autonomy are outweighed by job insecurity, with one driver pointing out, “I can be deactivated [without warning] … [and] they will not investigate … [t]hey can shut me off.”[197]

Millennials who are replacing Baby Boomers as the largest subsection of the U.S. workforce tend to be more technologically savvy and therefore comfortable working in a fast paced, app-driven work environment.[198] The younger, Gen X group made up about 29%.[199] Research indicates older workers are aging out of previously-held traditional payroll jobs and are subsequently stepping into independent work.[200] Baby Boomers are estimated to comprise 33% of the independent workforce, representing a subsection that is decreasing year-over-year.[201]

The increasing dependency on rideshare app use, both by drivers and riders, has led to the understanding that this unique group of independent workers is here to stay. Recognizing this trend, new policies have sprung up and LFIs have adapted. The protection of the independent rideshare workforce has become a concern for many industry stakeholders. Unions have begun addressing the necessity of independent worker protection in this rapidly evolving industry. Independent workers represented by unions are less likely to experience wage and hour violations by their employers, because together, workers have an increase bargaining power.[202] Other forms of workforce-wide wage protection and influence have cropped up as well, including the introduction of regional advocacy organizations and economic research groups.[203]

2.    Compliance with Misclassification and Wage Theft Law

Second to regulatory design, the next overall consideration when examining regulatory impact mechanisms is regulatory compliance, which refers to compliance with the law by individuals who are subject to its application.[204]

One major indicator of compliance, which is frequently part of the discussion regarding wage theft and misclassification, is back-pay wage recovery. Emphasizing the fact that this legal issue is fairly novel, research groups frequently disclaim that “it’s critical to remember that this [wage recovery] statistic is not representative of all wage theft.”[205] The EPI points out data reported by federal and state recovery bodies lags, plus, “the vast majority of workers will never file a claim to recover stolen wages” to begin with[206] Nevertheless, the EPI estimates $3.24 billion in stolen wages was actually recovered between 2017 and 2020 through enforcement by the DOL and state authorities.[207] A portion of this total recovery was also as a result of class action litigation.[208] Demonstrating the difficulty in obtaining and compiling recovery data, one national law firm specializing in labor litigation reported values much higher than EPI in terms of class action settlement recoveries year-over-year.[209] Both published reports find common ground, however, stating that recovery totals dipped in 2020.[210] Total recovery dropped significantly, with enforcement bodies reporting a drop of over 15%, with recovery through class actions down 34%.[211] Even so, class action lawsuits brought under the FLSA were more common than any other workplace class action lawsuit.[212] According to the DOL, recovered back wages was $270 million in 2017, $304 million in 2018, $322 million in 2019, and $257 million in 2020.[213] Throughout these varying year-over-year recoveries, likely understated as the result of difficulty in obtaining accurate data, the EPI nevertheless reported a consistent average recovery per worker overall.[214] For the year-over-year amount under the same span, recovered back wages per employee remained consistent, with $1,124 in 2017, $1,151 in 2018, $1,027 in 2019, and $1,121 in 2020.[215]

In interpreting total recovery data, two possible arguments arise: (1) post-violation recovery demonstrates past noncompliance by businesses, or, (2) consistent regulatory enforcement leads ultimately to compliance. One might see how consistent enforcement of statutory violations by offending businesses or industries might serve as a deterrent for other businesses contemplating, or actually engaging in, misclassification. However, a better compliance scenario might look like consistent, thorough investigation undertaken by regulatory authorities with very few actual findings of noncompliance.

According to the EPI, the “[c]urrent levels of civil monetary penalties … are woefully insufficient,” and the result “has been detrimental to incentivizing compliance among employers.”[216] In its report, the EPI examines wage violations under federal statutes, comparing them with violations of SEC regulations, stating that the DOL issues civil monetary penalties up to $2,074 per violation, yet the SEC can substantially penalize violators up to $2.16 million.[217]

The EPI cites several anecdotal wage recoveries within its report, resulting from labor authority investigations or class action lawsuits.[218] The EPI, however, recently uncovered evidence that employers condition employment on forced arbitration agreements which limit or entirely prohibit an employees’ ability to sue their employers.[219] Employers continue to respond to misclassification and wage theft findings within their industries.

