Flexibility or Liability? What the Gig Economy Means for Entrepreneurs

What is the Gig Economy?

The gig economy is a labor market where people earn wages by performing flexible, on-demand work usually found through apps or websites.^[1] Globally, the gig economy is vast and is projected to exceed a market size of over $1.8 trillion by the year 2032.^[2] Some sectors of the gig economy include asset-sharing services, transportation-based services, professional services, and handmade goods & household services.^[3] Gig work can be found on platforms such as DoorDash, Etsy, Uber, Care.com, Catalant, and Airbnb.^[4] Gig economy workers span all ages, genders, regions, and education levels; “there is not a single, typical gig worker.”^[5] Income and work vary widely depending on the type of gig, with some workers enjoying flexibility and higher pay while others face less stability and lower wages.^[6]

The Gig Economy as a Path to Entrepreneurship

A key advantage of gig work is the flexibility, independence, and variety of experiences it provides.^[7] Research has found that people who have worked within the gig economy are about one percentage point more likely to start a new business than non-gig workers, which doubles the usual rate of entrepreneurship.^[8] Using tax return data, one study shows that “lower-income individuals, younger workers, and those who likely benefit from flexibility (such as single parents) are significantly more likely to form businesses” after working in the gig economy.^[9] These former gig workers often launch businesses in industries similar to their work, which shows that those jobs provide valuable experience and help people test business ideas and build confidence before launching their own ventures.^[10] Entrepreneurs can also use the gig economy to access a large pool of talent to support their business venture.^[11] Gig platforms also drive innovation by allowing entrepreneurs to leverage feedback from gig workers to jumpstart and test their ideas before committing to their own business plans.^[12]

The Uncertainties of the Gig Economy

A major obstacle within the gig economy is how workers are classified and protected.^[13] The legal frameworks that have developed over the years to reflect traditional employment no longer work for this new economy and shift in labor.^[14]U.S. frameworks have not caught up to modern trends and classify most gig workers as independent contractors rather than employees, which makes them ineligible for “fundamental protections under wage and hour laws, anti-discrimination statutes, and collective bargaining frameworks.”^[15] Uber has consistently argued that its drivers are independent contractors and not employees.^[16] When companies do this, they are not held legally responsible for the conduct of their workers in the same way they would be if those workers were classified as employees.^[17] Moreover, companies are not required to fund programs such as the New Jersey Unemployment Trust Fund that benefits employees at the state level.^[18] After an audit from the New Jersey Department of Labor (NJDOL) found the ride-share company misclassified hundreds of thousands of drivers as independent contractors, Uber submitted a $100 million payment to the NJDOL’s Unemployment Trust Fund.^[19] This reflects a broader shift in how the government has begun to view and regulate the gig economy.^[20]

Another example of how this issue is evolving is when a federal jury held Uber responsible for the actions of one of its drivers, awarding $8.5 million in damages.^[21] In 2023, Jaylynn Dean sued Uber, alleging that she was sexually assaulted by her driver during a ride and that Uber failed to take steps to ensure the safety of its passengers.^[22] A federal jury found that Uber was liable “because the driver was acting as an apparent agent of the company” when the incident occurred.^[23] This is a landmark verdict because it suggests that when companies utilize gig workers, even though they are not traditional employees, they can be held liable for harm caused by those workers.^[24] This shift in how courts have started to view liability for gig workers could potentially affect the outcomes of the more than 3,000 similar cases pending against Uber.^[25] Additionally, policymakers are trying to crack down on the gig economy.^[26] For example, Mayor Mamdani of New York City recently instructed the city’s Department of Consumer and Worker Protection to tighten regulations on the misclassification issues involved with gig work.^[27]

What This Means for Entrepreneurs and Workers

The gig economy has changed how people think about work and entrepreneurship.^[28] Market observers have urged that instead of over-regulating gig work, policymakers can focus on the substantial economic activity it generates by inspiring and helping workers transition into self-employment and small-scale entrepreneurship.^[29] Policymakers should focus not only on strengthening protections for gig workers, but also on creating the conditions that encourage entrepreneurship and innovation.^[30] A balanced approach can help protect workers while allowing the gig economy to contribute to long-term economic growth.^[31] Overall, the gig economy offers a mix of flexibility and opportunity but also brings uncertainties and risks.^[32] As this type of economy grows and evolves, workers and entrepreneurs will have to weigh the advantages of participating in the gig economy against the risks, and they must have the ability to adjust to volatile legal landscapes.^[33] The gig economy is here to stay and is rapidly expanding, so entrepreneurs must learn to navigate the gig economy or get left behind.^[34] With careful and attentive planning, the gig economy can act as a stepping stone to entrepreneurial success for both workers and entrepreneurs.^[35]

^[1] See Emma Charlton, What is the Gig Economy and What’s the Deal for Gig Workers?, World Economic Forum (Nov. 22, 2024), https://www.weforum.org/stories/2024/11/what-gig-economy-workers/.  

