Who Is an Employee?

On the one hand, employment law resembles contract law--a matter of private ordering between workers and hirers, or perhaps between unions and employers. On the other hand, employment law has long been seen to implicate fundamental questions of justice--what discrimination means, what workers deserve, and what the balance should be between work and the rest of life. 

Historically, the balance between private ordering and public values was always fraught. In the nineteenth century, U.S. law and culture often described employers and employees as peers, bargaining at arms length. Of course, the relationship was never so equal in practice, but the courts still endorsed the idea of freedom of contract, most clearly in a series of Supreme Court decisions. See, e.g., Lochner v. New York, 198 U.S. 45 (1905) (regulation of bakers’ working hours).

But support for freedom of contract was never as uncomplicated as it seems. In the next two decades, workers’ compensation regimes tried to address an epidemic of workplace deaths and injuries. And workers' compensation was just the beginning. The Great Depression brought the New Deal, which witnessed a revolution in employment law, including passage of the National Labor Relations Act (“NLRA”), 29 U.S.C. §§151-69 (2018), protecting the right to unionize and bargain collectively, and the Fair Labor Standards Act (“FLSA”), 29 U.S.C. §§201-19 (2018), establishing a federal minimum wage and regulating overtime. 

The Civil Rights movement ensured that law considered not only the rights of workers but discrimination against particular classes of worker, including people of color. Title VII of the Civil Rights Act of 1964, 42 U.S.C. §2000e-2000e-17 (2018), was the first federal regulation effectively limiting employers’ ability to hire and fire at will, by prohibiting discrimination on the basis of race, sex, national origin, and religion. That statute was followed within three years by the Age Discrimination in Employment Act (“ADEA”), 29 U.S.C. §§621-634 (2018), and, after two more decades, by the Americans with Disabilities Act (“ADA”) of 1990, 42 U.S.C.A. §§12101-12213 (2018). In 2020, the Supreme Court interpreted Title VII to prohibit discrimination on the basis of sexual orientation or gender identity.

The 1970s ushered in two more modest adjustments, the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. §§1001-1381 (2018), and the Occupational Safety and Health Act (“OSHA”), 29 U.S.C. §§651-78 (2018). ERISA was a response to horror stories of employers firing workers to avoid paying their pensions. The statute was intended to put a stop to these practices and incentivize employers to create a more equitable retirement system. OSHA adopted and facilitated explicit administrative regulations to create safe workplaces. On top of these statutory limitations on private ordering, state courts were softening what they saw as the harshest effects of the at-will rule.

But a focus on private ordering would return. Private-sector unions had lost influence, and gaps and exemptions in federal wage laws left many behind. Judicial interpretations of federal antidiscimination mandates narrowed. Some laws, like both OSHA and ERISA, have struck critics as ineffective. Most details of the employment relationship have been left to private negotations.

Throughout the course, we will consider the balance between private ordering and public values. What values matter most in the workplace? How best can law advance those values? Are there scenarios when employees benefit from private ordering? And how can we make the law of work better reflect the reality of work in the United States--and the lives of workers?

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We will begin with the issue of who qualifies as an employee. After all, by far the most litigated issue in employment law is who counts as an employee versus an independent contractor. Historically, this issue arose in fights about when hirers could be vicariously liable for the acts of workers. Recently, the rise of contingent labor--temporary, seasonal, and as-needed workers--has raised new challenges. So has the ascendancy of the gig economy (over half of workers are expected to participate in the gig economy in 2022). 

In this section, we will consider the different tests used to determine whether someone is an employee or an independent contractor. We will explore the reasons that workers and hirers invest in one status or another--and the public values at stake when a worker is misclassified.