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Labor Groups, San Francisco Push Bogus Taxpayer-Funded Survey to Support Anti-Gig Law

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A liberal advocacy group’s own researchers raised red flags about a taxpayer-funded study used to justify a union campaign against the California gig economy.

The San Francisco Local Agency Formation Commission helped fund a survey conducted by Jobs with Justice, a left-wing advocacy group largely funded by labor powerhouse Service Employees International Union (SEIU). The survey reported that 71 percent of gig workers in the San Francisco area work more than 30 hours a week and receive “poverty level” wages. According to the group’s website, Jobs with Justice planned to use the survey to “make policy recommendations and support organizing” among gig workers. The survey’s summary page emphasizes the need to enforce anti-gig labor laws.

Left-wing labor group Gig Workers Rising has used the survey to rally in support of California Assembly Bill 5, a controversial law limiting companies’ ability to classify workers as independent contractors. The group called the study “the most comprehensive survey of actual work done” in the gig economy. Internal communications obtained by the Washington Free Beacon, however, reveal that the survey was pitched to potential financial backers as “not representative,” and an academic researcher involved in the study voiced concerns regarding Jobs with Justice’s recruitment tactics.

While the study initially called for 1,200 survey respondents, Jobs with Justice narrowed the scope following the spread of coronavirus, pivoting to an online survey focusing on the pandemic that aimed to reach just 500 respondents.

“The goal behind an online survey of 500 workers, while not representative, would be to turn around data quickly … in order to inform current policy discussions,” an internal description of the updated survey obtained by the Free Beacon said. It went on to reach just 219 respondents.

Pacific Research Institute senior fellow Wayne Winegarden criticized the study’s methodology, calling the survey’s results “meaningless.”

“The survey is not representative of the intended population with the original goal of 500 responses,” Winegarden told the Free Beacon. “The study did not reach this amount, having only 219 responses. So, in no uncertain terms do these results represent the view of gig workers.”

The study also downplayed Jobs with Justice’s involvement in an attempt to bolster its academic appeal. While the published survey lists UC Santa Cruz professor Chris Benner as the project’s lead, Jobs with Justice executive director Kung Feng is described as “leading” the project in internal emails obtained by the Free Beacon. The emails also show that the online survey was written by the group’s research director, Erin Johansson. Benner merely “edited the wording in a few questions,” according to the internal communications.

Benner, who did not return request for comment, also raised concerns regarding Jobs with Justice’s incentive plan to provide a gift card to all survey respondents.

“One, I’m not sure where the budget for that comes from, and two, with an online survey, it leaves open lots of opportunities for people to game it,” Benner wrote in a March 17 email to Johansson.

Following the academic’s objection, Gig Workers Rising continued to advertise the survey in an April tweet by saying respondents would “get a $10 gift card.” A Jobs with Justice invoice for the study listed $45,181 in “survey costs,” including “incentives and app payments.” While the published study lists the gig economy companies each of the survey’s 219 respondents work for, internal data obtained by the Free Beacon shows that 91 of the respondents did not report their company, suggesting some may have been non-gig workers who completed the survey for the incentive.

The invoice was sent to San Francisco Local Agency Formation Commission executive officer Bryan Goebel, who solicited funding for the study on Jobs with Justice’s behalf, internal emails show. Reached for comment, Goebel said the coronavirus-related study “was never intended to be” representative and that $50,000 in taxpayer funds were used only for the “initial pilot survey” launched prior to coronavirus. The final study combined the results of both the pilot survey and coronavirus-related survey, a methodological red flag, according to Winegarden.

“In the midst of the survey being in the field, they stopped the survey, reworked it to account for the coronavirus, and then continued with the survey,” Winegarden told the Free Beacon. “These results from before and after cannot be compared to one another.”

Goebel also told the Free Beacon that Benner “was indeed the overall lead” on the study, adding that Jobs with Justice simply “led the outreach.” He did not address the fact that the coronavirus-related survey was drafted by Jobs with Justice.

