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CARES Act May Propel Gig Economy Employment Law Shift

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Law360 (April 9, 2020, 5:38 PM EDT) —

Kevin Vozzo
Kevin Vozzo

In 2019, California enacted A.B. 5, a controversial law designed to make it more difficult for businesses to classify workers — including those providing services in the gig economy — as independent contractors.

The new law, which went into effect on Jan. 1, codifies and expands use of the so-called ABC test in California to differentiate between employees (who are entitled to certain benefits and other protections under the law) and independent contractors (who generally are not).

Although worker classification has been a polarizing issue for many years, A.B. 5 — in conjunction with the continued expansion of the gig economy — intensified the debate. Soon after California Gov. Gavin Newsom signed the bill into law, businesses in several industries mounted challenges to the statute in court. In addition, lawmakers have since introduced a number of bills seeking to amend the law, or repeal it outright.

Despite the backlash in California, other states may soon follow suit. Indeed, New Jersey considered similar legislation in 2019, and Illinois and New York are expected to do so within the next year.

The motivation behind legislation like A.B. 5 is clear: extending the protections of various labor and employment laws — such as the right to earn minimum wage and overtime, and to collect unemployment insurance benefits — to as many workers as possible. But for many workers and small businesses, the legislation could do more harm than good. 

As the U.S. Department of Labor acknowledged in an April 2019 opinion letter, the gig economy presents workers with unique entrepreneurial opportunities, including the right to simultaneously work on multiple different platforms; to work as much (or as little) as they want; to dictate when, where and how often they work; and to accept, reject and select among the job offers they receive.[1]

As many employees would likely attest, this level of autonomy is irreconcilably inconsistent with an employer-employee relationship. And for many workers, it is precisely the reason they choose to provide services as independent contractors, rather than work in a traditional employment setting.

The coronavirus pandemic has increased the tension between parties on both sides of the debate over worker classification. 

On March 26, for example, the New York State Court of Appeals reinstated a finding from the Unemployment Insurance Appeals Board holding that couriers who complete deliveries arranged through Postmates Inc.’s online platform are employees of Postmates, and as such, are entitled to unemployment insurance benefits under New York state law.[2] 

Although the Court of Appeals did not mention the coronavirus pandemic in its decision, the New York Attorney General’s Office issued a press release noting that the ruling is “particularly relevant today as New Yorkers and Americans across the nation battle the coronavirus disease 2019 … which has resulted in many workers losing their jobs and turning to unemployment insurance benefits to make ends meet.”[3]

In most jurisdictions, courts and government agencies view a business’s extension of benefits (e.g., paid leave, medical insurance, retirement benefits, etc.) to independent contractors as strong evidence of employee status. Accordingly, although businesses may want to provide greater assistance to independent contractors who use their platforms, some may be reluctant to do so solely because of the current legal framework, which many believe has not yet adapted to the modern workplace.[4]

The Coronavirus Aid, Relief, and Economic Security, or CARES, Act, which President Donald Trump signed into law on March 27, could provide insight into how U.S. labor and employment law, as applied to the gig economy, might evolve. 

Notably, the CARES Act provides for enhanced unemployment benefits for both employees and independent contractors. Among other things, the act establishes a pandemic unemployment assistance program, which provides up to 39 weeks of unemployment insurance benefits to workers not otherwise eligible for unemployment compensation, including independent contractors and self-employed individuals, who are unable to work because of COVID-19.

Although the program is temporary, the CARES Act provides independent contractors and other self-employed individuals with a safety net during the pandemic, without jeopardizing their independence and autonomy. 

Voters in California will have an opportunity to nudge California law in a similar direction later this year. In October 2019, a coalition of businesses and drivers announced a ballot initiative designed to preserve certain gig economy workers’ independence, and establish earnings and benefit guarantees.[5] The initiative, known as the Protect App-Based Drivers & Services Act, will likely appear on the California ballot in November. 

Under the proposal, certain app-based transportation and delivery drivers would necessarily qualify as independent contractors under California law, so long as they retain certain freedoms, such as the right to control the days and times at which they make themselves available to perform services.

Notwithstanding their independent contractor status, covered drivers would be entitled to various benefits, including 120% of the minimum wage, 30 cents per mile for automobile expenses (e.g., fuel, and vehicle wear and tear), health care stipends, occupational accident insurance, automobile accident and liability insurance, and protection against discrimination and sexual harassment. In other words, if approved, the initiative would both preserve workers’ independence and guarantee their entitlement to certain benefits. 

The prospect of extending benefits to independent contractors is not a new concept, and lawmakers in multiple jurisdictions proposed bills with similar objectives long before the coronavirus pandemic. However, the pandemic — and the federal government’s decision to temporarily extend unemployment insurance benefits to independent contractors through the CARES Act — may accelerate the rate at which businesses and lawmakers around the country explore alternative approaches to the traditional framework in their respective jurisdictions.