In 2020, the Seattle City Council extended their city-mandated employee minimum wage to Uber and Lyft drivers.[220] The City Council passed legislation that set per-mile and per-minute rates for drivers—rates that take effect only when drivers are actually transporting passengers.[221] These rates were calculated at amounts thought to sufficiently account for drivers’ expenses.[222] Additionally, the city-wide legislation required drivers be paid a minimum rate per trip of $5.[223] Under the new legislation, the estimated gross hourly pay was $29.90.[224] This city-wide legislation may be considered one example of institutional bypass—the idea that when reform is resisted, developmental reform works around dysfunctional institutions rather than trying to fix them head-on.[225] Even so, such attempts at achieving classification compliance through bypass have been met with opposition by Uber and Lyft.[226] In Seattle, as a result of the legislation, rideshare companies felt incentivized to have fewer drivers on the road at any point in time.[227] This reaction is in large part due to the implementation of a “utilization rate”—a figure based on the share of drivers’ time spent with passengers actually in the car, as opposed to time spent idle.[228] When drivers are without passengers, rideshare companies must nonetheless pay their drivers higher rates and minimums under the new formulation.[229] Thus, rideshare companies attempt to achieve maximum vehicle occupancy by having fewer drivers on the road overall.[230] As a result, riders have difficulty securing available drivers on either app. Uber and Lyft reacted similarly in New York City after similar legislation was passed.[231] These companies say their hands are tied as a result of the new regulations.[232] After the Seattle legislation took effect, Uber stated, “[w]e know that any price increase is frustrating for customers, and we continue to look for new ways to reduce prices while complying with the City Council’s laws.”[233]

3.    Quality of Implementation of Regulations

The third and final topic under the examination into regulatory impact mechanisms is quality of implementation, which refers to the government’s ability to meet requirements and undertake law’s mandates to fulfill its objectives.[234] Under this subject, two sub-topics primarily determine the quality of implementation of the law: state capacity and political will.[235]

a.    State Capacity

The first sub-topic for consideration within quality of implementation of regulations is state capacity.[236] State capacity refers to the state’s financial, technological, and administrative capabilities.[237] According to the EPI, the DOL’s Wage and Hour Division is unable to fully enforce worker protection statutes largely due to insufficient resources.[238] This lack of resources has made it difficult for the DOL to hire additional investigators necessary to initiate inquiries and ensure compliance.[239] Additionally, funds provided at the federal level are subject to changes in administration and shifts in budget priorities. The DOL reportedly lost 14% of its staff between 2016 and 2020, thus “limiting [the department’s] ability to perform inspections and conduct investigations.”[240] Prior to and during the Trump administration, the DOL saw a sharp decrease in funding, which forced investigators to stretch already-limited resources.[241] The Biden administration subsequently increased funding for the DOL by $30 million, an increase which allowed the ramping up of staff levels by 11%.[242] Even so, according to the current Secretary of Labor, the DOL doesn’t have resources to pursue every claim submitted because the agency has been “shortchanged on budget money.”[243]

As a result of shifting capacity at the federal level, state district attorneys and attorneys general have taken up the task for themselves.[244] As explained earlier, state and regional governments have created dedicated bodies that proactively investigate and prosecute wage theft allegations.[245] It may actually be easier for state governments to consistently obtain resources in order to operate these dedicated units. Additionally, violations tend to be a more localized issue anyway, involving local employers and employees. Some advocates also cite the direct involvement of regional criminal prosecutors as an effective deterrent for local businesses, or businesses like Uber and Lyft who have an established presence in major U.S. cities.[246] However, some states have not established authorities specifically dedicated to address wage theft complaints.[247] The Secretary of Labor emphasized the need for localized responses to wage theft claims, investigations, and violations, saying, “if you live in some of these other states that … don’t put wage theft as a top priority … [t]hose are the states that people are really being abused in losing their wages.”[248]

b.    Political Will

The second sub-topic within the quality of implementation analysis is political will, which refers to the commitment and devotion of the political leadership of a country to implement the law.[249] As stated in the previous section, administration shifts have resulted in subsequent budget ebbs and flows. The Secretary of Labor summarized the importance of wage theft recovery in the context of shifting political will, stating, “[d]emocrat or [r]epublican—it doesn’t matter who you are … we should be doing more as far as trying to reclaim [wages].”[250]

One other important consideration in terms of political will and political organization in regards to wage protection is the creation of unions. Unions affect legislation and political will by ensuring defined work standards exist, and by providing avenues for wronged employees to pursue legal action.[251] Union workers are said to be less likely to experience wage and hour violations due to their bargaining power and ability to establish the necessary mechanisms to combat wage theft.[252] Unions and labor organizations also attempt to influence local elections and ballot initiatives.[253]

Conclusion

Improper misclassification among app-based rideshare drivers is a relevant issue of significant magnitude within the modern independent workforce. The appropriate response by regulators and stakeholders should focus on the careful coordination of relevant regulatory impact mechanisms. Examining this important legal issue through the application of the theory proposed by Lee allows for a regionally-based analysis that carefully and thoroughly examines various interrelated components. In order to properly classify independent rideshare drivers, stakeholders will find success through the thought provoking step-by-step process outlined in this discussion.

[1] Yong-Shik Lee, Law and Development: Theory and Practice (Routledge, 2d ed. 2022).

