TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Friday, May 25, 2018

Weekly SSRN Tax Article Review And Roundup: Mazur Reviews Ring's Silos And First Movers In The Sharing Economy

This week, Orly Mazur (SMU) reviews a new work by Diane M. Ring (Boston College), Silos and First Movers in the Sharing Economy Debates.

Mazur (2017-2)Should the workers who make up the sharing economy be classified as employees or independent contractors? This question, which has significant legal ramifications for gig economy workers, has been extensively debated by policymakers, academics, litigators, legislators, business operators, and regulators, among many others. In her new work, Diane Ring brings a new perspective to the debate. She convincingly argues that the worker classification debates are often incomplete due to silos among legal experts. In the sharing economy, the detrimental effects of these legal silos are compounded by first-mover actions, which together create the risk that the outcomes of the worker classification debates have unintended and undesirable collateral effects. 

As Ring explains, when answering the question of how sharing economy workers should be classified, legal experts often focus on the implications of each classification arising from their area of the law or “legal silo,” without a full understanding of the effects of that outcome in other legal contexts. But resolution of this worker classification issue in one legal context is likely to affect a worker’s legal implications in another context. 

As a result, “important legal questions might be resolved without adequate appreciation by policymakers and other actors of overall effects on labor, work and social safety nets.” To illustrate this point, Ring demonstrates the negative ramifications that arise when labor law experts advocate for employee status for sharing economy workers without appreciating the nuanced, but significant tax repercussions, and vice versa. 

The work then explores the various ways that constituents have sought to shape the sharing economy debates through contracts, labeling, rhetoric, worker litigation, state and local legislation reform, and proposed federal tax reform legislation. Through this discussion, Ring demonstrates that these first mover efforts can have a powerful effect on the outcome of the worker classification debate across numerous legal regimes. This is troubling because these actions often do not take these far-reaching repercussions into account. The work also makes the important observation that these legal silos and first mover actions detract from the key issue at hand: namely, the question of “why particular rights, benefits, and duties should be tied to a particular worker classification.”

To address these concerns, Ring emphasizes the need to increase awareness of the role and power of these legal silos in detracting from an ideal policy formulation and to take steps to minimize these effects. Specifically, she argues that engagement across fields to assess legal issues is critical. She recognizes that to accomplish this engagement, it is first necessary that policymakers and advocates are aware that a legal silo is operating in a detrimental manner in a particular context. Ring also advocates for developing a systematic approach for inquiring about notable collateral effects in assessing legal issues. 

Overall, this work is insightful and has the potential to help shape in a positive manner the sharing economy debates going forward. It builds on Ring’s prior work with co-author Shu-Yi Oei, as well as the work of many others in this field. However, this work also has important implications beyond the sharing economy debates. As Ring acknowledges, the issue of legal silos and first movers is not limited to the sharing economy or to tax. By making us more aware of the existence and power of legal silos and their negative effects, this work makes an invaluable contribution to legal scholarship and policy debates in general. It reminds us to consider the potential collateral effects of any position we advocate and to advocate for policy changes that are based on more complete information. Doing so, we can formulate thoughtful and well-informed legal rules that are better aligned with desirable policy outcomes. 

Here’s the rest of this week’s SSRN Tax Roundup:

https://taxprof.typepad.com/taxprof_blog/2018/05/weekly-ssrn-tax-article-review-and-roundup-mazur-reviews-rings-silos-and-first-movers-in-the-sharing.html

Orly Mazur, Scholarship, Tax, Weekly SSRN Roundup | Permalink

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