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92 Tul. L. Rev. 777 (2017-2018)

handle is hein.journals/tulr92 and id is 825 raw text is: The Entrepreneurial Responsibilities Test Jooho Lee* This Article proposes a three-part test to help simplify worker classification and connect the law with the overall purposes of our economic system. Existing legal tests struggle to provide justifiable and workable guidance for courts, employers, and workers. One recent response has been an increased focus on entrepreneurship. However neither courts nor scholars have paid sufficient attention to economic theories ofentrepreneurship to inform their reliance on the concept. By drawing frm classic economic theories of entrepreneurship, this Article will argue that a worker should be considered an employee unless she assumes entrepreneurial responsibility within her economic relationship with the hirer and that entrepreneurial responsibility consists of three elements: (1) the assumption of liability for economic uncertainty; (2) the exercise of control over the allocation of resources being combined to sell in the market; and (3) participation in the market discovery process by buying resources to sell in the market in the pursuit ofprofits. Aside fm its simplicity and wide-ranging applicability, the proposed three-part test is superior to other existing tests for employee status because it corresponds with the principle of fair play and the very reasons why we organize our economic activities within markets and firms. Because our economic system is a cooperative enterprise within which we organize our economic activity into markets and firms so that we can all benefit fmm an efficient allocation of resources, the principle offair play suggests that it would be unfair for economic actors to benefit privately by circumventing the bifurcation of work into markets and firms in our economic system. This principle can explain and justify a wide variety of the need for distinguishing employees from independent contractors ina parsimonious and unified way. I. INTRODUCTION. ................................. .....778 II. EXISTING TESTS FOR EMPLOYEE STATUS .................785 A. Assessing the Control Test ......... ............786 B. Assessing the Economic Realities Test...... ......791 C. The Emergence of the Entrepreneurial Opportunities Test ............. ...............796 EU. EcoNOMIc THEORIES OF ENTREPRENEURSHIP ...... .......800 A. Knight and Uncertainty. .....................800 B. Schumpeter and Creative Destruction ...... ......803 C. Kirzner and Alertness ............... ...........807 IV. THE ENTREPRENEURIAL RESPONSIBLITIES TEST ....................... 811 A. Assumption ofLiability for Economic Uncertainty......813 B. Allocative Control over Resource Combination ..........814 C. Buying to Sellfor Profit ..........................817 * C 2018 Jooho Lee. Assistant Professor of Business Ethics and Law, Pepperdine University; Ph.D., The Wharton School at the University of Pennsylvania; J.D., University of Pennsylvania Law School. Many thanks to Sophia Lee, Thomas Donaldson, Nico Cornell, Alan Strudler, Richard Shell, and Deepa Das Acevedo for their helpful comments. 777

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