[2] In Lee’s book, he explains his proposed general theory of law and development and then applies the careful framework to certain developmental periods in countries such as South Korea, South Africa, and the United States. Id.

[3] The State of Independence in America, MBO Partners (June 2019), https://s29814.pcdn.co/wp-content/uploads/2019/06/MBO-SOI-2019.pdf

[4] Supra note 3.

[5] Connor Brooke, The History and Future of the Gig Economy, Business 2 Community (December 11, 2022), https://www.business2community.com/infographics/the-history-and-future-of-the-gig-economy-infographic-02260584

[6] Supra note 5.

[7] Jeremy Rosen, Low-Wage Workers Speak Out: The Emerging Future of Work is Not Improving Their Jobs, Shriver Center on Poverty Law (September 2022), https://www.povertylaw.org/wp-content/uploads/2022/09/Low-Wage_Workers_Speak_Out_report_v04.pdf

[8] David Smith, ‘It’s kind of a tragedy’: behind the battle for power at Uber, The Guardian (March 5, 2022), https://www.theguardian.com/tv-and-radio/2022/mar/05/uber-joseph-gordon-levitt-travis-kalanick-super-pumped; see also Andrew Greiner, A History of Lyft, from Fuzzy Pin Mustaches to Global Ride Share Giant, CNN Business (April 2, 2019), https://www.cnn.com/interactive/2019/03/business/lyft-history/index.html

[9] Supra note 8, Smith.

[10] Supra note 8, Smith.

[11] Jingjing Jiang, More Americans are Using Ride-Hailing Apps, Pew Research Center (January 4, 2019), https://www.pewresearch.org/fact-tank/2019/01/04/more-americans-are-using-ride-hailing-apps/

[12] Rani Molla, Uber and Lyft are in a Battle for User Loyalty, and Riders May Win, Vox (February 5, 2019), https://www.vox.com/2019/2/5/18210376/uber-lyft-ride-loyalty-chart

[13] Supra note 12.

[14] Uber Delve Into Paid Advert; To Make Billions from its Pool of 122 Million Active Users, Investors King (October 22, 2022), https://investorsking.com/2022/10/22/uber-delve-into-paid-advert-to-make-billions-from-its-pool-of-122-million-active-users/

[15] Form S-1 Registration Statement: Uber Technologies, Inc., United States Securities and Exchange Commission (April 11, 2019), https://www.sec.gov/Archives/edgar/data/1543151/000119312519103850/d647752ds1.htm

[16] Mansoor Iqbal, Lyft Revenue and Usage Statistics, Business of Apps (February 20, 2023), https://www.businessofapps.com/data/lyft-statistics/#:~:text=Lyft%20had%2018.7%20million%20active%20riders%20in%202021%2C%20an%20increase,as%20were%20riding%20in%202019

[17] Supra note 11.

[18] Supra note 16.

[19] A First Step Toward a New Model for Independent Platform Work, Uber Newsroom (August 10, 2020), https://www.uber.com/newsroom/working-together-priorities/

[20] David Curry, Food Delivery App Revenue and Usage Statistics, Business of Apps (January 9, 2023), https://www.businessofapps.com/data/food-delivery-app-market/

[21] Supra note 20.

[22] Supra note 20.

[23] Supra note 20.

[24] Form S-1 Registration Statement: Uber Technologies, Inc., United States Securities and Exchange Commission (April 11, 2019), https://www.sec.gov/Archives/edgar/data/1543151/000119312519103850/d647752ds1.htm; see also Dan Blystone, The History of Uber, Investopedia (April 18, 2023), https://www.investopedia.com/articles/personal-finance/111015/story-uber.asp#:~:text=Uber's%20IPO%20was%20one%20of,dollar%20loss%20in%20U.S.%20history

[25] Supra note 24, Form S-1.

[26] Form 10-K Annual Report: Uber Technologies, Inc., United States Securities and Exchange Commission (December 31, 2021), https://d18rn0p25nwr6d.cloudfront.net/CIK-0001543151/c94d88c9-fe59-4487-8e68-ccb030ea49b0.pdf

[27] Supra note 19.

[28] Supra note 3.

[29] Supra note 3.

[30] Supra note 3.

[31] Supra note 7.

[32] Supra note 7.

[33] Supra note 7.

[34] Ihna Mangundayao, More than $3 billion in stolen wages recovered for workers between 2017 and 2020, Economic Policy Institute (December 22, 2021), https://www.epi.org/publication/wage-theft-2021/; see also Illinois Payroll Tax Guide 2022: Laws, Taxes and more, CAVU (last accessed May 7, 2023), https://www.cavuhcm.com/illinois-payroll-taxes#:~:text=Typically%2C%20Illinois%20employers%20must%20withhold,W%2D4%20for%20each%20employee

[35] Chris Hacker, Wage theft often goes unpunished despite state systems meant to combat it, CBS News (January 24, 2023), https://www.cbsnews.com/news/owed-employers-face-little-accountability-for-wage-theft/

[36] Id. In one case, independent drivers were paid on a per-delivery basis, yet were expected to perform tasks, unpaid, like “cleaning the bathrooms, stocking shelves and taking out trash.”

