Drivers and couriers for companies like Uber and Deliveroo need full worker rights and not "bogus" self-employment status, MPs have said.
Self-employed status leaves workers vulnerable to "exploitation", the Work and Pensions Committee concluded after an investigation into the issue.
Staff should be designated as workers, with full rights, by default, MPs said.
In response, Uber said the vast majority of its drivers were happy with their terms.
"Almost all taxi and private hire drivers in the UK have been self-employed for decades, and with Uber they have more control over what they do," a spokesperson said.
"The vast majority of drivers who use Uber tell us they want to remain their own boss, as that's the main reason why they signed up to us in the first place."
Last year an employment tribunal ruled that Uber drivers were wrongly classified as self-employed - the company is appealing against the ruling.
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Deliveroo was also among the companies that gave evidence to the Work and Pensions Committee as part of its inquiry in to the so-called gig economy.
Deliveroo said in a statement: "We receive 10,000 rider applications every week because people are attracted to the flexible way of working that we offer.
"Before Deliveroo existed, many workers in the food delivery business were paid in cash, in the black economy. All of our riders are registered to work legally and pay their taxes in the UK.
"Deliveroo is proud to offer well paid, flexible work to over 15,000 riders. Our riders on average earn well above the National Living Wage."Image copyright Getty Images
In the report by the Work and Pensions Committee, chairman Frank Field said companies were "avoiding all their responsibilities" in order to profit from "bogus self-employed designation".
"This inquiry has convinced me of the need to offer 'worker' status to the drivers who work with those companies as the default option."
If firms want to class workers as self-employed, they should be made to justify that move, he said.
Those changes would protect staff from "the appalling practices that have been reported to the committee in this inquiry".
Mr Field singled out Uber and its policy of charging drivers the costs of organising cover if they were off sick.
In its defence, Uber says it contributes towards a scheme that drivers can join, which gives a range of benefits including illness and injury cover.
Mr Field also said that self-employment also caused "substantial" tax losses for the government.
Last year the government asked Matthew Taylor, former head of the Labour Policy Unit, to review employment practices.
The review will look at security, pay and rights and it will also examine whether there are ways to increase opportunities for carers, people with disabilities and the elderly.
Speaking on the subject last year, Prime Minister Theresa May said: "If we are to build a country that works for everyone - not just the privileged few - we need to be certain that employment regulation and practices are keeping pace with the changing world of work."