^[2] Id.

^[3] Id.

^[4] Id.

^[5] Who Participates in the Gig Economy?, The Workers Lab (last visited March 14, 2026), https://gigeconomydata.org/basics/who-participates-gig-economy.html.   

^[6] Id.

^[7] See Noelle Graf, The Pros and Cons of the Gig Economy, Western Governors University (Apr. 15, 2025), https://www.wgu.edu/blog/pros-and-cons-gig-economy1808.html.

^[8] The Gig Economy and Entrepreneurship, National Bureau of Economic Research (Sep. 29, 2025), https://www.nber.org/be/20252/gig-economy-and-entrepreneurship?page=1&perPage=50.

^[9] Id.

^[10] See id.

^[11] See The Gig Economy: Shaping the Future of Work and Business, Park University (July 31, 2024), https://www.park.edu/blog/the-gig-economy-shaping-the-future-of-work-and-business/.

^[12] See id.

^[13] See Moon Hwan Lee, Reimagining Workers’ Rights in the Gig Economy: Bridging the Gap Between Independent Contractors and Employees, New York State Bar Association (Aug. 5, 2025), https://nysba.org/reimagining-workers-rights-in-the-gig-economy-bridging-the-gap-between-independent-contractors-and-employees/?srsltid=AfmBOoqvCprobZsz4B8w_WxiSvYN2yS3FTmhIKesF8w0FGQxh5GZNrXM.

^[14] See id.

^[15] Id.

^[16] See Audrea Chen, Employee or Independent Contractor? A Legal Analysis of Uber’s Worker Misclassification, Columbia Undergraduate L. Rev. (Sep. 5, 2024), https://www.culawreview.org/current-events-2/employee-or-independent-contractor-a-legal-analysis-of-ubers-worker-misclassification.

^[17] Id.

^[18] See Uber Pays $100M in Driver Misclassification Case with NJ Department of Labor and Workforce Development and Attorney General’s Office, New Jersey Department of Law & Public Safety: Office of Attorney General (Sep. 13, 2022), https://www.njoag.gov/uber-pays-100m-in-driver-misclassification-case-with-nj-department-of-labor-and-workforce-development-and-attorney-generals-office/.

^[19] Id.

^[20] See id.

^[21] See Clare Duffy, Uber Must Pay $8.5 Million in Driver Sexual Assault Case, Jury Says. Here’s What It Could Mean for Thousands of Similar Cases, CNN Business (Feb. 6, 2026), https://www.cnn.com/2026/02/06/tech/uber-sexual-assault-case-verdict#:~:text=case%2C%20jury%20says.-,Here's%20what%20it%20could%20mean%20for%20thousands%20of%20similar%20cases,declined%20to%20award%20punitive%20damages.

^[22] Id.

^[23] Id.

^[24] See Uber Hit With $8.5M Verdict in Landmark Sexual Assault Case, The Tech Buzz (Feb. 6, 2026), https://www.techbuzz.ai/articles/uber-hit-with-8-5m-verdict-in-landmark-sexual-assault-case.

^[25] See id.

^[26] See Jarrett Dieterle, In Mamdani’s War on Delivery Apps, New Yorkers Are the Collateral Damage, Manhattan Institute (Feb. 14, 2026), https://manhattan.institute/article/in-mamdanis-war-on-delivery-apps-new-yorkers-are-the-collateral-damage.

^[27] See id.

^[28] Dr. Zri (Aaron) Cheng, It’s Time We Recognized How the Gig Economy Is Stimulating Entrepreneurialism, Forbes (Jan. 7, 2025), https://www.forbes.com/sites/londonschoolofeconomics/2025/01/07/its-time-we-recognised-how-the-gig-economy-is-stimulating-entrepreneurialism/.

^[29] See id.

^[30] See id.

^[31] See id.

^[32] See Hwan Lee, supra note 13.

^[33] See id.

^[34] See Top Trends Shaping the Future of Gig Economy Payouts, Thunes (Mar. 17, 2025), https://www.thunes.com/insights/learn/future-gig-economy/#:~:text=the%20gig%20economy-,What%20is%20the%20gig%20economy?,the%20clients%20they%20work%20with.

^[35] See The Gig Economy and Entrepreneurship, supra note 8.