[37] Policy Brief: Independent Contractor Misclassification Imposes Huge Costs on Workers and Federal and State Treasuries, National Employment Law Project (October 2020), https://s27147.pcdn.co/wp-content/uploads/Independent-Contractor-Misclassification-Imposes-Huge-Costs-Workers-Federal-State-Treasuries-Update-October-2020.pdf

[38] Supra note 37.

[39] Supra note 37.

[40] Supra note 37.

[41] Supra note 37.

[42] Supra note 37.

[43] Supra note 37.

[44] Heidi Groover, Seattle to require minimum wage for Uber and Lyft drivers, The Seattle Times, (September 29, 2020), https://www.seattletimes.com/seattle-news/transportation/seattle-to-require-minimum-wage-for-uber-and-lyft-drivers/

[45] Monica Nickelsburg, Seattle moves forward with plans to bring Uber and Lyft regulations in line with taxis, GeekWire (April 9, 2018), https://www.geekwire.com/2018/seattle-moves-forward-plan-bring-uber-lyft-regulations-line-taxis/

[46] Supra note 45.

[47] Supra note 44.

[48] Ihna Mangundayao, More than $3 billion in stolen wages recovered for workers between 2017 and 2020, Economic Policy Institute (December 22, 2021), https://www.epi.org/publication/wage-theft-2021/; see also Illinois Payroll Tax Guide 2022: Laws, Taxes and more, CAVU (last accessed May 7, 2023), https://www.cavuhcm.com/illinois-payroll-taxes#:~:text=Typically%2C%20Illinois%20employers%20must%20withhold,W%2D4%20for%20each%20employee

[49] Supra note 48.

[50] Supra note 48.

[51] Supra note 48.

[52] Supra note 48.

[53] Supra note 48.

[54] Supra note 48.

[55] Supra note 48.

[56] See Complaint, Lopez v. Naty’s Pizza et al, 1:22-CV-01023 (N.D. Ill. Dec. 30, 2022).

[57] Jeremy Rosen, Low-Wage Workers Speak Out: The Emerging Future of Work is Not Improving Their Jobs, Shriver Center on Poverty Law (September 2022), https://www.povertylaw.org/wp-content/uploads/2022/09/Low-Wage_Workers_Speak_Out_report_v04.pdf

[58] Supra note 57.

[59] See Lopez v. Naty’s Pizza; see also Frank Manzo IV, Improving Labor Standards for Uber and Lyft Drivers in Chicago, Illinois Economic Policy Institute (March 14, 2022), https://lep.illinois.edu/wp-content/uploads/2022/03/ILEPI-PMCR-Improving-Labor-Standards-for-Uber-and-Lyft-Drivers-FINAL.pdf

[60] Shanzeh Ahmad, ‘We need to take care of ourselves’: Ride-share, delivery drivers learn about wellness, self-care as stress of the job increases, Chicago Tribune (May 16, 2022), https://www.chicagotribune.com/news/ct-rideshare-delivery-drivers-wellness-fair-20220516-oqslmguqw5abdof64uj3v3ttkm-story.html

[61] Michael Loria, Southwest Side pizza joint owner cheated drivers out of wages, lawsuit claims, Chicago Sun Times (October 19, 2022), https://chicago.suntimes.com/2022/10/19/23413054/natys-pizza-delivery-drivers-lawsuit-wage-theft-independent-contractors-kedzie-gage-park

[62] Supra note 61.

[63] Yong-Shik Lee, Law and Development: Theory and Practice 125 (Routledge, 2d ed. 2022).

[64] Id. at 38.

[65] Id. at 39, 127.

[66] Id.

[67] Id.

[68] Id.

[69] Id.

[70] Id.

[71] Id.

[72] Id. at 43.

[73] Policy Brief: Independent Contractor Misclassification Imposes Huge Costs on Workers and Federal and State Treasuries, National Employment Law Project (October 2020), https://s27147.pcdn.co/wp-content/uploads/Independent-Contractor-Misclassification-Imposes-Huge-Costs-Workers-Federal-State-Treasuries-Update-October-2020.pdf; see also Wages and the Fair Labor Standards Act, U.S. Department of Labor (last visited April 23, 2023), https://www.dol.gov/agencies/whd/flsa

[74] See 29 USCA § 201 et seq.; See also Wages and the Fair Labor Standards Act, U.S. Department of Labor (last visited April 23, 2023), https://www.dol.gov/agencies/whd/flsa

[75] Supra note 74.

