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Federal Judge Refuses To Grant Injunction Against California’s Gig Economy Law, But Acknowledges ‘Likelihood of Irreparable Harm’ – Reason.com

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A federal judge this week declined to grant Uber and Postmates an injunction against Assembly Bill 5 (A.B. 5), the gig-economy law in California that is forcing many companies to reclassify their contractors as employees. 

Judge Dolly M. Gee of the U.S. District Court for the Central District of California wrote that “the balance of equities and the public interest” favor enforcing the law, although she conceded that the two companies will likely experience some “irreparable harm” as a result. 

Many gig-economy companies and independent contractors are suffering across the state of California in the wake of A.B. 5 taking effect on January 1.

Filed in response to the ruling in Dynamex Operations West, Inc. v. Superior Court of Los Angeles, A.B. 5 imposes a much broader standard in determining if workers are contractors or employees. To pass the “ABC test,” a contractor must A) control his or her own workload, B) perform tasks that are not crucial to the company’s main scope of operations, and C) be “customarily engaged” in the work.

The legislation sent a slew of industries into disarray at the start of the year. Employees in California are entitled to benefits not offered to contractors, such as a minimum wage, health insurance, paid time off, and reimbursement for expenses. Experts estimate that ridesharing companies should expect to see a 20-30 percent increase in labor costs.

As a result, those companies have prepared to make major changes that will hurt the very people the law was supposed to help. Workers will first lose the flexibility that has come to define gig-economy work, as businesses have said they will need to start scheduling workers in tight shifts. And a multitude of operators will be laid off entirely. Under a 40-hour workweek, Lyft expects to kick 300,673 drivers to the curb if it experiences the more modest 20 percent increase in expenses, according to a Beacon Economics LLC study commissioned by the ridesharing company. 

As it currently stands, gig-economy businesses present some of the lowest barriers to entry, providing opportunities to lower-skilled, vulnerable populations. Lyft, for instance, merely requires that would-be drivers meet regional age standards, pass a background check, and have insurance, a license, and a decent four-door vehicle. The new regulations, however, would render ridesharing a more exclusive profession, forcing out workers who may otherwise struggle to find a well-paying gig. (As I’ve previously reported, 90 percent of app-based drivers in Manhattan are immigrants.)

Uber and Postmates said they will consider appealing the decision. (The rejected injunction has no bearing on the companies’ lawsuit against the state of California, which is still moving forward.) In a statement, Uber characterized A.B. 5 as “biased and overtly political,” a reference to the many exemptions granted to various industries under the legislation.

The law’s first iteration excluded doctors, hairstylists, real estate agents, lawyers, accountants, insurance agents, dentists, and others from having to comply. And the list keeps growing. Assemblywoman Lorena Gonzalez (D–San Diego), the architect of A.B. 5, announced last week she would move to consider exempting freelance content creators and photographers, who are currently prohibited from completing more than 35 individual assignments for a single company without being hired as an employee. 

Journalists, translators, transcribers, digital marketers, and others vigorously pushed back against that restriction, with many claiming that they had lost thousands of dollars in contracts and that the legislation had decimated their livelihoods. The Pacific Legal Foundation also filed a lawsuit on behalf of the American Society of Journalists and Authors and the National Press Photographers Association, alleging First Amendment violations.

“Companies can simply blacklist California writers and work with writers in other states, and that’s exactly what’s happening,” Alisha Grauso, an entertainment writer and the co-leader of California Freelance Writers United (CAFWU), told Reason in December. “I don’t blame them.”

Perhaps most notoriously, Vox Media, who originally called A.B. 5 “a victory for workers everywhere,” severed ties with around 200 of its California freelancers who wrote for its sports site, SB Nation. They instead replaced those freelance positions with 20 part- and full-time positions.  

The law’s 35-piece-per-year publication cap “makes it impossible for us to continue with our current California team site,” wrote SB Nation’s John Ness in a statement.

A.B. 5 and its freelancer ramifications briefly united progressives and more fiscally conservative types, and Gonzalez became somewhat well-known for her combative Twitter exchanges with those negatively impacted by the legislation. “[Freelancers] shouldn’t fucking have to [work 2-3 jobs],” the assemblywoman told a detractor in December. “And until you or anyone else that wants to bitch about A.B. 5 puts out cognizant policy proposals to curb this chaos, you can keep your criticism anonymous.”

But in other exchanges, Gonzalez iterated a desire to hear out her constituents and get the law right. “Based on dozens of meetings with freelance journalists & photographers,” she tweeted last week, “we have submitted language to legislative counsel that we hope to have available next week to put into AB1850 which will cut out the 35 submission cap & instead more clearly define freelancer journalism.”

The moment was a major victory for a subset of workers whose livelihoods depend on their ability to set their own schedules and spread their work across many different businesses. In another similarly encouraging turn, a Los Angeles Superior Court judge ruled last month that truckers must also be exempt from the legislation, writing that A.B. 5 “clearly run[s] afoul” of federal law pertaining to interstate commerce.