Accordingly, both businesses and workers — many of whom place a premium on the autonomy and entrepreneurial opportunities available to them in the gig economy — should be mindful that changes could be on the horizon.


Kevin R. Vozzo is a member at Epstein Becker Green.

The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm, its clients, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.

[1] See U.S. Department of Labor, Wage and Hour Division, Opinion Letter FLSA 2019-6 (April 29, 2019).

[2] See Matter of Vega (Postmates Inc. – Commissioner of Labor), 2020 NY Slip Op 02094 (NY Ct. App. March 26, 2020).

[3] See https://ag.ny.gov/press-release/2020/attorney-general-james-scores-major-win-gig-workers-victory-postmates-case.

[4] For example, the dissenting opinion in Matter of Vega acknowledged that “[w]e need a clear understanding, comprehending the modern realities of our rapidly evolving economy, of who should be an employee and who an independent contractor, including whether work relationships should continue to be measured on that dichotomy. It is past time for the law to reexamine the definition of work and its application to different forms of entitlement and obligation.”

[5] See https://protectdriversandservices.com/.

For a reprint of this article, please contact reprints@law360.com.

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‘Uber for evictions:’ Startup raising eyebrows for listing tenant removal gig jobs | WETM

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(NEXSTAR) – The newest option for flexible gig work doesn’t involve driving your neighbors around or delivering food to their homes, it requires removing them and their stuff for failing to pay the rent.

The website for the startup Civvl advertises process server and eviction crew work on a flexible schedule across all 50 states.

The company website describes the work as the “fastest growing money making gig due to COVID-19.”

According to Civvl’s site, the work involves posting eviction notices, serving papers and assisting with foreclosure cleanouts on behalf of banks, landlords and property managers.

While it may seem like a cruel parody of the gig economy in the age of COVID-19, Vice reporter Ashwin Rodrigues dug into the business and says it appears to legitimate based on its national advertising effort and links to slightly more established gig sites. Rodrigues was unsuccessful in attempts to get a response from the company founders.

“Seizing on a pandemic-driven nosedive in employment and huge uptick in number-of-people-who-can’t-pay-their-rent, Civvl aims to make it easy for landlords to hire process servers and eviction agents as gig workers,” wrote Rodrigues, describing the company as, “Uber, but for evicting people.”

An estimated 22 million people lost their jobs in the early days of the pandemic, and while some of those people have been rehired, many have been lost for good. With government agencies and facing unexpected deficits and stimulus efforts gridlocked, it’s likely that the economic fallout will be felt for months to come.

Renters fearing eviction should look at protections instituted at both the state and federal level.

On September 1st, the Centers for Disease Control and Prevention issued a moratorium on evictions that covered roughly 40 million Americans at risk of losing their residences. In order to be covered, the renters are required to sign a document declaring that they don’t make more than $99,000 annually or $198,000 if filing jointly, and that they would likely become homeless if not receiving protections.

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Startup Civvl Blends Gig Economy With Evictions

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The world of startups can sometimes teeter dangerously close to self-parody. For years now, “Uber, but for ____” has worked as shorthand for hundreds, if not thousands, of upstart tech companies. Over the summer, an app allowing swimming pool owners to rent out their pools by the hour got plenty of coverage; a year earlier, that’s the kind of thing that might have popped up in a satirical novel or television show.

Where do we go from here? A new article at Vice offers one suggestion: a startup called Civvl. As author Ashwin Rodrigues describes it, Civvl is “essentially, Uber, but for evicting people.” As apps go, that sounds like something that would’ve been cut from Sorry to Bother You for being a little too on-the-nose.

The Vice article chronicles Civvl’s growth: it’s been posting ads on Craigslist for work all over the country, citing the pandemic and the damage it’s done to the nation’s economy as an explanation for why its services are in demand. “There is plenty of work due to the dismal economy,” one ad states. Among the gigs offered: process servers and furniture movers.

The article goes into even more detail about Civvl’s origins, including the fact that it’s part of a larger gig economy-based company called OnQall — and that people who have downloaded the app have posted angry reviews about being charged a $35 fee to use it. A startup charging people money to find work evicting other people sounds like the stuff of satire; instead, it’s just another sign of 2020 being 2020.

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Code on Social Security, 2020, lays down gig and platform worker benefits

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In a first, the central government has recognised the gig economy gig workers, platform workers, and aggregators under a wide-ranging proposed labour law that it introduced in Lok Sabha on Saturday. The Code on Social Security, 2020, empowers the central government to formulate social security schemes for gig workers and platform workers around life and disability cover, accident insurance, health and maternity benefits, old age protection, creche, and other benefits the government may determine as necessary.

So far, gig workers have not fallen under any legislation and are not entitled to social security schemes. Companies that rely on gig workers, such as Zomato, Swiggy, Ola, and others, consider such workers as independent contractors, and not employees, and hence leave them out of any social security benefits.