[76] Employee or Independent Contractor Classification Under the Fair Labor Standards Act, Federal Register (October 13, 2022), https://www.federalregister.gov/documents/2022/10/13/2022-21454/employee-or-independent-contractor-classification-under-the-fair-labor-standards-act

[77] Id.; See also Wages and the Fair Labor Standards Act, U.S. Department of Labor (last visited April 23, 2023), https://www.dol.gov/agencies/whd/flsa

[78] Policy Brief: Independent Contractor Misclassification Imposes Huge Costs on Workers and Federal and State Treasuries, National Employment Law Project (October 2020), https://s27147.pcdn.co/wp-content/uploads/Independent-Contractor-Misclassification-Imposes-Huge-Costs-Workers-Federal-State-Treasuries-Update-October-2020.pdf

[79] Supra note 78.

[80] Supra note 78.

[81] Supra note 78.

[82] Supra note 78.

[83] Supra note 78.

[84] Supra note 78.

[85] Supra note 78.

[86] Supra note 78.

[87] Supra note 78.

[88] Policy Brief: Independent Contractor Misclassification Imposes Huge Costs on Workers and Federal and State Treasuries, National Employment Law Project (October 2020), https://s27147.pcdn.co/wp-content/uploads/Independent-Contractor-Misclassification-Imposes-Huge-Costs-Workers-Federal-State-Treasuries-Update-October-2020.pdf

[89] Supra note 88.

[90] Supra note 88.

[91] Public Act 101-0527, Illinois General Assembly (Effective January 1, 2020), https://www.ilga.gov/legislation/publicacts/fulltext.asp?Name=101-0527&GA=101

[92] Supra note 91.

[93] Supra note 91.

[94] Ihna Mangundayao, More than $3 billion in stolen wages recovered for workers between 2017 and 2020, Economic Policy Institute (December 22, 2021), https://www.epi.org/publication/wage-theft-2021/

[95] Supra note 94.

[96] Jeremy Rosen, Low-Wage Workers Speak Out: The Emerging Future of Work is Not Improving Their Jobs, Shriver Center on Poverty Law (September 2022), https://www.povertylaw.org/wp-content/uploads/2022/09/Low-Wage_Workers_Speak_Out_report_v04.pdf

[97] Id. SCPL’s analysis also focuses on proposed policy outcomes for traditional minimum wage workers.

[98] Frank Manzo IV, Improving Labor Standards for Uber and Lyft Drivers in Chicago, Illinois Economic Policy Institute (March 14, 2022), https://lep.illinois.edu/wp-content/uploads/2022/03/ILEPI-PMCR-Improving-Labor-Standards-for-Uber-and-Lyft-Drivers-FINAL.pdf; see also Jeremy Rosen, Low-Wage Workers Speak Out: The Emerging Future of Work is Not Improving Their Jobs, Shriver Center on Poverty Law (September 2022), https://www.povertylaw.org/wp-content/uploads/2022/09/Low-Wage_Workers_Speak_Out_report_v04.pdf

[99] Id.

[100] Supra note 98.

[101] Supra note 98.

[102] Supra note 98.

[103] Supra note 98.

[104] Supra note 98.

[105] Id. According to Chicago.gov, the minimum wage in Chicago, as of July 1, 2022 is $15.40 per hour. See also Business Affairs and Consumer Protection: Minimum Wage, Chicago.gov (last visited on April 25, 2023), https://www.chicago.gov/city/en/depts/bacp/supp_info/minimumwageinformation.html

[106] Heidi Groover, Seattle to require minimum wage for Uber and Lyft drivers, The Seattle Times, (September 29, 2020), https://www.seattletimes.com/seattle-news/transportation/seattle-to-require-minimum-wage-for-uber-and-lyft-drivers/

[107] Supra note 106.

[108] Id. See also Jeremy Rosen, Low-Wage Workers Speak Out: The Emerging Future of Work is Not Improving Their Jobs, Shriver Center on Poverty Law (September 2022), https://www.povertylaw.org/wp-content/uploads/2022/09/Low-Wage_Workers_Speak_Out_report_v04.pdf

[109] California Proposition 22, App-Based Drivers as Contractors and Labor Policies Initiative (2020), BallotPedia (last visited April 23, 2023), https://ballotpedia.org/California_Proposition_22,_App-Based_Drivers_as_Contractors_and_Labor_Policies_Initiative_(2020)

[110] Id.; See also Frank Manzo IV, Improving Labor Standards for Uber and Lyft Drivers in Chicago, Illinois Economic Policy Institute (March 14, 2022), https://lep.illinois.edu/wp-content/uploads/2022/03/ILEPI-PMCR-Improving-Labor-Standards-for-Uber-and-Lyft-Drivers-FINAL.pdf

[111] Brian Chen, Prop 22 was a Failure for California’s App-Based Workers. Now, It’s Also Unconstitutional, National Employment Law Project (September 16, 2021), https://www.nelp.org/blog/prop-22-unconstitutional/

[112] Supra note 111.

