In both the United States and the United Kingdom, the work covered by employment statutes has been defined by reference to the common law. Unfortunately this use of the common law in both nations has generated confusion, incoherence, and the allowance of the evasion of statutory purposes. In the United States, the failure of Congress to provide a meaningful definition of employees covered by statutes framed to provide protections and benefits has resulted in judicial use of unpredictable multifactor tests unfocused by an ultimate standard that could control employer manipulation. While the judicial use of unfocused multifactor tests also has impeded judicial decision making in the United Kingdom, even greater impediments have derived from the use and misuse of the common law of contracts.
In my view, the legislatures and courts of each country would do better if they used a simple, central principle from the common law of agency and torts governing respondeat superior vicarious liability to answer the question of whether there is an entity or entities that should be responsible for the deprivation of benefits or protections promised by employment statutes. This principle, which I term reciprocal cost internalization, applies where there is an alignment of employee duties and employer interests. I argue that it explains the law of respondeat superior and that it also should provide a wide default boundary for employment protection and benefit statutes. The principle is consistent with and supports the definition of the employment relationship presented in the American Law Institute’s recently published Restatement of Employment Law, on which I worked as a Reporter. The principle could also inform United Kingdom law, though the use of contractual language in the statutes poses a hurdle, especially for the assignment of responsibility to user employers with aligned interests in some triangular relationships.