New Law Addresses Marketplace Contractors and Platforms

By Judge Joshua Davis Baker, Nashville

Josh Baker

The General Assembly recently passed SB1967/HB1978 concerning “marketplace platforms,” which the law defines as a business offering “an online-enabled application, software, website or system that enables the provision of services by marketplace contractors to third-party individuals or entities seeking services.” A marketplace platform provides a forum for third parties to advertise short-term work opportunities. The marketplace platform cannot “derive” any benefit either directly or through a related party from the work performed but can collect a fee or subscription cost for the use of the service.

The people performing the work advertised on the platform are called “marketplace contractors,” and the bill primarily addresses the relationship between the marketplace platform and the marketplace contractor. The bill declares that a marketplace contractor is an “independent contractor” and not an employee of the marketplace platform, if the contractor enters into a written agreement with the platform that contains the following specific conditions:

  1. The contractor is an “independent contractor” with respect to the platform;
  2. The platform does not “unilaterally prescribe specific hours” when the contractor must be available to provide services;
  3. The contractor may provide/solicit work through other “online-enabled, software, website, or system offered by other marketplace platforms;”
  4. The contractor can engage an assistant to perform any of the work acquired through the platform;
  5. The contractor may engage in other occupations or businesses;
  6. The contractor does not have to use any specific supplies or equipment at the instruction of the platform;
  7. The platform does not control the manner of work performance but may insist on quality standards;
  8. Either the contractor or platform may terminate the agreement at any time;
  9. The platform provides no medical or insurance benefits to the contractor, and the contractor has the responsibility of paying all taxes associated with income derived from work performed; and,
  10. “All, or substantially all payment” to the contractor arises from work performed for third parties.

As most of you reading this blog will recognize, many of these conditions required as part of the agreement between the contractor and the platform concern characteristics considered when determining whether a person is an employee or an independent contractor.

The Governor signed SB1967/HB1978 into law on April 9 and it becomes effective on July 1 of this year. The law applies to all industries and persons with the exception of transportation network companies and construction services providers.

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