CONTROVERSY over America’s “independent contractors”—self-employed workers who do not benefit from regulations governing employment—predates the gig economy by decades. In 1984 the IRS estimated that 3.4m workers were being misclassified as independent contractors. FedEx, a delivery firm, has been fighting lawsuits that allege its contractors are really employees for at least ten years. But the upsurge in apps that connect users with contractors—to drive them somewhere, collect their laundry or deliver their shopping—has reinvigorated this old debate.

On April 21st Uber, a ride-hailing app and the biggest such platform, announced that it had settled two class-action lawsuits brought by drivers in California and Massachusetts. Under the deal, which still needs judicial approval, the classification of Uber’s drivers as independent contractors will not change (though, among some other concessions, they will be able to form a “driver’s association” through which they can air concerns).

Uber did not bring contractor status to its industry: in 2009, the year the firm was founded, 88% of taxi drivers were already contractors. Unlike employees, who must show up to work and obey instructions, contractors usually strike bargains for individual tasks, such as fixing a sink. This model works best when such deals are easily struck and enforced. It is rarely easier than in the taxi industry, where a contract is a promise to take someone from A to B.

What is new about platforms like Uber is their potential power over workers. Traditional contractors—plumbers, say—can advertise in multiple places to find work. Licensed taxis can physically seek out passengers. But for some drivers, Uber’s size and competitive advantage may make it the only feasible route to finding clients. There is little workers can do if a monopoly platform decides to slash prices, take a bigger cut of each transaction for itself, or disconnect them due to low customer ratings. (As part of the settlement Uber set out its disconnection policy for the first time.)

The first potential solution is competition. Where rivals operate, Uber must tread more carefully. Cut drivers’ earnings too deeply, and they might flee to a competitor. Yet switching costs and network effects—the benefit customers and drivers get from using the same app—could make these platforms natural monopolies. In that case, letting workers unionise is the second logical response to platforms with outsize bargaining clout. The problem is that contractors usually cannot unionise because antitrust law treats them as businesses. To bargain collectively is to run a cartel.

That provides one reason to treat drivers as employees. There would be other upsides, too. Contractors must pay both the employer’s and the employee’s portion of social-security taxes. For most self-employed workers, this makes sense: electricians could hardly ask each of their clients to pay such levies. If drivers were employees, a centralised platform such as Uber could handle the paperwork. That would simplify life for drivers, who currently face one tax rate in their car and another in a regular job.

However, full employee status would risk breaking the business model of most platforms. Take the minimum wage, which employees but not contractors are entitled to. Uber’s app works so well because it steers drivers to where demand is highest. If they could earn a minimum wage for driving around in a quiet area, those incentives would be blunted.

One solution, advocated by economists Seth Harris and Alan Krueger, who has consulted for Uber in the past, is to introduce a third category of worker for the gig economy: the “independent worker”. These hands would have the right to organise and would have social-security contributions made on their behalf. But they would not receive the minimum wage or unemployment insurance. The idea has some merit, though it would make worker classification still more complicated. In the meantime, lawsuits against Uber in other states roll on.