- Who We Serve
The 1099 economy (or "gig economy") is a labor market that utilizes contracted human labor to fulfill the service promises from marketplace/shared economy platforms. Taking its name from the tax form filled out by freelancers or short-term independent contractors, the 1099 economy demonstrates the fundamental changes to the very idea of work and employment that are now taking place. By 2020, 40% of American workers will be contracted.
Online marketplaces hire a significant number of contractors or freelancers to provide goods or fulfill services. It is important, then, that your legal terms with workers outlines your liabilities in clear, enforceable terms.
The arbitration clause mandates that independent contractors must resolve disputes with businesses through the arbitration process, thereby preventing class action risk. Many online marketplace owners make arbitration mandatory because it leads to a quicker settlement, costs less, and protects a company’s reputation.
An arbitration clause can be part of an organization’s agreement with its independent contractors and/or customers. If executed properly, this clause can help prevent against one of the more common (and costly) risks endemic to any organization with a high volume of signers. After all, a greater volume of transactions (be it for employment or for goods/services) inherently carries of risk of people who can be displeased and rise up as a class to bring your organization to court.
Does this mean that your agreements online are at even higher risk than the ones done by manual processes? Yes and no.
Presenting agreements to customers or contractors via a clickthrough can mean doing business more quickly, but clauses like your arbitration clause can only be upheld if your clickthrough is enforceable.
Here are two examples of what not to do:
The enforceability of a clickthrough depends a lot on its design. Even if terms were crafted perfectly, it will not hold weight unless it meets some of the following criteria:
Enforceable agreements are the key to protecting your online marketplace in the 1099 economy. It is important to know what agreement each party signed when, and what clauses they accepted. This makes you more prepared to scale while minimizing risk, ensuring success in the on-demand economy.