[113] Id. California Supreme Court Judge Frank Roesch held the ballot initiative infringed on legislative power explicitly granted to the State Legislature via the State constitution. Roesch also found the initiative to have impermissibly impeded with the State Legislature’s ability to pass laws allowing unionization. Roesch took issue with the fact that the initiative proposed to offer worker flexibility and safety, yet simultaneously prevented rideshare workers from organizing under unions.

[114] Frank Manzo IV, Improving Labor Standards for Uber and Lyft Drivers in Chicago, Illinois Economic Policy Institute (March 14, 2022), https://lep.illinois.edu/wp-content/uploads/2022/03/ILEPI-PMCR-Improving-Labor-Standards-for-Uber-and-Lyft-Drivers-FINAL.pdf

[115] Supra note 114.

[116] Supra note 114.

[117] Supra note 114.

[118] Supra note 114.

[119] Supra note 114.

[120] Supra note 114.

[121] Supra note 114.

[122] Supra note 114.

[123] Id. The Illinois EPI’s estimates are based on a proposed employer classification model, rather than a model comparable to California Proposition 22.

[124] Heidi Groover, Seattle to require minimum wage for Uber and Lyft drivers, The Seattle Times, (September 29, 2020), https://www.seattletimes.com/seattle-news/transportation/seattle-to-require-minimum-wage-for-uber-and-lyft-drivers/

[125] Supra note 124.

[126] Chapter 14.19 Minimum Wage and Minimum Compensation Rates for Employees Performing Work in Seattle, Seattle.gov (June 2, 2014), https://library.municode.com/wa/seattle/codes/municipal_code?nodeId=TIT14HURI_CH14.19MIWAMICORAEMPEWOSE

[127] Office of Labor Standards: Our Mission, Seattle.gov (last visited April 23, 2023), https://www.seattle.gov/laborstandards/about/our-mission

[128] Supra note 126.

[129] Supra note 124.

[130] Supra note 124.

[131] Supra note 124.

[132] Supra note 124.

[133] Supra note 124.

[134] Supra note 124.

[135] Supra note 124.

[136] The State of Independence in America, MBO Partners (June 2019), https://s29814.pcdn.co/wp-content/uploads/2019/06/MBO-SOI-2019.pdf

[137] Yong-Shik Lee, Law and Development: Theory and Practice 46 (Routledge, 2d ed. 2022).

[138] Id.

[139] Id. at 30.

[140] Id. at 46.

[141] Wages and the Fair Labor Standards Act, U.S. Department of Labor (last visited April 23, 2023), https://www.dol.gov/agencies/whd/flsa

[142] Id. See also Fair Labor Standards Act, 29 USCA § 204.

[143] 29 U.S.C.A. § 204(a).

[144] See 29 U.S.C.A. § 206, Notes of Decisions.

[145] History of Federal Minimum Wage Rates Under the Fair Labor Standards Act, 1938-2009, U.S. Department of Labor (last visited April 23, 2023), https://www.dol.gov/agencies/whd/flsa

[146] Wages and the Fair Labor Standards Act, U.S. Department of Labor (last visited April 23, 2023), https://www.dol.gov/agencies/whd/flsa

[147] Ihna Mangundayao, More than $3 billion in stolen wages recovered for workers between 2017 and 2020, Economic Policy Institute (December 22, 2021), https://www.epi.org/publication/wage-theft-2021/

[148] Supra note 147.

[149] Policy Brief: Independent Contractor Misclassification Imposes Huge Costs on Workers and Federal and State Treasuries, National Employment Law Project (October 2020), https://s27147.pcdn.co/wp-content/uploads/Independent-Contractor-Misclassification-Imposes-Huge-Costs-Workers-Federal-State-Treasuries-Update-October-2020.pdf

[150] Supra note 147.

[151] Supra note 147.

[152] Supra note 147.

[153] See generally Chris Hacker, Wage theft often goes unpunished despite state systems meant to combat it, CBS News (January 24, 2023), https://www.cbsnews.com/news/owed-employers-face-little-accountability-for-wage-theft/; see also Ihna Mangundayao, More than $3 billion in stolen wages recovered for workers between 2017 and 2020, Economic Policy Institute (December 22, 2021), https://www.epi.org/publication/wage-theft-2021/

[154] Public Act 101-0527, Illinois General Assembly (Effective January 1, 2020), https://www.ilga.gov/legislation/publicacts/fulltext.asp?Name=101-0527&GA=101

[155] Supra note 154.

[156] Supra note 154.

[157] Supra note 154.