The new code said that social security schemes can be can be fully or partially funded by the government, by aggregators, in part by the state government, or funded by CSR, or “any other source”. Aggregators will have to contribute between 1-2% of their annual turnover, excluding taxes or cess payable to the central government, as contribution to social security funds for gig and platform workers. The aggregator’s contribution will not exceed 5% of the amount payable to gig workers and platform workers.

The bill was introduced in Lok Sabha amidst opposition from Congress MPs Manish Tewari and Shashi Tharoor.

How the code defines gig workers, platform workers, and aggregators

A gig worker is a person who works or participates in a work arrangement and earns from such activity “outside of traditional employer-employee relationship”. Separately, the bill also recognises “platform work”, also a work arrangement outside traditional employer-employee relationship “organisations or individuals use an online platform to access other organisations or individuals to solve specific problems or to provide specific services or any such other activities which may be notified by the Central Government, in exchange for payment”. A “platform worker” is a person engaged in or undertaking platform work.

An aggregator is a digital intermediary or market place for a buyer/user of a service to connect with the seller/service provider. The bill classifies aggregators into the following kinds:

  1. Ride-sharing services
  2. Food and grocery delivery services
  3. Logistic services
  4. e-Market place (both market place and inventory model) for wholesale/retail sale of goods and/or services (B2B/B2C)
  5. Professional services provider
  6. Healthcare
  7. Travel and hospitality
  8. Content and media services
  9. Any other goods and service provider platform

Central govt will lay down scheme specifics

The government will also provide for how the scheme would be administered, what the role of aggregators would be, and the agencies for implementing the scheme, and so on. The government will notify when aggregators have to start contributing.

  • Power to exempt aggregators: The central government can exempt an aggregator or a class of aggregators from contributing funds to social security subject to certain conditions. An aggregator having more than one business shall be treated as a separate business entity or aggregator. [Section 114].

Additionally, the central government will provide for the interest rate payable by aggregators in case of delayed payments or failure to contribute to the social security fund. [Section 114]

Toll free centre: The “appropriate Government” “may” set up a toll free call centre or helpline to give information about social security schemes for unorganised workers, gig workers, and platform workers. The centre will also help with processing registrations for gig workers and platform workers, and help enroll them in the social security schemes. [Section 112]

Government also to establish social security fund

Apart from letting the government form schemes [under Section 114], the bill also provides that the central government establish a social security fund for unorganised workers, gig workers, and platform workers [under Section 141]. For gig and platform workers, the funding can come fully or partially funded from the central the government, from aggregators, in part from state government, or from CSR, or “any other source” (as was mentioned above). It can also be made up of the composition of the offences under the bill.

Social security means “the measures of protection afforded to employees, unorganised workers, gig workers and platform workers to ensure access to health care and to provide income security, particularly in cases of old age, unemployment, sickness,invalidity, work injury, maternity or loss of a breadwinner by means of rights conferred on them and schemes framed, under this Code”.

Scheme under ESIC: The central government can also frame a scheme for gig workers and platform workers, and their family members for benefits admissible under the Employees State Insurance Corporation (ESIC). The government will have to specify the contribution, user charges, scale of benefits, and eligibility criteria in the scheme.

National Social Security Board to be formed, will administer, monitor schemes

A National Social Security Board will be formed by the central government, that will give recommendations on formulating schemes for gig workers and platform workers (and for unorganised workers). It will also monitor the schemes, and advise the centre on issues that arise out of the code’s administration. It will review the state-level record keeping and review the expenditure of the fund and account. The labour minister and labour secretary will serve as chairperson and vice-chairperson.

  • Out of the 40 nominated members (by the centre), 19 will be government officers, including from central government ministries and departments, and from state governments. There will be 21 members 7 representatives each from unorganised sector employers, unorganised sector workers, and eminent persons from civil society [Section 6].

This will also be the board for welfare of gig workers and platform workers. Provided while “such Board serves the purposes of welfare of, or matters relating to, gig workers and platform workers”, some of the members will be replaced by [under Section 114] :

  • 5 representatives each of aggregators, and gig workers and platform workers, nominated by the central government
  • Experts nominated by the central government
  • Five representatives of state governments in rotation
  • Joint secretary in the Labour ministry to serve as member secretary

It’s unclear whether there will be two separate National Social Security Boards, one for unorganised workers [Section 6], and another for gig workers and platform workers [Section 114]. It is more also possible that the same board will have different members, when addressing gig and platform workers.

Mandatory registration with Aadhaar

To avail benefits, every gig worker and platform worker has to register for a unique number, “in such form along with  such documents including Aadhaar number as may be prescribed by the Central Government”. This comes with the pre-condition that gig and platforms workers seeking registration are above 16 years of age and has submitted a self-declaration “containing such information as may be prescribed by the Central Government” [Section 113].

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