Charlyce Bozzello, a spokeswoman for labor watchdog the Center for Union Facts, said activist front groups often misuse research to advance their ideological goals.

“For years, unions have used flawed ‘research’ to support their organizing campaigns, so it’s no surprise to see Jobs with Justice involved in this project,” she told the Free Beacon. “What is surprising is that the city of San Francisco and UC Santa Cruz would lend their names to this charade.”

Other gig economy studies dispute Jobs with Justice’s findings. A Cornell University study published Monday found that 96 percent of Uber and Lyft drivers in Seattle drove less than 40 hours a week. It further found that 92 percent made more than Seattle’s minimum wage of $16.39, with the media driver earning $23.25 per hour after deducting expenses.

Jobs with Justice and Gig Workers Rising did not respond to requests for comment.

Collin AndersonCollin Anderson is a staff writer for the Washington Free Beacon. He graduated from the University of Missouri, where he studied politics. He is originally from St. Louis and now lives in Arlington, VA. His email address is anderson@freebeacon.com.



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FlipServe Cloud Gig Model Seeks to Disrupt Traditional MSPs

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A startup called FlipServe has launched a cloud IT services platform that seeks to disrupt the traditional MSP (managed IT service s provider) market. The goal: Blend one-demand talent and cloud technologies to simplify IT services delivery for end-customers.

Similar in some ways to Uber’s on-demand talent, FlipServe’s business takes a page out of the gig economy playbook by focusing on outcome-based services delivery via on-demand access to a certified global workforce and emphasis on meeting service-level agreements, according to the statement.

Rather than paying for IT services based on output, FlipServe users pay for IT services based on measurable outcomes or business impacts they can objectively assess, the company says.

FlipServe Harnesses On-Demand IT Services Talent

The FlipServe platform will also provide opportunities to gig employees globally, the company said. Information about FlipServe’s IT associates such as their credentials and ratings will be provided to the customer. Once a task is assigned to a FlipServe associate, their progress will be tracked, and all of their activity from start to finish will be recorded for full transparency.

In some ways, the effort sounds similar to WorkMarket, the former OnForce, and other on-demand IT platforms that attempted to align IT talent with end-customer needs.

On FlipServe platform, users can select the service they want to accomplish along with its associated SLA’s and KPI’s, view the associated costs, track the progress of the service, and pay only after the service is completed to satisfaction. All services on the FlipServe platform are non-contractual.

Here’s how FlipServe works:

  1. Select a Service: The customer selects a service with clearly defined SLA’s and KPI’s. Multiple services can be purchased for a single server (e.g. monitoring, patching, and upgrade).
  2. Select Service Options: The customer chooses from three service options: Silver, Gold, or Platinum. The customer also has the option to choose hours of service for each server to minimize cost.
  3. Service Transparency: Cost associated with selected options will be shown. Customers have the ability to adjust service options to control costs. Once the selected service and service options are confirmed, a FlipServe-Certified cloud professional will be engaged, and the customer dashboard will be updated with progress on both desktops and mobile smart devices for complete transparency.
  4. Simplified Payment: Customers only pay based on the condition that the work meets defined SLAs. If work does not meet SLA, FlipServe will credit the customer’s account.

Infrastructure Services as a Service

Instead of focusing heavily on classic PC and server support, FlipServe bills itself as an Infrastructure Services as a Service (iSaaS) company offering managed services for Microsoft Azure, Amazon Web Services (AWS), and Google Cloud, according to the statement.

FlipServe’s stated mission is to democratize cloud through unparalleled transparency, flexible service offerings, non-contractual agreements and outcome-based work. Available services include cloud subscription management, day-to-day management of cloud operations, performance management, spend management, high availability and disaster recovery.

FlipServe claims to have onboarded roughly 120 customers and 60 terabytes of data so far, according to the company’s website. Still, FlipServe did not disclose whether the company’s underlying platform is home-grown or third-party software. Also, the company did not disclose how it’s funding business development.

Additional insights from Joe Panettieri.

