RULING OF THE FEDERAL LABOR COURT: CROWDWORKERS ARE – UNDER CERTAIN CIRCUMSTANCES – EMPLOYEES
The placement of orders via digital platforms in the form of so-called crowdworking serves to outsource (mostly) small-scale activities to a large number of people who are mostly unknown to the client – the “crowd” – whereby the orders are (frequently) placed via the operator of an online platform. The modern digital structuring of work (inevitably) leads to questions arising about the legal status of those involved in it. In the context of crowdworking, the status of crowdworkers as self-employed or employees had not been clarified until now. The Federal Labor Court (Bundesarbeitsgericht – BAG) has now ruled in a judgment dated 1 December 2020 that a crowdworker in the case to be decided was not self-employed but had to be classified as an employee (case no.: 9 AZR 102/20).
I. The decision of the Federal Labor Court
1. Facts of the case
The BAG’s decision was based on a case in which the execution of small orders (so-called microjobs) was taken over by crowdworkers as users of an online platform. The crowdworkers had entered into a framework agreement with the operator of the online platform (the so-called crowdsourcer) for this purpose. This agreement consisted of a basic agreement and general terms and conditions. The crowdworkers registered on this online platform were able to accept orders placed by customers of the platform operator via their personal account set up there. By accepting the order, a contractual relationship between the crowdworker and the platform operator came into existence. A contractual relationship between the customer of the platform operator and the crowdworker did not arise. There was no contractual obligation on the part of the crowdworker to process the orders. The availability of orders as well as their number, frequency and endowment could not be controlled by the platform operator and thus could not be guaranteed to the crowdworker.
In the case submitted to the BAG, the crowdworker (claimant) had carried out approx. 3000 of the aforementioned orders for the platform operator (defendant) over a period of 11 months. The purpose of these orders was for the crowdworker to control the presentation of branded products in retail stores and at gas stations for a customer of the platform operator. A large part of the task was to take photos of the product presentation and answer questions about product promotion. Once the crowdworker had accepted such an order, he/she regularly had to complete the order in certain sales outlets within two hours in accordance with detailed specifications provided by the platform operator. The system credited experience points to the crowdworker’s user account for completed jobs, which allowed the crowdworker to accept and complete multiple jobs at the same time once they reached a certain experience level.
In February 2018, the platform operator then informed the crowdworker that they would not be offering him any more jobs in the future. The crowdworker then filed a lawsuit against the platform operator seeking a declaration that a permanent employment relationship existed between them. As a result, the sued platform operator terminated any existing employment relationship as a precautionary measure. The claimant then extended his action to include a claim for protection against dismissal and continued to pursue the core of his compensation claims.
The lower courts dismissed the crowdworker’s claim and denied the existence of an employment relationship.
2. Legal assessment
Contrary to the previous instances, the BAG affirmed the existence of an employment relationship between the crowdworker and the platform operator. The reasons for the ruling are not yet available, but the BAG’s considerations can be found in a detailed press release.
The BAG based its assessment of the question of the crowdworker’s status as an employee on sec. 611a German Civil Code (Bürgerliches Gesetzbuch – BGB). Accordingly, the qualification as an employee depends on the fact that the employee performs work that is subject to instructions and is determined by others in a state of personal dependence. The designation in the contract is then irrelevant. In the case decided here, the BAG came to the conclusion within the framework of an overall assessment that the crowdworker as contractor was not free to organize his activity in terms of place, time and content. Instead, the crowdworker performed work in a manner typical of an employee, bound by instructions and determined by others in personal dependence. In the opinion of the BAG, this is also not contradicted by the fact that the crowdworker was not contractually obligated to accept offers from the defendant via its online platform. The BAG rather considered the organizational structure of the defendant, which was designed by means of the online platform so that the trained crowdworker continuously accepted bundles of simple, step-by-step, contractually specified micro jobs in order to complete them personally, to be predominant. The ability of the crowdworker to accept several orders at the same time and complete them on a (self-defined) route was only possible after reaching a higher level in the rating system, i.e. only after completing a large number of (individual) orders. According to the BAG, this system caused the crowdworker to continuously accept and complete assignments in the district of his place of habitual residence. The Munich Regional Labor Court had denied the resulting “pressure situation” for the crowdworker to constantly accept offers. The BAG now obviously sees this differently and links the “pressure situation” for the crowdworker to his employee status.
II. Consequences for the practice and legislative action
Even though the reasons for the BAG’s ruling are not yet available, important insights for practice can be gained from the press release.
The BAG did not declare crowdworkers to be employees per se, but rather made this assessment in the individual case to be decided, based on an examination of the criteria of sec. 611a BGB. If platform operators (crowdsourcers) such as the defendant (or clients who use crowdworkers themselves) want to avoid the establishment of an employment relationship with the crowdworkers, it is crucial not to allow the “pressure situation” for the crowdworkers considered decisive by the BAG to arise. This means that contract drafting and job placement practices, especially by platform operators, must avoid tying down crowdworkers with a constant stream of small-scale jobs to be completed in person, as well as a bonus system. The crowdworker’s degree of self-determination must be more extensive, and the requirements for completing the job correspondingly lower.
If operators of placement platforms do not succeed in eliminating the close relationship and the “pressure situation” of the crowdworker and the latter is to be qualified as an employee, this essentially has two elementary consequences: (i) The platform operator owes the payment of social security contributions and (ii) the crowdworker is entitled to employee rights: Continued payment of wages, vacation, maternity protection, parental leave, protection against dismissal (if applicable) and co-determination in the company.
Legislators have not yet taken action in the area of crowdworking, and immediate action does not appear imminent. However, in November 2020, the Federal Ministry of Labor and Social Affairs (Bundesministerium für Arbeit und Soziales – BMAS) published a paper outlining key points in which the need for protection of crowdworkers was classified as comparable to that of employees. It is explicitly announced that the inclusion of crowdworkers in the social security branches will be examined. In addition, the BMAS is considering a status clarification by the labor court, which would ease the burden of proof for crowdworkers in such a way that if the crowdworker presents circumstantial evidence for the existence of an employment relationship with the platform operator, the platform operator would have to prove the non-existence of an employment relationship. In addition, minimum notice periods for the exclusion of crowdworkers from placement platforms are to be defined depending on the period of use of the platform. The paper on key points demonstrates that there are currently no plans to put crowdworkers on an equal footing with employees, but that the status issue and many follow-up questions have moved into political focus.
III. Consequences and outlook
The BAG’s ruling has reignited questions regarding the status of crowdworkers under labor law. The BMAS is also dealing with these issues and wants to examine the establishment of employee-like rights in favor of crowdworkers. This should be a reason for operators of crowdworking platforms to have their contracts and the practice of placing orders with crowdworkers reviewed, especially in light of the BAG decision.
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