Finally, new monitoring technologies can help firms to shunt workers outside of their legal boundaries through independent contracting, subcontracting, and franchising. Various economic theories suggest that firms tend to bring workers in-house as employees rather than contracting for their services—and therefore tend to accept the legal obligations and financial costs that go along with using employees rather than contractors—when they lack reliable information about workers’ proclivities, or where their work performance is difficult to monitor. In a Coasean approach, the challenge of monitoring workers outside the firm may be a transaction cost that encourages the firm to bring them inside as employees […]

Yet where firms can develop near-perfect knowledge about workers’ performance, the calculus changes.