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The Lawsuit That Could Help Undo (or Cement) Crowdsourcing in the U.S.
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The Lawsuit That Could Help Undo (or Cement) Crowdsourcing in the U.S.

A lawsuit filed in a federal court against leading cloud labor platform Crowdflower challenges an assumption that is at the very foundation of crowdsourcing, at least in the United States. If a court agrees with Oregon resident and one-time Crowdflower worker Christopher Otey that cloud laborers like him are employees who should be entitled to at least the federal minimum wage for each hour spent working on tasks through the platform, it could upend the industry as it functions today.

But, of course if a ruling were to go the other way, or the case were to be thrown out, it could help to affirm the legal patchwork that underlays the current business model for microtasking and many other sorts of crowd labor.

Either way, the stakes are high. While there could still be years of appeals and other cases before we have definitive answers, Otey vs. Crowdflower, Inc. represents the first act in an important drama that will help shape the global labor landscape for the rest of the 21st century and beyond.

The Case

Lukas BiewaldThe basic premise of the complaint by Otey and his attorneys against Crowdflower is actually pretty simple. They allege that the platform violated the Fair Labor Standards Act which dates back to the New Deal days in the United States and created a federal minimum wage, among other things. The complaint, which was originally filed in the U.S. District Court for Northern California at the end of October, cites a 2010 interview on YouTube -- which is no longer available online -- with Crowdflower CEO Lukas Biewald (pictured right) in which he admits many workers are only paid $2 - 3 per hour. (Crowdflower has since responded that Biewald was taken out of context). The complaint then goes on to allege that Otey was paid even less for work he performed in 2012.

Otey and his attorneys seek to pursue an "opt-in" class action made up of other users of the platform and have demanded a jury trial.

Not surprisingly, Crowdflower disputes the charges.

"Crowdflower's view is that the FLSA does not apply to contributors that choose to accept the various tasks offered to the crowd," Crowdflower spokesperson Julie Crabill told me over the phone in December. "We look at crowd contributors as independent contractors, not employees. They're free to work whenever, wherever, however they wish, for whoever they wish for as long or as short a time as they wish."

And there it is, the very simple premise that is the bedrock of crowdsourcing in this country -- cloud-based workers are independent contractors, not employees entitled to the various rights and benefits afforded such workers under the law.

Unfortunately, determining who is and isn't an employee is not nearly so simple. And no, just signing a legal contract that defines a certain worker as a contractor does not necessarily mean that worker isn't actually an employee in the eyes of the law. There is no signing away certain workers' rights in the United States.

A Test Without Clear Answers

"Whether a worker is an employee or independent contractor is determined via a multifactored test that depends on the facts of the employment relationship," writes law professor Miriam Cherry in an article in the Alabama Law Review dealing with the topic of virtual workers (like Christopher Otey) and the FLSA. "The multifactored test derives from the caselaw and decisions on agency law, and attempts to classify whether the worker has independent judgment and control over their own work, the manner in which the work is performed, and whether it is customary to use employees to perform this type of work... in addition the courts will look at the economic realities of the relationship to determine whether the employee is dependent upon the employer."

That multi-factored test would likely be central to any arguments made in a court if the Crowdflower case goes to trial. Whether or not it would pass the test seems to be anyone's guess.

In an article published in 2011 in the Berkeley Journal of Employment and Labor Law, Alek Felstiner uses Amazon Mechanical Turk as a case study, running the platform's approach to crowdsourcing through the multi-factored test to try and determine if Turkers are really employees or contractors under the FLSA. Felstiner's analysis concludes that three factors in the test weigh in favor of statutory employment, one appears to weigh in favor of independent contractor status and the other three factors vary widely depending on the work being performed, if they're relevant at all.

"The reason the question is complicated is that the FLSA was part of the New Deal legislation, and certainly crowdsourcing (much less computers) was not part of anyone's thinking about the minimum wage laws back in the 1930s," Prof. Cherry explained to me via e-mail. "So essentially we are trying to use a 80-year-old framework to apply to a contemporary problem. The FLSA is much more clear about other things like whether meal breaks are covered and travel to and from work, but obviously none of these kinds of issues apply to a virtual environment... This is not a new problem, neither is it unique to employment law. In many areas the law struggles to keep pace with technology."

Too Soon for a Legal Update?

Despite the uncertainty over how increasingly archaic federal labor laws apply to our modern digital, distributed workforce, both Cherry and Felstiner argue that the time has come to extend some of the protections of the FLSA and other federal labor laws to cloud-based workers, but recognize that new legislation may be required to achieve this if courts don't find in favor of plaintiffs like Christopher Otey.