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2021 01 20 US DOL Issues Final Rule to Simplify Analysis of Workers in Gig Economy

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A critical and growing issue facing gig economy platforms and other similar business models is the failure of existing laws to reflect the realities of a modern, adapting workforce. In response to calls for action, the United States Department of Labor recently published a final rule providing a simplified framework to determine if a worker is an “employee” or an “independent contractor” under the Fair Labor Standards Act (FLSA). The final rule, scheduled to take effect on March 8, represents the latest DOL endorsement of the gig economy platform model.

Background

In its final rule, the DOL observed that the FLSA does not define the term “independent contractor.” Instead, the DOL long ago adopted the economic realities test to determine proper worker classification. The economic realities test ultimately evaluates the extent of a worker’s economic dependence on the putative employer: the more dependent the worker is on the business, the more likely he or she could be considered an employee of that business.

The DOL noted that there has been significant confusion regarding the meaning of economic dependence and increasing legal uncertainty against the backdrop of increasingly flexible work arrangements. The DOL therefore promulgated the final rule to provide greater clarity on its own worker classification test under the FLSA.

DOL provides five factors to determine a worker’s ‘economic reality’

In its effort to clarify the confusion caused by the ever-changing meaning of the “economic reality” of a worker’s engagement, the DOL provided five factors to assess a worker’s economic dependence. Although the factors below are not exhaustive, and no single factor is dispositive, the DOL has clarified that the first two factors “are the most probative as to whether or not an individual is an economically dependent ‘employee.’” If these two factors point to the same conclusion, the remaining three factors need not be analyzed in making the classification determination.

  1. The nature and degree of the worker’s control over the work. This factor examines whether the worker exercises substantial control over key aspects of the performance of the work, such as scheduling the hours worked, selecting projects and/or being able to work for competing companies. The DOL noted, however, that even if a business required a worker to comply with specific legal obligations – such as satisfying health/safety standards and carrying proper insurance, or contractually agreed-upon deadlines or quality control standards – this alone would not constitute “control” for the purpose of this factor.
  2. The worker’s opportunity for profit or loss. This factor focuses on the extent of the worker’s opportunity to earn profits or incur losses based on (i) his or her own managerial skill, business acumen or judgment, and (ii) management of his or her investment in or capital expenditure on helpers or equipment or material to further his or her work. By contrast, if a worker “is unable to affect his or her earnings or is only able to do so by working more hours or faster,” the more likely he or she is classified as an employee under the FLSA.

If these first two factors conflict, however, the following three remaining factors can serve as further guideposts for proper classification.

3. The amount of skill required for the work. This factor examines whether the individual’s work requires specialized training or skill that the business does not provide.

4.The degree of permanence of the working relationship. This factor examines whether the relationship is impermanent (i.e., finite or sporadic) or permanent (i.e., indefinite or continuous). If a worker’s engagement falls into the former category, this would be indicative of an independent contractor relationship.

5. Whether the work is part of an “integrated” unit of production. This factor focuses on the extent the work is a component of the business’s “integrated production process” for a good or service. Significantly, in incorporating this rule, the DOL rejected the prior test’s assessment of a worker’s “integrality” – which focused solely on a worker’s “importance” or “centrality” – because it found that identifying the “‘core or primary business purpose’ is not a useful inquiry in the modern economy.” Instead, under this factor, the worker is not likely to be found to be an employee if they are not “integrated” into the business’s production process, which is composed of operational subparts working in coordination towards a “specified unified purpose.”

Also noteworthy, the DOL announced that offering health, retirement and other benefits to independent contractors in and of itself is not “necessarily indicative of employment status.” However, the DOL cautioned that offering the same benefits to both independent contractors and employees poses misclassification risks.

Will the final rule take effect?

This remains to be seen. While the final rule is scheduled to go into effect on March 8, 2021, the future of the final rule remains uncertain because the incoming Biden administration is expected to issue a directive to all agencies to delay the effective date of any pending regulation that is not yet effective. Further, under the Congressional Review Act, the Democratic majority in the Senate and House could rescind the final rule with presidential approval.

What does this all mean?

