Legal Protections for Gig Economy Consumers

Over the past decade, jobs in the gig economy have become a reliable source of income for a growing share of the labor market. More people rely on gig work—gig platforms have grown significantly, and they prefer flexible work arrangements. This is especially true since the global COVID-19 pandemic.

But what are the legal protections for gig economy consumers? Does employment law give these services responsibilities? Read on for the answers to these questions and more. If you need more help, contact a local consumer protection lawyer. They can explain your legal rights.

Understanding the Gig Economy

Independent contractors and freelancers are the foundation for the gig economy. Gig workers commonly work on an on-demand, temporary, or short-term contract basis. Gig companies like the following have embraced this business model:

• Doordash
• Uber
• Instacart
• Lyft

You may be one of the millions of workers who rely on these companies as a primary source of income. These platforms usually use algorithms to match users. They also use reviews and ratings to develop trust.

Legal Protections for Gig Economy Consumers

Rapid growth in the gig economy comes with challenges. Basic consumer protection and competition principles apply to gig workers, regardless of employment status. No matter how gig companies classify gig workers, you’re a consumer entitled to protections under the law. Users of gig economy services are also entitled to legal protections.

Rights and Responsibilities of Service Providers

Regulating the gig economy is of interest to groups concerned about workers’ rights. The Federal Trade Commission (FTC) recently issued a policy statement concerning gig work.

The press release for the FTC Policy Statement on Enforcement Related to Gig Work says that “American workers deserve fair, honest, and competitive labor markets.”

The FTC explains that consumer protection and competition principles apply to gig economy companies. It addresses issues such as:

• Deceptive claims about pay and hours
• Workers’ rights
• Unfair contract terms
• Anticompetitive wage fixing
• Worker protections
• Coordination between gig economy companies

You can report a gig company to the FTC if you believe they’re making false or misleading claims about the work or earnings related to the work.

Federal Laws That Apply to Gig Workers

Congress introduced the Advancing Gig Economy Act, which requires the Department of Commerce to study and report on the gig economy’s impact on U.S. businesses. However, this bill is far from becoming law.

Worker advocates have long clashed with gig economy companies on the employment status and worker classification of their workers. Gig companies oppose mandates requiring them to classify workers as employees.

The U.S. Department of Labor issued its final rule in 2024. The rule makes it more difficult to classify workers as independent contractors. It determines whether a worker is an independent contractor under Fair Labor Standards Act requirements.

The six-factor test to determine whether a worker is an independent contractor narrowed the definition. It’s now more likely that certain workers will be reclassified as employees entitled to minimum wage, employee benefits, and overtime pay. Gig companies, however, believe that the final rule doesn’t change the classification of ride-share and delivery-app drivers.

State Law Impacting Gig Workers

As noted in the examples below, jurisdictions across the United States address the gig economy through legislation.

California

California enacted a new law, Proposition 22, which the California Supreme Court recently upheld. It allows gig economy workers to be classified as independent contractors. It also prevents ride-share and delivery app drivers from being treated as employees under California’s three-factor ABC test.

New York

New York state enacted freelance worker protections concerning gig workers in mid-2024. The law requires written contracts for independent contractors for engagements valued at $800 or more. It provides rights and protections for freelancers and independent contractors and offers increased clarity regarding the scope of work and payment schedules.

New York City enacted the Freelance Isn’t Free Act several years before New York State. It covers similar issues. New York City’s law doesn’t generally apply to work under a collective bargaining agreement that defines workers as employees.

Massachusetts

Massachusetts provides resources on laws about the gig or sharing economy. You can access state and local laws, regulations, and related cases.

Common Issues in the Gig Economy

Some common customer disputes may require you to seek legal protection. Common issues in the gig economy include:

• Payment disputes: Gig workers can face delayed payments or disagreements over what the platform owes the worker.
• Misclassification: Gig workers often want employee status classification due to the platforms’ level of control over working conditions.
• Regulatory and legal challenges: Governments are working to determine how to classify gig workers under existing labor laws.
• Lack of some essential benefits of traditional employment: Gig workers can lack job security, social security benefits, unemployment insurance, and minimum wage guarantees.
• Diminished bargaining power: Workers have little leverage to hold gig companies accountable or demand transparency.

Both regulatory bodies and platforms continue to explore ways to address issues raised by those involved in labor rights advocacy for gig workers.

Tips for Safe and Informed Gig Economy Transactions

Consumer fraud relating to gig economy platforms isn’t uncommon. Consumers can become victims while using ride-sharing and delivery apps. Payment fraud is also a significant issue. Gig workers may not receive pay for their services, or scammers may pay you with fraudulent payment methods.

To prevent payment fraud, you can do the following:

• Use secure payment methods
• Verify the identity of employers and clients
• Keep accurate records
• Be aware of red flags
• Report suspicious activity
• Protect your identity

To prevent unlawful practices concerning constraints imposed on gig economy workers, you can do the following:

• Be clear about potential earnings
• Understand the costs workers have before taking work from a gig economy company
• Look for any restrictive contract terms, including those that limit you from seeking other jobs

It’s important to make safe and informed gig economy transactions. Should you need to resolve disputes in the gig economy, you would likely be subject to mandatory arbitration agreements and class action waivers. This prevents you from litigating some claims under these agreements.

Get Legal Help

Gig economy jobs have grown exponentially in recent years. Contact a local consumer protection lawyer if you need help understanding your rights or resolving a dispute.