Remember the first Star Wars movie? Remember how it ended? Luke Skywalker is in his fighter, screaming down a kind of alley on the surface of Darth Vader’s Death Star. The Death Star is powering up and preparing to obliterate the rebel base – in fact, the entire planet it sits on. Uh-oh. Luke has to shoot a laser torpedo, or whatever it is, right into the entrance to an exhaust port while flying along at top speed. If he hits his tiny target, it will destroy the Death Star and save the galaxy.
When Luke gets in range of the exhaust port, he activates what’s basically an augmented reality device that turns his helmet into a heads-up display showing him exactly how to hit the port. Then, suddenly, the voice of Alec Guinness enters Luke’s brain, and says: “Luke, use the Force.” Luke, of course, turns off the A/R device, destroys the Death Star with a perfect shot, and launches hundreds of millions of dollars in movie revenue. The movie itself is a classic hybrid of some of the most ancient myths and issues the human race has ever contended with, but one question lingered like a quasar pulsating on the perimeter of space for some of the audience:
“Was Luke an employee or an independent contractor?”
As usual, augmented reality raises as many questions as it answers.
One of the most consistently fought-over questions the IRS (and state taxing authorities) have repeatedly had to grapple with over the years has been whether someone who is performing a service for someone else is an employee, or is a contractor. It’s a very situation-dependent assessment, and the IRS has developed a multi-part test to help arrive at the answer. There is no bright-line procedure, but rather, a series of factors the IRS can evaluate to arrive at a classification. And A/R may have the potential to disrupt this test. Meet DAQRI.
Based in Los Angeles, DAQRI is a tech company that has developed and is marketing a series of A/R enabled devices – currently, a helmet, and a pair of glasses – that are intended to bring A/R into the workplace. The helmet, for example, creates an intelligent heads-up display that “reads” a worker’s physical environment. It then uses sensors, processors and software to interpret that environment, and extend the worker’s expertise and intelligence into the environment. Brian Mullins, the company’s CEO and founder, writes: “We become so limited by this idea of technology replacing workers when the better idea is to power-up their senses and extend what they’re capable of doing.”
The company’s promotional video, which can be found here, demonstrates this. In part of it, a worker is moving through some kind of factory, and stops to look at a pressure gauge. Through the heads-up display the DAQRI system “sees” the gauge, outlines it in green, identifies it, identifies normal pressure ranges (which are also displayed), reads and interprets the gauge’s reading, then places a bright green check mark, signifying that the pressure reading is normal. The worker moves on.
In another segment, the DAQRI system displays a heads-up to-do list, telling the worker what tasks need to be performed inside the factory, what needs to be checked, repaired, and so on. In another, another worker moves through a different facility, and uses DAQRI’s thermal sensor capability to see his environment in terms of temperature. Cooler objects are blue, warmer ones brighter, up to and including a red shade for hot objects, such as steam pipes. The system will help workers identify problems before, perhaps, they’re visible.
In essence, like Luke before he resorts to the Force, the workers in this video are no longer solely operating in the physical environment. They’re working in the A/R system’s interpretation of it, and literally second by second, are being both closely monitored and instructed. When a worker looks at a piece of machinery, the display shows him what it is, how it fits together, and piece by piece, what to do to repair it. It’s really impressive.
The upside of this is, of course, obvious. The worker now has vastly more information, is presumably safer, more efficient, and much, much more productive. When he looks at the section of piping, the A/R display will tell him exactly what the different parts are he’s seeing, what they do, what temperature they should run at, and if necessary, how to repair or adjust them. Because there are cameras embedded in the device, the worker can also have supervisors or other experts actually “see” what he sees, and instruct him.
The downside? This scenario increasingly blurs the line between workers and contractors, which has an enormous impact on all kinds of legal issues, from union membership to taxation to liability for industrial accident. Hypothetically, even if someone is an independent contractor, the total shift in the nature of his day-to-day work could result in courts determining that he is, in fact, actually an employee.
The determination of whether someone is an employee or a contractor is tricky, complex, and often involves litigation. There’s a lot at stake, and much of the determination has to do with how independently the work is being done, versus how much control the company may have over what’s being done. Generally, the more control, the more likely it is that someone’s going to be determined to be an employee. The more independence, the more they’re likely to be found to be a contractor instead.
One way this question’s addressed is using a 20-factor test, created by the IRS, that examines how much independence a worker has. The 20 factors used to evaluate the validity of independent contractor classifications include several issues in which a worker who, thanks to an A/R helmet, is being controlled minute-by-minute, may be found to be an employee when, previously, he might have been found to be a contractor instead. A few examples – the factor is first, followed by my comments in italics:
Level of instruction. If the company directs when, where, and how work is done, this control indicates a possible employment relationship. This is exactly what happens. The company directs the operations the worker performs moment-by-moment through the device.
Amount of training. Requesting workers to undergo company-provided training suggests an employment relationship since the company is directing the methods by which work is accomplished. Same thing – the company is directing how the work is performed, and arguably, work in an A/R environment can be considered “training”.
Degree of business integration. Workers whose services are integrated into business operations or significantly affect business success are likely to be considered employees. With an A/R display, a human being is literally physically integrated into the operation. You arrive, don the helmet, and are then part of the infrastructure of the facility you’re working in.
Extent of personal services. Companies that insist on a particular person performing the work assert a degree of control that suggests an employment relationship. In contrast, independent contractors typically are free to assign work to anyone. This is complex, because the person doing the work has to be wearing the DAQRI helmet, and receiving instructions. However, if they are, it doesn’t matter who they are.
Flexibility of schedule. People whose hours or days of work are dictated by a company are apt to qualify as its employees. The hours of work are dictated by the company in the sense that the A/R system controls when and how you work, moment-by-moment.
Need for on-site services. Requiring someone to work on company premises—particularly if the work can be performed elsewhere—indicates a possible employment relationship. This one’s easy – you have to work on company premises.
Sequence of work. If a company requires work to be performed in specific order or sequence, this control suggests an employment relationship. The DAQRI system dictates the sequence of tasks, down to the second.
Provision of tools and materials. Workers who perform most of their work using company-provided equipment, tools, and materials are more likely to be considered employees. Work largely done using independently obtained supplies or tools supports an independent contractor finding. If the key piece of equipment is the A/R helmet, which is provided by the company, as is the software the runs in it and the instructions it generates, that moves the needle towards “employee” findings.
The commercial potential of the DAQRI system is enormous. In initial projects, some involving the assembly or maintenance of extremely complex technologies (jet engines, airplane wings) the error rate has been reduced, literally, to zero. However, Nature always balances her books, and this kind of efficiency requires some changes, and imposes some costs. In these environments, workers are functionally working under extremely close supervision, albeit supervision by software systems. Given that autonomy is one of the hallmarks of being an independent contractor, and lack of it is part of what defines an employee, work in an augmented environment may mean a serious reexamination of the definitions of the two terms. Interestingly, AR may redefine work – just not in the way everyone intended. And, unfortunately for Luke, being a Jedi Knight and relying on the Force seems to include no job security.