That legislation isn't yet on the horizon and opponents to the idea of updating such labor laws argue that introducing new regulation now before the crowdsourcing industry is fully mature could act to effectively stunt its growth, or worse. Felstiner also points out in his Berkeley Journal article that implementing and enforcing minimum wage statutes for cloud workers would be convoluted to say the least (in the case of Amazon Mechanical Turk):

If an individual worked for six employers in the course of an hour, she would have to extract coverage payments from each just to scratch her way up to minimum wage for that hour. In addition, even the most generous and law-abiding employer cannot easily determine what reward to set in order to satisfy the minimum wage requirements, due to the difficulty of predicting exactly how long a given task will take to perform.

While the long-term result of requiring minimum wage for U.S.-based cloud workers could be a boon for workers with specialized knowledge or skills that are unique to American culture or geography (certain kinds of translation, localization and geo-tagging tasks come to mind), the likely result is that the majority of U.S. cloud workers would price themselves out of the market. Alternatively, cloud labor platforms may simply choose to restrict the sourcing of work in the United States to avoid costly compliance requirements and future legal battles, essentially shutting down the domestic market for microtask labor completely.

Disputed Charges

For its part, in a formal response to the complaint filed with the District Court on December 20th, 2012, Crowdflower claims that Otey's allegations are completely baseless. The company maintains that Otey was never an employee under the FLSA, and even goes further, saying that if he were to be deemed an employee for the sake of argument, he would still have no claim because he was paid the same or more than federal minimum wage for his work. According to Crowdflower's response of record:

Some work allegedly performed by Plaintiff and the putative class was completely voluntary in nature and without CrowdFlower’s knowledge or authorization, was contrary to express instructions, was not required by CrowdFlower as a term or condition of employment, and does not constitute compensable working time under the FLSA as a matter of law.

This apparent dispute over what could even be counted as hours worked for a cloud labor platform speaks not only to one of the factors in the multi-factor test (control) used to determine employment status, but to the broader issue of how to enforce current labor laws at all in a distributed workforce.

While the case of Christopher Otey vs. Crowdflower could begin to provide more concrete answers for where crowdsourcing stands in the eyes of the law, the lack of understanding of our technologically advanced and globalized world in the current status quo will take years to fully inform. And by that time, new developments could need to be addressed, or perhaps artificial intelligence will have advanced to the point that this discussion -- and cloud workers like Otey -- will have been rendered moot.

In the meantime, it could be up to the industry itself to self-regulate as much as its collective will allows and implement best practices.

"We apply our expertise in crowdsourcing workflow management and micro-task design to make sure their experience is enjoyable and efficient," reads a statement on the case provided to me by Crowdflower. "Most importantly we provide direct support to our contributors through a very active community forum."

Perhaps crowdsourcing has not only blurred the line between employees and independent contractors, but also between online work and social networking. Is time spent hanging around on a forum or other virtual water cooler considered to be on the clock? Before we can answer that question, we still need to figure out who is subject to the clock in the first place.

I'll be keeping a close eye on the Crowdflower case as it moves forward in the coming months. Be sure to check back for updates and let us know your thoughts in the comments.

 - Eric Mack is Managing Editor for  He has covered business, technology and politics for more than a decade for major outlets including CNET, CBS, AOL, NPR, Wired, and the New York Times.  You can contact him at Find him on Twitter and Google+. Also be sure to follow on Twitter and join our Crowdsourcing community on Google+.

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  • Michael Dobbertin Michael Dobbertin Jan 08, 2013 07:44 am GMT

    I'm not surprised at this lawsuit, in fact I'm surprised it's taken so long. If it succeeds, it's a big blow against the free market of crowdsourcing. Crowdflower typically offers an enormous amount of jobs for little pay, while other players in Mechanical Turk and elsewhere might pay higher for more-specialized jobs but without a steady stream. This free market gives people a choice - to work harder/faster and make above minimum wage, and/or to take higher paying jobs if desired (or work outside crowdsourcing companies altogether). Unfortunately, this lawsuit is an indication of where our economy (and society) is headed... it's someone else's fault if I'm not getting what I want, when and how I want it.

  • Jeffrey Henderson Jeffrey Henderson Jan 09, 2013 10:21 pm GMT

    If this case goes against Crowdflower you'll just see these companies flock to off shore tax havens and continue functioning without a blip. The only difference is the profits these companies generate won't contribute to the US economy anymore.

