Technological advancement and the proliferation of the smartphone have reshaped the commercial landscape, providing consumers new ways to access the retail marketplace. On-demand companies are one such innovation, and underpinning on-demand commerce is the gig economy , the collection of markets that match service providers to consumers of on-demand services on a gig (or job) basis. Flagship on-demand companies such as Uber (driver services) and Handy (home cleaners and household services) have garnered significant media attention both for their market success and recent legal challenges, particularly concerning the classification of gig workers. Broader questions about the pros and cons of the gig economy have emerged as on-demand markets grow and the gig economy expands into new sectors. By some accounts, workers' willingness to participate in the gig economy provides evidence that gig work is a beneficial arrangement. Indeed, gig jobs may yield benefits relative to traditional employment in terms of the ease of finding employment and greater flexibility to choose jobs and hours. The gig economy may facilitate bridge employment (e.g., temporary employment between career jobs or between full-time work and retirement) or provide opportunities to generate income when circumstances do not accommodate traditional full-time, full-year employment. At the same time, however, the potential lack of labor protections for gig workers and the precarious nature of gig work have been met with some concern. The nationwide reach of gig work and its potential to impact large groups of workers, and their livelihoods, have attracted the attention of some Members of Congress. These Members have raised questions about the size and composition of the gig workforce, the proper classification of gig workers (i.e., as employees or independent contractors), the potential for gig work to create work opportunities for unemployed or underemployed workers, and implications of gig work for worker protections and access to traditional employment-based benefits. In support of these policy considerations, this report provides an overview of the gig economy and identifies legal and policy questions relevant to its workforce. The gig economy is the collection of markets that match providers to consumers on a gig (or job) basis in support of on-demand commerce. In the basic model, gig workers enter into formal agreements with on-demand companies to provide services to the company's clients. Prospective clients request services through an Internet-based technological platform or smartphone application that allows them to search for providers or to specify jobs. Providers (i.e., gig workers) engaged by the on-demand company provide the requested services and are compensated for the jobs. Business models vary across companies that control tech platforms and their associated brands. Some companies allow providers to set prices or select the jobs that they take on (or both), whereas others maintain control over price-setting and assignment decisions. Some operate in local markets (e.g., select cities) while others serve a global client base. Although driver services (e.g., Lyft, Uber) and personal and household services (e.g., TaskRabbit, Handy) are perhaps best known, the gig economy operates in many sectors, including business services (e.g., Freelancer, Upwork), delivery services (e.g., Instacart, Postmates), and medical care (e.g., Heal, Pager). With some exceptions, on-demand companies view providers as independent contractors—not employees—using their platforms to obtain referrals and transact with clients. This designation is frequently made explicit in the formal agreement that establishes the terms of the provider-company relationship. In addition, many on-demand companies give providers some (or absolute) ability to select or refuse jobs, set their hours and level of participation, and control other aspects of their work. In some ways, then, the gig economy can be viewed as an expansion of traditional freelance work (i.e., self-employed workers who generate income through a series of jobs and projects). However, gig jobs may differ from traditional freelance jobs in a few ways. The established storefront and brand built by the tech-platform company reduces entry costs for providers and may bring in groups of workers with different demographic, skill, and career characteristics. Because gig workers do not need to invest in establishing a company and marketing to a consumer base, operating costs may be lower and allow workers' participation to be more transitory in the gig market (i.e., they have greater flexibility around the number of hours worked and scheduling). In addition, a few commonly held characteristics of the provider-company relationship, when taken together, set gig work apart from the traditional freelance worker model. On-Demand Com panies Collect a Portion of Job Earnings. On-demand companies collect commissions from providers for jobs solicited through the company platform. Commissions often take the form of a flat percentage rate applied to job earnings, but some companies employ more sophisticated models. For example, in 2014, Lyft announced that it would return a portion of its 20% commission on rides as a bonus to certain high-activity drivers. On-Demand Companies