Crowdsourcing as a new form of organizing labor relations: regulatory requirements and welfare effects

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Crowdsourcing refers to the act of an institution taking a function traditionally performed by employees and subcontracting it to an undefined and large group of people in the form of an open call. Crowdsourcing comes in two different forms: "microwork" and "online freelancing". Microwork refers to low complexity tasks, for which no particular skills are necessary and which can be completed within seconds or minutes. Online Freelancing defines high complexity tasks, which require specialized knowledge and professional skills. Crowdsourcing bears the potential for companies to have tasks completed at short notice and thereby benefiting from the creativity of the crowd. This new form of organizing work relations brings benefits to crowdworkers as well, as they can organize their work day in a geographically and timely flexible manner. Because the work is divided into ever smaller parts, workers might, however, be structurally disadvantaged when contracting with crowdsourcers and portals. The goal of the research project is to analyze whether the German and European legal system knows suitable instruments and regulations in order to ensure the balancing of interests between the respective parties or whether regulatory action is required. In particular, we will investigate whether worker protection rights can be applied to crowdworkers and which options for the collective protection of interests exist or should exist. The investigation will resort to findings in the United States, as the largest experience with crowdsourcing activities exists there and the consequences of the new form of organizing labor relations became most visible. From the economic perspective we analyze whether crowdworkers perform these jobs to earn a living or whether they follow a different objective function. Moreover, we will analyze how welfare gains are distributed between crowdworkers, portals, and crowdsources. In some cases, crowdworkers might in fact feel treated unfairly and consequently take action against the other two parties. The research questions will be answered using a comparative legal approach as well as empirical and experimental methods. Should the legislator pass a German crowdsourcing law or implement a respective EU directive, the data collected in this project will be used to evaluate the new rules.