The Push for a Third Worker Classification Between Employee and Contractor

A wave of state and federal proposals to regulate how gig economy workers are classified is forcing a rethink of labor protections built around a traditional employee-or-contractor binary that increasingly doesn’t fit how a large share of the workforce actually works.

Existing labor law in most jurisdictions divides workers into two categories, employees and independent contractors, each carrying a distinct set of protections and benefits, a binary that has come under increasing strain as gig economy platforms have built business models around a large workforce that doesn’t fit cleanly into either traditional category.

Several jurisdictions have proposed or enacted a third classification category specifically for gig workers, offering some benefits typically reserved for employees, such as minimum earnings guarantees or portable benefits contributions, while preserving the scheduling flexibility that both platforms and many workers say they value about contractor status.

Worker advocates and platforms remain divided on whether a third category helps

Worker advocacy groups remain split on these proposals, with some viewing a dedicated third category as a pragmatic improvement over the current binary, and others arguing it risks permanently enshrining a lower tier of protection rather than pushing platforms to simply classify workers as full employees with complete benefits.

“A third category can be a genuine improvement or a permanent compromise, depending entirely on what specific protections actually end up in it.”

With several jurisdictions now testing different versions of this framework simultaneously, policymakers elsewhere are watching closely to see which specific approach produces the best balance of worker protection and platform flexibility before deciding whether to adopt a similar model themselves.