Key Takeaways
- • The International Bar Association published an article titled "'Economic reality' check: worker classification issues in the US," authored by Akin partner Laura Smolowe and litigation associate Juliette West.
- • The authors state that it is settled law that a worker must be classified according to the 'economic reality' of the actual working relationship, rather than by title alone.
- • The article covers the employee versus independent contractor distinction, shifting federal guidance, divergent state approaches, and misclassification risks for employers.
- • The authors also examine how growing gig-economy use and artificial intelligence in the workplace may complicate worker-classification analyses.
Summary
Akin attorneys Laura Smolowe, a labor and employment and complex commercial litigation partner, and Juliette West, a litigation associate, have authored an article published by the International Bar Association titled "'Economic reality' check: worker classification issues in the US." The piece examines the evolving legal landscape governing whether workers are classified as employees or independent contractors in the United States.
According to the publisher summary, the authors anchor their analysis in a core legal principle. Quoting the article, they write, "It is settled law that a worker must be classified according to the 'economic reality' of his or her actual working relationship with his or her employer, rather than title alone." This standard means that contractual labels do not control classification; the substance of the working relationship does.
The article also explores shifting federal guidance and the varying approaches taken by individual states. It addresses the consequences of misclassification for employers, a recurring compliance risk for companies that rely on contractor arrangements.
The authors further consider two emerging pressures on classification analysis: the growth of the gig economy and the increasing use of artificial intelligence in the workplace. Both developments may affect how the economic reality test is applied, according to the publication's summary.
The full article is available on the International Bar Association website.
According to the publisher summary, the authors anchor their analysis in a core legal principle. Quoting the article, they write, "It is settled law that a worker must be classified according to the 'economic reality' of his or her actual working relationship with his or her employer, rather than title alone." This standard means that contractual labels do not control classification; the substance of the working relationship does.
The article also explores shifting federal guidance and the varying approaches taken by individual states. It addresses the consequences of misclassification for employers, a recurring compliance risk for companies that rely on contractor arrangements.
The authors further consider two emerging pressures on classification analysis: the growth of the gig economy and the increasing use of artificial intelligence in the workplace. Both developments may affect how the economic reality test is applied, according to the publication's summary.
The full article is available on the International Bar Association website.
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