[158] Chris Hacker, Wage theft often goes unpunished despite state systems meant to combat it, CBS News (January 24, 2023), https://www.cbsnews.com/news/owed-employers-face-little-accountability-for-wage-theft/

[159] Supra note 158.

[160] Id. Illinois is presently second behind New Jersey in felony wage theft violations.

[161] Supra note 158.

[162] Public Act 101-0527, Illinois General Assembly (Effective January 1, 2020), https://www.ilga.gov/legislation/publicacts/fulltext.asp?Name=101-0527&GA=101

[163] Supra note 162.

[164] Supra note 162.

[165] Supra note 162.

[166] Supra note 162.

[167] Ihna Mangundayao, More than $3 billion in stolen wages recovered for workers between 2017 and 2020, Economic Policy Institute (December 22, 2021), https://www.epi.org/publication/wage-theft-2021/

[168] Chris Hacker, Wage theft often goes unpunished despite state systems meant to combat it, CBS News (January 24, 2023), https://www.cbsnews.com/news/owed-employers-face-little-accountability-for-wage-theft/

[169] Supra note 168.

[170] Supra note 168.

[171] Supra note 168.

[172] Ihna Mangundayao, More than $3 billion in stolen wages recovered for workers between 2017 and 2020, Economic Policy Institute (December 22, 2021), https://www.epi.org/publication/wage-theft-2021/

[173] Complaint, Lopez v. Naty’s Pizza et al, 1:22-CV-01023 (N.D. Ill. Dec. 30, 2022).

[174] Id.

[175] Id.

[176] Yong-Shik Lee, Law and Development: Theory and Practice 46 (Routledge, 2d ed. 2022).

[177] Chris Hacker, Wage theft often goes unpunished despite state systems meant to combat it, CBS News (January 24, 2023), https://www.cbsnews.com/news/owed-employers-face-little-accountability-for-wage-theft/

[178] Supra note 177.

[179] Yong-Shik Lee, Law and Development: Theory and Practice 46 (Routledge, 2d ed. 2022).

[180] See Lopez v. Naty’s Pizza; See also Frank Manzo IV, Improving Labor Standards for Uber and Lyft Drivers in Chicago, Illinois Economic Policy Institute (March 14, 2022), https://lep.illinois.edu/wp-content/uploads/2022/03/ILEPI-PMCR-Improving-Labor-Standards-for-Uber-and-Lyft-Drivers-FINAL.pdf

[181] The State of Independence in America, MBO Partners (June 2019), https://s29814.pcdn.co/wp-content/uploads/2019/06/MBO-SOI-2019.pdf

[182] Supra note 181.

[183] What are the steps to sign up?, Uber (last visited April 24, 2023), https://help.uber.com/driving-and-delivering/article/what-are-the-steps-to-sign-up?nodeId=88b80350-8701-40c0-8493-9b21189a71ec

[184] Apply to drive with Lyft, Lyft (last visited April 24, 2023), https://www.lyft.com/drive-with-lyft

[185] Your make-it-happen rental car, Lyft (last visited April 24, 2023), https://www.lyft.com/expressdrive

[186] The State of Independence in America, MBO Partners (June 2019), https://s29814.pcdn.co/wp-content/uploads/2019/06/MBO-SOI-2019.pdf

[187] Supra note 186.

[188] Supra note 186.

[189] Supra note 186.

[190] Supra note 186.

[191] Supra note 186.

[192] Id. Additionally, 17% have advanced or graduate degrees.

[193] Jeremy Rosen, Low-Wage Workers Speak Out: The Emerging Future of Work is Not Improving Their Jobs, Shriver Center on Poverty Law (September 2022), https://www.povertylaw.org/wp-content/uploads/2022/09/Low-Wage_Workers_Speak_Out_report_v04.pdf

[194] Supra note 193.

[195] The State of Independence in America, MBO Partners (June 2019), https://s29814.pcdn.co/wp-content/uploads/2019/06/MBO-SOI-2019.pdf

[196] Supra note 196.

[197] Supra note 196.

[198] Supra note 196.

[199] Supra note 196.

[200] Supra note 196.

[201] Supra note 196.

[202] Ihna Mangundayao, More than $3 billion in stolen wages recovered for workers between 2017 and 2020, Economic Policy Institute (December 22, 2021), https://www.epi.org/publication/wage-theft-2021/

[203] See Chris Hacker, Wage theft often goes unpunished despite state systems meant to combat it, CBS News (January 24, 2023), https://www.cbsnews.com/news/owed-employers-face-little-accountability-for-wage-theft/;  See also Jeremy Rosen, Low-Wage Workers Speak Out: The Emerging Future of Work is Not Improving Their Jobs, Shriver Center on Poverty Law (September 2022), https://www.povertylaw.org/wp-content/uploads/2022/09/Low-Wage_Workers_Speak_Out_report_v04.pdf

[204] Yong-Shik Lee, Law and Development: Theory and Practice 50 (Routledge, 2d ed. 2022).

