What happens when modern innovations in the workforce (made possible by the advent of the internet) collide with traditional concepts of employment? You get lawsuits like Christopher Otey v. Crowdflower, Inc., filed late last year in the Northern District of California.

According to the Crowdflower website:

CrowdFlower is the world’s leading crowdsourcing service, with over 800 million tasks submitted by over four million contributors. We specialize in microtasking: distributing small, discrete tasks to many online contributors, assembly-line fashion – for instance, using people to check hundreds of thousands of photos every day for obscene content.

With Crowdflower, you gain access to the world’s largest crowdforce, along with smart workflows and strict quality control mechanisms. This combined will provide you with the quality results and fast turnaround time you want for a low cost.

CrowdFlower has always designated its “crowdforce” as independent contractors. Now, in a federal class action lawsuit, a former worker for CrowdFlower alleges that he — and all of the other members of the “crowdforce” — are employees and not independent contractors. And therefore, according to the Complaint, under the Fair Labor Standards Act (FLSA) and Oregon Law, such “employees” are entitled to minimum wage rates — rather than the $2-3 dollars per hour that the Complaint alleges they are in fact earning.

In short, one person’s innovative out-of-the box business idea is another person’s “digital sweat shop” (as the Complaint characterizes it). Furthermore, one wonders if crowdsourcing will survive as a practice if workers are designated employees in the future.

As a legal matter, it may be an open question whether crowdsourced workers will be deemed employees or independent contractors; the answer will largely depend upon the facts developed in discovery. The various federal and state tests for employee and independent contractor status tend to involve the weighing of multiple factors, though often the central question is the right of the principal to control the worker’s method and means of achieving the results of the relationship. This makes it difficult to predict results.

As crowdsourcing gains popularity, the future of this business model may hinge on whether lawsuits such as this one gain traction.