Control the Brand. On-demand companies rely on the jobs brokered through their platform to generate revenue, and therefore have a clear stake in attracting and retaining clients. Consequently, and to varying degrees, these companies are selective about who can operate under their brand. Some on-demand businesses condition provider participation on a background check and credentials (e.g., some require past work experience, licenses, or asset ownership), and some reserve the right to terminate the relationship if the work delivered does not meet company-defined standards of quality and professionalism. On-Demand Companies Control the Provider-Client Relationship. Some on-demand companies discourage or bar providers from accepting work outside the platform from clients who use the company's platform. The provider agreement for business-services company Upwork, for example, includes a noncircumvention clause that prohibits providers from working with any client that identified the provider through the Upwork site for 24 months. Likewise, "service professionals" working with the on-demand home-services company Handy must agree that they will "not affirmatively solicit [clients] originally referred through the Handy Platform to book jobs through any means other than the Handy Platform." This is a potentially important difference between gig work and traditional freelance work, because it curtails the provider's ability to build a client base or operate outside the platform. Currently, the federal government does not publish statistics on the gig economy workforce. Instead, most of what is known about the number and characteristics of gig workers is drawn from related labor and tax entity statistics or comes from private-sector studies and academic research. Measuring and characterizing the gig economy workforce are challenging tasks for several reasons. A first necessary step to measuring gig workers is establishing a precise and measurable statistical definition of the gig economy, a complicated task given the relative newness of the concept, and its broad and evolving application. A second and closely related challenge is designing a survey that identifies individuals—through self-reported information—who meet this definition. This challenge requires carefully formulated survey questions that account for how workers perceive their gig economy activity and a data collection strategy that aligns with the potential for seasonal or otherwise dynamic participation. In addition to survey design issues, the relative infrequency of gig work in the overall population may create additional challenges to obtaining reliable estimates of these workers' characteristics and work patterns. Finally, modifying existing labor force survey instruments to measure these new labor force areas may require significant time and funding. While not measuring gig work specifically, federal statistics on self-employment, nonemployer establishments (i.e., business owners who are subject to federal income tax and have no paid employees), and nontraditional work arrangements may provide insight into the size and growth of the gig workforce. Existing large-scale labor force survey data on nontraditional work arrangements and self-employment may provide some insights, but are imperfect proxy measures of contemporary gig economy participants. Notably, in 1995, 1997, 1999, 2001, and 2005, the Bureau of Labor Statistics (BLS) funded the collection of data on the number and characteristics of contingent workers (i.e., those who did not expect their jobs to last) and workers in alternative employment arrangements (i.e., independent contractors, on-call workers, temporary help agency workers, and workers employed by contract firms). These data—collected through the Contingent Worker Supplement (CWS) to the Current Population Survey—establish that temporary workers and independent contractors represented a nonnegligible share of the workforce in 2005 and are not new phenomena. However, they are likely to have limited value to analyses of the gig economy workforce today, because these data predate the launch of the Apple iPhone, and the creation of Uber, Lyft, and other gig economy tech-platform companies. New CWS data collection is planned for 2017 and is expected to result in an important source of information on the size and characteristics of the gig workforce. In January 2016, then-Labor Secretary Tom Perez announced plans to rerun an expanded version of the CWS in May 2017 that specifically seeks to measure gig work. In particular, the BLS plans to include new questions in the 2017 CWS that "explore whether individuals obtain customers or online tasks through companies that electronically match them, often through mobile apps, and examine whether work obtained through electronic matching platforms is a source of secondary earnings." How workers participating in the gig economy should be classified—independent contractors or employees—is an open legal question (see section " Are Workers Within the Gig Economy Employees or Independent Contractors? "); nonetheless, self-employment data may provide some value to analyses of this workforce. The Current Population Survey (CPS), the instrument used by the BLS to produce its monthly unemployment rate estimates, routinely collects data on self-employment.