  • myazimia myazimia Jan 10, 2013 03:45 am GMT

    If Crowdflower loses the only real loser will be the US; This would not happen in the European context and will only mean that crowd labour platforms will simply shift their bases to more regulatory friendly jurisdictions: welcome to crowd friendly innovative Europe!

  • Vahlsing Inc. Vahlsing Inc. Jan 11, 2013 01:17 am GMT

    No one should work for less than the federal minimum wage unless they are working at a commission fee of which was agreed upon by the employer. Slave labor and sweat shops are over guys. People should be able to afford to live decent and comfortable. Enough of this cheep labor crap already.

  • Guest Miguel Branada Jan 11, 2013 03:04 pm GMT

    This article is just brilliant, and the subject discussed just fascinating. We are seeing the future of humanity unfolding in front of our eyes, arising many fundamental questions with high philosophical implications. Just brilliant, please keep a good eye on this!

  • Guest mouseman Jan 16, 2013 07:44 pm GMT

    Crowdflower brought this on themselves, demanding piles of work for a few cents. I'll blame them if they drag US mturkers down with their sorry hides. Personally, I don't care if requesters pay somewhat less than minimum wage, as it's just a convenient sideline for me. These idiots have pushed the envelope way too far.

  • Peter Michael Peter Michael Jan 28, 2013 06:44 am GMT

    This is ridiculous. I someone wants to perform a task for nothing at all, (as I have done to get my foot into larger permanent marketplaces), then how could someone prohibit that? I'm gobsmacked at most of the comments actually. In my book this guy filing this lawsuit is nothing but a leech who saw an opportunity to disrupt a valid entity, who happens to be allowing thousands to buy and sell at their pleasure. He can not win this case.

  • Guest liladybugz26 Feb 07, 2013 02:59 am GMT

    I am an mTurk worker:
    I am free to seek out other business opportunities, I maintain my own
    workplace and I am always available to work for other people in the
    market. I am paid a flat fee for each job that I choose to accept. I
    also have unreimbursed costs such as a computer purchase, internet
    service and software to protect me online, which is also a significant
    independent contractor investment. I also have the possibility to
    incur losses if my computer needs replacing. I control when and where
    I work and what order or sequence I follow when I am working. Am I
    clearly not an independent contractor? Thankfully, according to the US government I am! Those are all IRS independent contractor test and common US law rules that make me one.

  • Guest KaitLynnHt Feb 12, 2013 04:31 pm GMT

    Vahlsing Inc. said: "No one should work for less than the federal minimum wage unless they are working at a commission fee of which was agreed upon by the employer."

    I agree, but that is exactly what we're doing here. When I job is found on a crowdsource site (I use mTurk, myself) you are given the details of the job, the "wage", and the OPTION of taking the job. If you agree to take the job, you have agreed to that fee or wage for that job.

    I hate to side with CrowdFlower. I can't stand CrowdFlower. Their QC is horrendous and pay is dismally low for the amount of time/work required. However, it is our choice whether or not to accept this work. Therefore it is not required for CrowdFlower to pay us minimum wage since in accepting their work, we agree to the low pay they give us.

    We don't need a lawsuit. We need to stop accepting these jobs. If you aren't willing to work for the amount offered, don't work. If they don't get workers, they'll either raise their wages or go away. If they go away, good riddance. If they raise their wages, awesome, then we've made a difference and next comes the quality of their work.

  • Chris Lu Chris Lu Feb 18, 2013 04:51 pm GMT

    If you employ workers in the USA, then the FLSA applies to you. Doesn't matter that you call your employees "the crowd" or "providers". You must pay taxes and minimum wage.

  • Guest Eddie Jul 29, 2013 05:43 pm GMT

    So because this man couldn't make minimum wage online crowdsourcing, the whole world should suffer? For the complainant, if your making $1.00 to $2.00 an hour, you simply need to be working harder. I crowdsource 7-days a week, and in all actuality, I never make below minimum wage, especially being that I'm no longer online on the slow weekends. So someone to lazy to put a 100% effort into making above minimum wage. It's not a problem for anyone on to make over minimum wage, so why is it such a problem for this person? This is a case of low moralization and someone who is trying to do effortless work and expect a big pay check. It doesn't work that way. Today's society is set up so that you get what you deserve. If you don't want in the work then your not going to earn minimum wage. That goes with any job in this united states, if you go pick a job, don't give the employer any performance, what makes you think your going to keep the job and continue getting paid?

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