Unlike the DOL’s 2019 Opinion Letter supporting the gig economy, if implemented, the final rule constitutes binding authority that stands to alter how the DOL and adjudicative bodies analyze and ultimately classify workers under the FLSA. Although its practical impact can be limited by state laws with different and potentially more rigorous standards, the final rule represents another positive development for gig economy platforms and others businesses hampered by worker classification tests that fail to reflect, as the DOL describes it, the modern economy.

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The gig economy – a new category of worker on the horizon?

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Over five years ago, in 2015 we wrote a thought piece about the “gig economy” and where it might be headed. Given the gig economy was then only emerging as a part of the broader economy, the impacts, positive and negative, were not yet known. However, we observed that there was potential for workers and employers to successfully leverage technology as a complement or substitute for traditional ways of working.

In 2017, our colleague Ben Dudley, wrote about the continual rise and development of the gig economy. He observed that employment and industrial laws were slow to catch up with these developments but sophisticated businesses would be looking at their structures and operations to stay ahead of the movement.

Now, we come to the start of 2021.

The global pandemic has put a spotlight on gig work in a real and tangible way. On the one hand, platforms have helped us manage during lockdowns, supporting businesses to pivot to online delivery, providing work and allowing those in self isolation to access necessities. At the same time, tragically, a number of food delivery workers lost their lives on the roads, prompting the New South Wales Government to set up a taskforce to investigate the deaths and assess how to improve the safety of such workers.

The fact that contractors generally do not receive paid sick or carer’s leave was also highlighted in the pandemic response. It was reported that a number of ride-share and food delivery platforms moved to cover their partners’ lost income when required to self-isolate – to the benefit of both the individuals and their communities fighting a highly contagious virus. However, those platforms would understandably have been concerned about providing benefits associated with “employment” to those workers and potentially increasing their risk of misclassification claims.

In short, gig work and platforms are continuing to gain traction as a part of the economy, but governments have only recently recognised that the law must evolve to keep pace with them.

In the Report of the Inquiry into Victorian On Demand Work issued in June 2020, Chairperson Natalie James found a “compelling case for change” in relation to the regulation of gig work. The Inquiry’s recommendations included:

  • codifying work status in the Fair Work Act (rather than relying on “indistinct” common law tests),
  • allowing gig economy workers to bargain collectively with platforms, and
  • providing streamlined advice around work status.

The Victorian Government closed public consultations about the Inquiry’s recommendations in October 2020. It is now considering feedback on the Report.

Where to from here?

The correct classification of gig work is critical for both employers and workers because it determines the application of a broad range of entitlements and benefits. However, that issue is inherently uncertain in “borderline cases” where there are factors pointing in opposing directions.

The Fair Work Act currently applies in the main to employees, but leaves the definition of employee versus independent contractor to the common law. This requires employers to weigh up a series of factors, none of which are conclusive. In one case[1], the application of this multi-factor test resulted in a young backpacker engaged by a labour hire company to work on construction sites in Perth being found to be an independent contractor – an outcome which was queried but not overturned on appeal. One judge who sat on the appeal observed:

“It may be thought that the prevalence of trilateral relationships, the evolution of digital platforms and the increasing diversity in worker relationships has evolved in a way that the traditional dichotomy may not necessarily comprehend or easily accommodate“.

The “traditional dichotomy” between employee and independent contractor in the common law was once described by the High Court of Australia as “too deeply rooted to be pulled out”. However, with the growth of the gig economy and other innovative approaches to work it is now likely that the law will change to (at the very least) allow the provision of employment-like benefits to gig workers. There is a push to take the more radical step of defining “employment” in legislation to expand those rights and protections to gig workers. This would represent a marked shift in the law as we know it. Arguably, it could undermine the value of gig work – to provide workers with greater flexibility than traditional employment (for instance the right to set their own schedule and to accept or reject work). It would be preferable for a national approach to be taken rather than a state by state, piecemeal approach if this can be achieved. Whatever comes next, the gig economy will certainly be one of the most interesting legal and policy challenges for employment and industrial relations in 2021 and beyond.

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