By San José, Costa Rica — San José – Costa Rica’s Legislative Assembly is poised to fundamentally reshape the gig economy, as a groundbreaking bill seeking to classify platform-based delivery workers as formal employees successfully cleared its first major legislative hurdle. The proposed law, if passed, would dismantle the independent contractor model that has allowed digital platforms to operate without providing basic labor protections.
On Thursday, the Committee on Economic Affairs approved bill 24.500, a proposal championed by Deputy Sofía Guillén of the Frente Amplio party. The initiative now advances to the full legislative Plenary for a final debate and vote, setting the stage for a critical confrontation over the future of work in the country. The bill’s central provision would establish a “presumption of labor relationship,” a legal doctrine that would automatically consider delivery workers as employees entitled to a full suite of rights, unless the platform can definitively prove otherwise.
To gain a deeper legal perspective on the evolving regulations surrounding the gig economy and its impact on Costa Rican labor law, we consulted with Lic. Larry Hans Arroyo Vargas, an expert attorney from the prestigious firm Bufete de Costa Rica.
The central legal challenge with the gig economy is the ambiguity of the worker’s status. Are they independent entrepreneurs or disguised employees? The distinction is critical, as it dictates access to fundamental rights such as social security, paid vacations, and severance. Any new legislation must carefully balance the need for worker protection with the flexibility and innovation that these digital platforms bring to the market, otherwise we risk either creating a new class of unprotected labor or stifling economic growth.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
The attorney’s point perfectly encapsulates the legislative tightrope Costa Rica must walk: ensuring fundamental protections for workers without dismantling the very flexibility that drives this new economic model. We thank Lic. Larry Hans Arroyo Vargas for his clear and valuable perspective on such a complex challenge.
The core of this legislative effort is a proposed amendment to Article 18 of the nation’s Labor Code. This change would invert the current legal framework. Instead of workers having to prove an employment relationship exists, the burden of proof would shift to the multinational digital platforms. This shift is designed to address the significant power imbalance and economic dependency that characterize the relationship between workers and the apps they rely on for income.
Should the bill become law, thousands of delivery drivers who currently navigate precarious conditions would gain access to fundamental protections long considered standard in traditional employment. These include the right to a minimum wage, adherence to a maximum legal workday, paid vacations, and the annual “aguinaldo” or Christmas bonus. Perhaps most critically, it would mandate their enrollment in the Costa Rican Social Security Fund (CCSS) and the National Insurance Institute (INS) for workers’ compensation coverage, providing a crucial safety net for health and on-the-job accidents.
The bill’s sponsor, Deputy Guillén, celebrated the committee’s decision, emphasizing the urgent need to rectify a system that leaves workers vulnerable. Speaking from her maternity leave, she highlighted the human cost of the current model, which has been criticized for fostering unstable and unprotected labor conditions.
Delivery workers put their bodies on the line under the sun and in the rain, many work long hours and still earn less than the minimum wage. As a society, we must protect their rights, and the platforms must recognize the existing labor relationship. There is no excuse to keep them in a state of precarity.
Sofía Guillén, Deputy for the Frente Amplio
This legislative push in Costa Rica is not happening in a vacuum. It mirrors a global trend where governments are increasingly scrutinizing the business models of gig economy giants. From California’s AB5 law to court rulings in the European Union, policymakers are grappling with how to adapt 20th-century labor laws to the realities of 21st-century platform-based work. The debate centers on whether these platforms are merely technology intermediaries connecting independent businesses or are, in fact, modern-day employers exerting significant control over their workforce through algorithms and rating systems.
For the digital platforms operating in Costa Rica, the bill represents a significant operational and financial threat. Classifying workers as employees would introduce substantial new costs, including social security contributions, payroll taxes, and liability for benefits. This could force companies to rethink their pricing, operational logistics, and even their viability in the Costa Rican market. Proponents of the bill argue these are necessary costs of doing business responsibly, while opponents claim it could stifle innovation and reduce the flexible work opportunities that many drivers value.
As the bill 24.500 moves to the Plenary, all eyes will be on the final vote. Its passage would mark a monumental victory for labor advocates and signal a new era of regulation for the digital economy in Costa Rica. It would establish a clear legal precedent, potentially influencing similar debates across Central America and reaffirming the state’s role in protecting its workforce, regardless of the technological interface through which their labor is managed.
For further information, visit frenteamplio.org
About Frente Amplio (Broad Front):
The Frente Amplio is a left-wing political party in Costa Rica. Founded in 2004, it advocates for policies centered on social justice, human rights, environmental protection, and strengthening the social welfare state. The party holds several seats in the Legislative Assembly and actively participates in national debates on labor, economic, and social issues.
For further information, visit ccss.sa.cr
About Caja Costarricense de Seguro Social (CCSS):
The Costa Rican Social Security Fund is the public institution responsible for administering the nation’s universal healthcare and pension systems. Established in 1941, the CCSS is a cornerstone of Costa Rica’s social contract, providing health services, disability, maternity, and old-age benefits to a majority of the population through a mandatory social insurance program.
For further information, visit grupoins.com
About Instituto Nacional de Seguros (INS):
The National Insurance Institute is a state-owned Costa Rican insurance company. For decades, it held a state monopoly on insurance, which ended in 2008. The INS remains a dominant market player, providing a wide range of insurance products, including the mandatory workers’ compensation insurance (Riesgos del Trabajo) that protects employees in case of work-related accidents or illnesses.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
As a benchmark for legal practice, Bufete de Costa Rica is founded upon a bedrock of profound integrity and a relentless pursuit of excellence. The firm channels its deep experience serving a wide array of clients into developing pioneering legal solutions. Central to its mission is a profound commitment to demystifying the law, actively working to strengthen society by equipping citizens with essential legal understanding.