Uber and Postmates—along with the other gig-economy titans like Lyft and DoorDash—haven’t yet been so lucky, though the law does brush up against separate decisions filed by the Department of Labor and the National Labor Relations Board. Both agencies ruled that gig-economy workers are indeed contractors, noting in particular that those workers may log on whenever they please and contract for competing companies. It is not uncommon, for example, to drive for both Uber and Lyft.

Should the courts not grant them a reprieve, those businesses are hoping that a November ballot measure may exempt them from the legislation. Though A.B. 5 did not exclusively zero in on the gig-economy behemoths, they were arguably the primary target, and a successful effort to exclude them from the law would be a large step toward rendering it moot.



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The Music Dies for Poland’s Gig Economy Workers

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There was a time when the ruling right-wing Law and Justice party (PiS) was seen as the champion of those relying on flexible forms of employment. Five years ago, when it came to power, it declared it would abolish “junk” contracts.

But critics say all PiS has done is to introduce a minimum hourly rate for casual workers to match minimum rates for employees on full contracts.

“It takes more time for the labour market to totally get out of these types of contracts,” said Wojciech Zubowski, PiS deputy chairman of the parliament’s economy and development committee. “Besides, for many people who don’t want to be associated with one company, this kind of employment is simply suitable.”

In recent years, Poland has seen economic growth and budget surpluses thanks in part to a buoyant global economic outlook and austerity reforms brought in by PiS’s predecessors. Poland’s unemployment rate hit a record low of 2.9 per cent in January. 

But critics say PiS has squandered the conditions it inherited. Instead of reforming the chaotic labour market, it has overseen a dramatic increase in social spending.

It introduced a “13th” and then a “14th” month of annual pension payments and one-off gifts of around 70 euros for school pupils. It also brought in an immensely popular subsidy of 110 euros a month for each child, regardless of a family’s income, which has cost taxpayers 18.5 billion euros since 2016.

Critics say PiS has also distributed money among loyalists in the public media, government agencies and bureaucracy — sectors that are key to the party’s grip on power — though PiS denies it.

“In times of prosperity, PiS has neither made serious investments nor savings,” said Katarzyna Lubnauer, a member of the Modern party, which along with Civic Platform, the main opposition party, forms the Civic Coalition alliance in parliament.

“So now there are relatively few funds that can be allocated to saving the economy.”

In times of prosperity, PiS has neither made serious investments nor savings. So now there are relatively few funds that can be allocated to saving the economy.

– Katarzyna Lubnauer, the Modern party

While Lubnauer faults PiS for not reorganising the labour market, she said for some workers it was a conscious choice to work on non-standard contracts, which offered them flexibility and exemption from paying social contributions.

But “what worked in times of prosperity becomes a burden in the crisis”, Lubnauer added.

Meanwhile, singer Marcin Januszkiewicz wonders if he will ever play a concert again as social distancing looks more and more like the new normal.

Whatever happens, though, he is trying to stay upbeat.

“The thought that we’re all together facing some unknown disaster rather builds me up,” he said.



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Help is on the way for Uber, Lyft drivers and other gig workers as economy sputters

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“That shift in the economy, we’re not going back, so I think hey, when we get through this people are going to be renting out rooms again and sharing their vehicles and participating in opportunities. So I don’t think there’s any necessarily turning back on the gig economy, I think it was such a shock to the system of many folks that were participating in it that saw this as their full time job. And there really isn’t a nice safety net, although some of the programs may be addressing and supporting them,” Goldberg said.

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Collaborations helping gig economy survive COVID-19

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Multiple partnerships between local governments and private businesses in the gig economy space are playing an important role in the battle against the COVID-19 pandemic, a report by the Ola Mobility Institute (OMI), ‘Leveraging and Protecting the Gig Economy against COVID-19 has said. 

The report says such collaborations between governments and businesses has resulted in the government recognising the potential of gig workers in this crisis, by two non-fiscal strategies, i.e. by actively involving the technological capability of the platforms and their logistical networks (hands-on approach), and passively facilitating their operations through legal protection (hands-off approach). The agility of businesses implies fewer challenges to staffing their gig workforce, while also providing remunerative opportunities to gig workers, it said. 

In India, this collaboration has been seen as platforms such as Flipkart, Uber and Big Basket are partnering with each other in multiple cities to provide delivery of essentials.  

It calls for a collective effort to strengthen social partnership with platform companies to fast-track the recovery process from the COVID-19 crisis. Gig workers and platforms must be leveraged to better manage the crisis, fast-track recovery.

It also discusses steps to protect gig workers that have been taken by the new-age platforms and the governments. New businesses are strengthening safety measures, adapting to the new work environment, providing health access to all, expanding paid leave, and taking steps to secure the livelihoods of players in the gig economy. It also says that governments across the world have also announced multiple policy measures to minimise the human and economic impact of COVID-19, and particularly protect the gig workers.

Speaking on the report, Carson Dalton, Senior Director, Ola Mobility Institute said, “COVID-19 is an unprecedented crisis of our time. Under these extraordinary circumstances, gig workers and platform companies are adapting quickly and leveraging their workforce to ensure transportation services, delivery of essential commodities and medicines are available to the most vulnerable populations.” 

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