Research & Insights

By Alek Felstiner, June 29, 2010

Regulating Distributed Work (Part Three: Why It’s a Good Idea)**

In previous posts, I discussed the nature of employment law as it relates to crowd work, and the problems involved in trying to classify crowd workers according to existing categories and in transferring rights of free assembly and collective action into virtual space. Now comes the controversial part: explaining why I think it’d be a good idea for the law to jump into the middle of this complicated mess and start telling people what to do.

Scales of Justice

For some lawyers and lawmakers, “because we can” is a good enough reason. Others might press for regulation because advising clients in a regulation-free market generates fewer billable hours. But for a moment, let’s at least pretend that we as a society ought to engage in some kind of critical inquiry before intervening in an as-yet unregulated industry. And, while we’re pretending, let’s presume that such an inquiry would be shaped not by political dynamics but by the best information we have regarding how the law works and how regulation affects economic and social activity.

I’m not an economist, so I won’t be discussing the potential influence of economic theory on regulatory policy in this area. Instead I’ll focus on how the law deals with scenarios, like this one, in which existing doctrine appears woefully ill-equipped. The first question should always be: Does a problem actually exist? (Contrary to what you may believe, many lawyers and judges are perfectly willing to leave well enough alone. We’re not all “activists,” and in some cases, the most activist thing one can do is to permit the unfettered private ordering of employment relationships.)

So does a problem exist? When I’ve presented my argument that Mechanical Turk Providers should be classified as statutory employees, and that Amazon should function as a joint employer, I’ve gotten a variety of responses from classmates and colleagues. A few agree right off the bat, perhaps out of ideological sympathy (or pity). Others reject the argument, deciding that to the extent the parties are legally connected at all, they are governed by private contracts. And some go a step further. They conclude that no one in this situation is really a performing the kind of “work” that any of our laws — employment, labor, or contract — ought to regulate. In other words, they’re saying that there isn’t a problem. At least not one the law can address.

As you might imagine, I vigorously dispute that view. My argument for statutory coverage may stretch a little thin in places, but just because crowd workers don’t fit the “statutory employee” definition does not mean they fall easily into another. And they are being paid for their work. Many of them (perhaps as high as 18%) rely on it to make ends meet. It seems self-evident to me that their work should fit somewhere on the employment law spectrum, and if there’s no space right now, we should make room.

Something Doesn’t Look Right
It is true that many crowd workers perform their tasks in spare time, while doing something else, or for recreational/entertainment purposes. And often, that kind of work ends up outside the scope of employment law. But that’s not because it gets performed in spare time, or while watching TV, or simply for fun. It’s because when we think of idle college students, retirees, and stay-at-home moms, we think of them filling their time with entertainment, volunteerism, or education-focused internships — none of which are covered by employment statutes.

The key thing to recognize here is that for the most part the work itself determines statutory coverage. Or, at least, that’s the way it should be (agricultural and domestic workers absolutely deserve protection, in my view, but were excluded from minimum wage and collective bargaining laws for political and cultural reasons). Regardless of who they are, or why exactly they perform these tasks, crowd workers don’t fit the picture of the type of workers legislatures, courts, and administrative agencies have traditionally chosen to exempt from statutory coverage. They can bargain independently on only certain crowdsourcing platforms, and rarely have an opportunity to maximize profits through business organization and initiative. In short, though they may think of themselves as entrepreneurs, they aren’t really the type of entrepreneurs that employment law tends to leave alone. Turkers and similar crowd workers would more accurately be described as fungible particles in an on-demand labor pool. In that sense, they resemble day laborers, migrant farmworkers, and urban domestic workers. Most of them deserve coverage, they just don’t have it yet.

The Law Abhors a Vacuum
I’ll reiterate at this point that I have no particular economic expertise. My amateurish assessment leads me to believe that crowd labor presents at least some potential for market failure (information asymmetry, deception, problems with competition and global supply, etc.). I readily concede that it’s probably too soon to give any weight to those conjectures. Luckily for me, legal scholars don’t really require an impending market failure to justify regulatory intervention. Impending legal failure will suffice.

If we have an unstable, growing industry, with no reliable law and an unclear picture of who may owe what duties to whom, we can end up with problems. Stakeholders can’t adequately assess and manage risk. Lawyers give bad, conflicting advice, or, worse, there’s no way to tell whether any advice is good or bad. Practices develop, and expectations settle, without any consideration of how they might fit or contradict our existing legal principles and public policies. The law abhors a vacuum. Absence of regulation may be a major boon to industry pioneers (such as the one that has been generous enough to grant me space on its blog), but regulatory vacuums can really wreak havoc on the rest of us.

“Wait and See” Created This Problem
I have heard some in the industry and in the cyberlaw field suggest that it may be too early to address legal problems presented by online work. They argue that we don’t know exactly how it will play out, and that premature regulation could unintentionally suppress the healthy development of online democracy, commerce, and information exchange. I agree that we don’t know how it will develop, and that in regulating now we run some risk of stifling valuable development. But this argument really underestimates both the flexibility of the law and our own capacity to identify and articulate our priorities. Regulation does not necessarily imply blanket prohibitions and severe criminal penalties. There are creative legislators, lawyers, and judges out there. For that matter, there is no reason crowdsourcing stakeholders couldn’t participate in crafting a flexible and somewhat open-ended or discretionary approach to regulating crowd work. And we ought to be able to figure out our objectives without knowing exactly how the technology and industry will develop. For all its faults, that is the function of the legislative process, and if we trust it at all, we can trust it in this context.

What we shouldn’t do is “wait and see.” “Wait and see,” or rather, “wait and ignore,” is what got us here in the first place. It may be that in order to craft an effective regulatory approach to virtual property, lawmakers require a more fully developed picture of VP transactions. But such procrastination has not helped American workers in the slightest. Our laws were out of touch before the Internet. Permatemps, day laborers, and other contingent workers are already falling outside the reach of laws that should protect them. We cannot afford to exacerbate the problem.

Moreover, now is actually a good time to undertake some kind of regulatory intervention. Once expectations have settled, and the industry has begun to function in a certain way, and accumulate its own political clout, legislators and judges will find it more and more difficult to set rules. Customary practices will become norms, and eventually transform into sanctified industrial principles that cannot be disturbed. I’m sure that suits companies like Amazon just fine, since they already play such a prominent role in the industry and will likely continue. But my inner organizer and my inner corporate reformer don’t want to see settled expectations become law simply by virtue of the fact that things happen to have turned out that way. Even if the emerging structure of crowd labor perfectly reflected pure economic principles, and could thus function happily and indefinitely without any correction, I still wouldn’t want to see that structure automatically become law. Neither should you, if (like me) you believe in the potential of crowd work to transform economies and provide unprecedented opportunity. We have a chance to do better by workers (and employers) this time around, and we should take it.

**Note: This is the opinion of the author, and is not necessarily shared by CrowdFlower or, say, its CEO.