- reimagining the platform economy -

After years of working without employment protections or benefits, California gig economy workers were recently reclassified as employees by the California Supreme Court. This incredible shift has led to a moment where gig economy companies must rethink their model. The Cooperative Platform Economy Act takes advantage of this opportunity to propose a vision where gig workers own and govern their workplaces.

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The Cooperative Platform Economy Act is designed to ensure gig workers receive the benefits and protections they deserve and a majority ownership stake in the business where they work. At the same time, the act preserves the flexibility of the current gig economy arrangement and provides legal certainty to gig economy companies. Under the act, platform companies operating in California have the option to contract with cooperative labor contractors (CLCs) instead of directly employing workers. The CLCs, which operate with Democratic Worker Control, are licensed and overseen by the Labor Commissioner to ensure they remain centered on the needs of workers. If successful, this new arrangement would result in the majority of platform workers being employed at businesses that they own and govern.


For workers, the act offers employment benefits and protections, democratic governance control over their workplace, an ownership stake in the profitability of their company, and continued scheduling flexibility. For the platform companies, the act provides clarity on how to comply with the new standards. In addition, contracting with CLCs comes with incentives like exemption from joint employer liability, exemption from some wage order provisions, and safe harbor for compliance with onerous business expense requirements.


The Act requires CLCs to operate with Democratic Worker Control (DWC), a set of standards that is drawn from the cooperative principles and the definition of a worker cooperative. A worker cooperative is a business owned and controlled by its workers where workers have both governance control of the business and share in the profits. The DWC standards laid out in the act require uniform hiring and membership criteria, including a majority of workers as owners of the company, a majority of the board of directors to be elected by workers, a majority of profits of the CLC going to workers, and more.


Over the past decade, gig economy companies like Uber and TaskRabbit have eroded hardwon employment protections by classifying workers as independent contractors. As a result, workers in the gig economy operate without basic benefits like health insurance, workers’ compensation, breaks, or paid time off. They are often subjected to unsafe, compromising situations without recourse. In a recent California Supreme Court case, Dynamex Operations West, Inc. v. Superior Court of Los Angeles, No. S222732 (Cal. Sup. Ct. Apr. 30, 2018), the court unanimously announced a new test that would reclassify many gig economy workers - including Uber and Lyft drivers - as employees, restoring critical employment standards.

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