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The Gig Economy and Employment Law: What Employers Need to Know

A 2022 study by Neilsberg Research found that about one-third of Nevada’s small business workforce consisted of independent workers. In raw numbers, this translates into about 260,000 “gig” workers. Although we often tend to associate the gig economy with online delivery services like Uber or Instacart, Neilsberg found significant numbers of gig workers throughout all sectors, including healthcare, construction, and professional, scientific, and technical services.

From a business owner’s standpoint, gig workers are often seen as a way of cutting labor costs. For workers, the increased flexibility of gig work often outweighs the potential drawbacks. And for both sides, the intersection of gig work and employment law often leads to complex questions that may not have immediately obvious answers. So if you are a Nevada gig worker who is unsure of your rights, it is a good idea to speak with an experienced Las Vegas employment law attorney who can guide you on this subject.

Are Gig Workers “Employees” or “Independent Contractors”?

This is perhaps the number-one question we get at Ace Law Group when it comes to the gig economy and employment law. As with most legal questions, there is no one-size-fits-all answer. When it comes to Nevada law, however, there are certain statutory definitions of who qualifies as an “independent contractor.” And an employer who ignores this definition and attempts to misclassify a gig worker could face serious legal repercussions.

First, let’s establish why classification matters. An “employee” has certain rights under federal and Nevada state employment laws. For non-exempt employees, this includes the right to be paid at least the statutory minimum wage for every hour worked as well as overtime pay when the number of hours worked exceeds a certain threshold.

Employees are also entitled to certain benefits such as unemployment insurance and workers’ compensation. An independent contractor, in contrast, is someone who is considered their own legally distinct business from the employer. Among other things, this means that an independent contractor must pay their employment taxes and provide for their benefits.

NRS 680.0155 creates a “conclusive presumption” that a gig worker is an independent contractor when certain conditions are met. Some of these conditions include:

  • The worker provides their tools and equipment.
  • The worker is free to determine when and where they will work.
  • The worker is not exclusive to the business, i.e., they are free to work for other businesses.
  • The worker is free to hire other workers to assist them with their work.
  • The worker makes a substantial investment in their own business, such as to acquire tools, equipment, and materials.
  • The worker obtains their own business or occupational licenses.

Strictly speaking, a gig worker does not have to incorporate or create another formal legal entity (such as a limited liability company) to retain classification as an independent contractor, although that can help.

Do Gig Workers Need Written Contracts?

Again, a written contract is not legally mandated to create an independent contractor relationship. But it is generally a good idea to have such an agreement, as it can make each party’s obligations and responsibilities towards the other clear. It is generally in a worker’s interest to have a written contract they can point to in the event of a breach by the contracting business.

While every written contract is different, some of the more common terms include:

  • establishing pay rates for the contractor;
  • assigning any intellectual property created by the contractor to the business;
  • imposing confidentiality and non-disclosure obligations on both sides;
  • establishing specific legal remedies for a violation.

Some Nevada employers may choose to include language regarding independent contractors in their employee handbooks. Please note that in general, an employee handbook is not itself a contract. Rather, a handbook is a compilation of the employer’s policies and procedures, some of which may apply to both independent contractors and statutory employees.

Speak with a Las Vegas Employment Attorney Today

There are ongoing efforts at both the state and federal levels to classify more and more gig workers as statutory employees. This could have significant implications for gig workers looking to take legal action against employers for misclassification. If you need to consult a qualified Las Vegas employment attorney, call Ace Law Group at 702-333-4223 or contact us online to schedule a free initial consultation.