Crowdsourcing and the FLSA

social_connectionsMicrolabor — otherwise known as crowdsourcing —  is a concept involving a cloud labor platform that has been around for several years.  Basically, a company breaks down a large task into many smaller tasks (microtasks) and posts an open call over the Internet to a large network of unidentified individuals to take up pieces of the project. People choose to accept one of the various tasks offered to the “crowd.”  The individuals perform microtasking — each do a discrete remote piece of a larger project.

Payment is either in small increments of cash and in incentives (such as online game credits or points toward purchase of items).  Companies that use the crowdsourcing concept consider the individuals who perform the task as independent contractors.

A lawsuit was filed in late 2012 against Crowdflower Inc. (Otey v Crowdflower Inc.) by a virtual worker who claims that the workers who accept the tasks and perform the online work are entitled to be paid the federal minimum wage and that the Fair Labor Standards Act applies to this form of work.

The crux of the case is whether the so called “contributors” who perform the microtasks are independent contractors or employees.  Crowdflower’s position is that the workers are independent contractors because the contributors are free to work whenever, wherever they want for as long or short as they want, using their own tools, etc.

Certainly the concept of crowdsourcing was never contemplated when the minimum wage concept was introduced as part of the New Deal legislation 80 or so years ago.  And there has never been a hard and fast measurement to test the independent contractor versus employee classification.  For the Crowdflower case, the court will have to use the multifactor independent contractor test, which examines the various facets of the relationship to determine whether or not the FLSA applies to crowdsourcing.  That test, which focuses on issues surrounding control, independent judgment and the economic realities of the relationship, was developed over the years primarily through case law.

This case will be one to watch to see if the courts apply minimum wage requirements to cloud platform workers in the United States.  If it does, it may provide certain financial protections to the “crowd” while the actual result may be to shift the opportunities to perform microlabor to individuals in other countries without the same compliance requirements.

The individual who wrote this post works at Fox Rothschild LLP.  The information, comments and links provided do not constitute legal advice.  No attorney-client relationship has been, or will be, formed by any communication(s) to, from or with the blogger.

Diane Geller

Diane Geller
Diane Geller is an attorney with the law firm of Fox Rothschild. She can be reached at geller (at) foxrothschild (dot) com.

Diane Geller

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2 Responses to “Crowdsourcing and the FLSA”

  1. […] Microlabor — otherwise known as crowdsourcing — is a concept involving a cloud labor platform that has been around for several years. Basically, a company breaks down … Tags: crowdsourcing, online staffing.  […]

  2. andrewkarpie says:

    Diane,  Truly an excellent post that invites us to start the plumb the depths of the institutional/legal challenges and changes that lie ahead.  Like a speeding train invisible around the bend, they are coming.  I’ll spare you the Johnny Cash quote.  Andrew

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