[205] Emphasis added. Supra note 202.

[206] Supra note 202.

[207] Supra note 202.

[208] Supra note 202.

[209] Id.; see also Commercial Litigation Outlook, Seyfarth (2023), chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://www.seyfarth.com/dir_docs/publications/2023-Commercial-Litigation-Outlook.pdf

[210] This sudden decline is thought to be attributed to a Supreme Court Holding allowing employers to force workers to use arbitration. See generally Epic Systems v. Lewis; See also Ihna Mangundayao, More than $3 billion in stolen wages recovered for workers between 2017 and 2020, Economic Policy Institute (December 22, 2021), https://www.epi.org/publication/wage-theft-2021/; Compare with Commercial Litigation Outlook, Seyfarth (2023), chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://www.seyfarth.com/dir_docs/publications/2023-Commercial-Litigation-Outlook.pdf

[211] Ihna Mangundayao, More than $3 billion in stolen wages recovered for workers between 2017 and 2020, Economic Policy Institute (December 22, 2021), https://www.epi.org/publication/wage-theft-2021/

[212] Supra note 211.

[213] Supra note 211.

[214] Supra note 211.

[215] Supra note 211.

[216] Supra note 211.

[217] Supra note 211.

[218] Supra note 211.

[219] See note 211.

[220] Heidi Groover, Seattle to require minimum wage for Uber and Lyft drivers, The Seattle Times, (September 29, 2020), https://www.seattletimes.com/seattle-news/transportation/seattle-to-require-minimum-wage-for-uber-and-lyft-drivers/

[221] Supra note 220.

[222] Supra note 220.

[223] Supra note 220.

[224] Supra note 220.

[225] Yong-Shik Lee, Law and Development: Theory and Practice 31 (Routledge, 2d ed. 2022).

[226] Supra note 220.

[227] Supra note 220.

[228] Heidi Groover, Seattle to require minimum wage for Uber and Lyft drivers, The Seattle Times, (September 29, 2020), https://www.seattletimes.com/seattle-news/transportation/seattle-to-require-minimum-wage-for-uber-and-lyft-drivers/

[229] Supra note 228.

[230] Supra note 228.

[231] Supra note 228.

[232] Supra note 228.

[233] Michelle Baruchman, Uber will charge significantly more per trip as new Seattle law goes into effect Jan. 1, (January 4, 2021) The Seattle Times, https://www.seattletimes.com/seattle-news/transportation/embargoed-uber-raising-its-prices-starting-jan-1/

[234] Yong-Shik Lee, Law and Development: Theory and Practice 54 (Routledge, 2d ed. 2022).

[235] Id.

[236] Id. at 55.

[237] Id.

[238] Ihna Mangundayao, More than $3 billion in stolen wages recovered for workers between 2017 and 2020, Economic Policy Institute (December 22, 2021), https://www.epi.org/publication/wage-theft-2021/

[239] Supra note 238.

[240] Chris Hacker, Wage theft often goes unpunished despite state systems meant to combat it, CBS News (January 24, 2023), https://www.cbsnews.com/news/owed-employers-face-little-accountability-for-wage-theft/

[241] Supra note 238.

[242] Supra note 238.

[243] Chris Hacker, Wage theft often goes unpunished despite state systems meant to combat it, CBS News (January 24, 2023), https://www.cbsnews.com/news/owed-employers-face-little-accountability-for-wage-theft/

[244] Ihna Mangundayao, More than $3 billion in stolen wages recovered for workers between 2017 and 2020, Economic Policy Institute (December 22, 2021), https://www.epi.org/publication/wage-theft-2021/

[245] Supra note 244.

[246] Supra note 244.

[247] Chris Hacker, Wage theft often goes unpunished despite state systems meant to combat it, CBS News (January 24, 2023), https://www.cbsnews.com/news/owed-employers-face-little-accountability-for-wage-theft/

[248] Supra note 247.

[249] Yong-Shik Lee, Law and Development: Theory and Practice 58 (2d ed. 2022).

[250] Chris Hacker, Wage theft often goes unpunished despite state systems meant to combat it, CBS News (January 24, 2023), https://www.cbsnews.com/news/owed-employers-face-little-accountability-for-wage-theft/

[251] Ihna Mangundayao, More than $3 billion in stolen wages recovered for workers between 2017 and 2020, Economic Policy Institute (December 22, 2021), https://www.epi.org/publication/wage-theft-2021/

[252] Supra note 251.

[253] Heidi Groover, Seattle to require minimum wage for Uber and Lyft drivers, The Seattle Times, (September 29, 2020), https://www.seattletimes.com/seattle-news/transportation/seattle-to-require-minimum-wage-for-uber-and-lyft-drivers/.