The Misclassification Fear Index is based on the hypothesis that lawyers tend to draft contract provisions to mitigate perceived litigation risks. The presence of such risk-mitigation provisions can then be used to gauge a lawyer’s internal risk assessment. (For more on this methodology see my recent paper.)

This index measures the number of provisions in a company’s form independent contractor agreement that were likely intended to mitigate the risk of a misclassification claim. (Scroll down for the components of the index.) It includes provisions denying that the contractor is an employee, or affirming his/her status as a contractor. The index also includes provisions that attempt to limit damages from misclassification claims, such as tax liabilities or employee benefits. Other such provisions attempt to mitigate risk by construing the facts in a way that favors contractor status under applicable legal tests, such as stating that the contractor must provide his/her own tools, has the freedom to set his/her own schedule, or may subcontract the work.

The contracts that form the basis for this chart were gathered between 2014 – 2016, based on a review of each company’s website. Consequently, some results may not reflect recent revisions to a company’s form contract. The Uber contract was obtained from a 2014 court filing.

Note that the Index does not directly measure a company’s litigation risk; rather, it is a proxy for its lawyers’ risk assessments and the company’s risk tolerance. While companies with a high litigation risk would be expected to receive a high score on the Fear Index, so too would companies that are very risk averse and willing to pay employment law specialists to load up the contract with protective terms.

Components of Misclassification Fear Index