A common criticism of the gig economy is that companies treat those working in it less favorably than traditional employees due to their status as independent contractors.
The classification is important for a couple of reasons. For one, contractors are treated differently for tax purposes. They receive a 1099 from companies they work for at the end of the year, while traditional employees receive a W2. There are important implications involved in the distinction between the two.
Additionally, there are differences in the requirements placed on companies from an employment law standpoint when it comes to the classification of an employee as an independent contractor or a traditional employee.