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California State Contract Violates New Gig Worker Law, Lawyer Says

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California’s Employment Development Department (EDD) has hired outside independent contractors to help process unemployment claims, a lawyer says—thus breaking the state’s own AB 5 law requiring them to be classified as employees.

Los Angeles-based attorney Michael Alfera told The Epoch Times that the contractors are being funneled through consulting company Deloitte, then subcontracted to Tyme Global Technology, to hire contractors for the EDD.

The AB 5 law, which went into effect Jan. 1, prohibits contract work unless it meets certain benchmarks, commonly known as “the ABC test.” Contractors must be free from the control and direction of their employers, performing work outside the usual course of the company’s normal business, and customarily working in an independently established trade similar to the company’s business in order to pass the test.

Tyme Global’s independent contractor agreement violates the ABC test, Alfera said. The contract—a copy of which was obtained by The Epoch Times—specifies times the contractors must work, the number of hours they must work each week, the number of breaks they must take, and specific work orders that must be met.

The Epoch Times reached out to the EDD and Tyme Global Technologies for comment, but did not receive a response by press deadline.

Alfera said the EDD is hiring contractors to weather the upswing of demand due to COVID-19 to avoid keeping a larger workforce on hand full time.

“Ultimately, that just becomes cost prohibitive for any business. You can’t keep more employees on staff than you need in normal times—and the EDD knows that as well,” Alfera said.

The EDD has processed nearly nine million claims since mid-March between the regular Unemployment Insurance program, extensions, and the separate Pandemic Unemployment Assistance program, according to a July 23 news release—more than the entire highest year of the Great Recession, 2010.

Alfera called the EDD utilizing contractors for call centers while simultaneously flagging businesses for hiring gig workers “hypocrisy.”

“We have the state of California that’s coming forth with this law and saying everybody’s got to be an employee, because employers need to treat their employees better and it’s wrong. And then, at the same time, during a pandemic when the Employment Development Department needs to hire extra workers to deal with the upsurge in unemployment claims, it goes ahead and does the same thing,” he said.

EDD is hiring independent contractors to audit companies hiring other independent entities, Alfera said, calling the practice “fighting fire with fire in the worst possible way.”

Over two million Californians had filed claims for Pandemic Unemployment Assistance by July 4, according to the Department of Labor. Alfera believes the EDD is having trouble processing and filing the claims due to the AB 5 law.

“I really do believe that this independent contractor issue with AB 5—the very law that the EDD is supposed to enforce—is one of the major reasons why we’re seeing delays in fulfillment of unemployment claims,” said Alfera.

Many independent contractors are unsure about the law’s exemptions; whether they apply to the EDD could be challenged in court, Alfera said. Though there is a general legal principle that governmental agencies are not subject to general statutes unless expressly specified, a part of AB 5 “expanded the definition of employee to include all government workers,” Alfera said.

“I feel like I’m in a fun house with a bunch of mirrors. What if a contractor goes unemployed in six months, and needs to file for unemployment to the EDD, and reports to the EDD that the EDD was its employer, and needs the EDD to tell EDD to give that person unemployment insurance?”

Said Alfera, “That’s what AB 5 creates.”

The AB 5 law requires companies to hire workers as employees, with corresponding benefits and tax payments, rather than classifying them as freelance contractors. Opponents say the law has destroyed the livelihoods of thousands of independent gig workers since its inception.

Alfera said the law is especially unfair to the thousands of gig workers needed in online tech and medical industries who are losing business to out-of-state contractors.

“This law could be giving contract work to potentially thousands of Californians who are stuck at home in front of the computers, with time skills and an internet connection on their hands. But our own state created a law that forces it to hire contractors out of state,” he said.

The EDD has used independent contractors from Deloitte previously, according to Alfera. He told The Epoch Times in June that the EDD had hired freelancers through Deloitte to work in their call center as part of an $11 million deal. The earlier contract ended on June 20.

Calls to suspend the AB 5 law have been introduced on the state Assembly floor, but none have passed.

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CERB 2.0? Trudeau Hints at New Benefit for Gig Workers

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The CERB may be winding down, but that doesn’t mean out-of-work Canadians can’t still get benefits.

That’s the takeaway from a recent statement by PM Justin Trudeau, who announced that his government had been working on a “21st century EI system.” In covering Trudeau’s statement, the Canadian Press reported that the revamped EI system would replace the CERB, bringing more Canadians under coverage — including one group of Canadians who had been sorely neglected until the CERB came into effect.

An “EI-like benefit” for gig workers

One of the main beneficiaries of Trudeau’s “transitional EI-like benefit” would be gig workers. Under current rules, gig workers are considered self-employed. That means that they’re opted out of EI by default. Gig workers can indicate that they want to pay in to EI, but usually don’t. The self-employed pay twice the usual rate on CPP; passing on EI premiums is a way to partially offset that extra tax. As a result, many self-employed Canadians aren’t covered by EI.

Trudeau’s new EI benefit could remedy that. While details on the plan are scarce so far, it appears that there will be an interim benefit to cover non-EI eligible Canadians, followed by a totally revamped EI system. It’s hard to predict exactly what the latter will consist of, but the former will probably be regular EI with looser eligibility requirements.

Why this is good news

While many out-of-work Canadians may bemoan the loss of the $2,000 a month benefit, it may ultimately be a good thing. The CERB has always been beset by concerns about eligibility and fraud. Many Canadians have reported being “scared” to spend their CERB money, and ominous CRA statements probably haven’t helped with that.

Getting back to EI could therefore be a welcome development. While the average monthly amount isn’t as high as the CERB, EI has fewer eligibility questions hanging over it. As a result, individuals receiving EI may feel more free to spend it.

For example, if you received $1,000 a month in EI, you could spend that money on investments. If you took $1,000 worth of EI and spent it on shares in Fortis, you’d be within your rights to do so. After all, it’s a program you paid in to, and if you’ve been laid off, you’re eligible to benefit from it. It doesn’t matter how you spend the money.

With the CERB, it’s not quite so simple. There’s been a big question mark about eligibility ever since the program began, and spending CERB money on non-essential items has been frowned upon. If you took $1,000 worth of CERB money and bought FTS shares with it, that wouldn’t make you ineligible. However, it could be inconvenient if the shares declined in value, and you were later forced to repay the CERB. With EI, you always know that you’re entitled to the money you’re getting, as applications are pre-screened for eligibility. As a result, you can sleep soundly no matter how you spend the money — be it on groceries, Fortis shares, or anything in between.

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Observers call on National Wages Council for more aggressive wage support, office to look after gig workers, Manpower News & Top Stories

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In September and October 1998, as the full impact of the Asian financial crisis on Singapore’s economy became more apparent, the National Wages Council (NWC) was convened a second time that year to revise its annual wage guidelines.

Its original guidelines, issued in May, had called for wage restraint and non-wage cost-cutting measures, as the Trade and Industry Ministry forecast economic growth for the year of between 2.5 per cent and 4.5 per cent.

But as the crisis deteriorated, the growth forecast for the year was revised downwards in June to between 0.5 per cent and 1.5 per cent.

The NWC in November proposed that in addition to a 10 percentage point cut to employers’ Central Provident Fund (CPF) contributions recommended by the Committee on Singapore’s Competitiveness, total wages for 1998 be cut by 5 per cent to 8 per cent, as compared with 1997.

This year, with Singapore headed for its worst recession since independence due to the Covid-19 pandemic, observers suggested that the council consider calling for more aggressive wage support, an office to look after gig workers and pay hikes for low-wage staff.

Manpower Minister Josephine Teo said in a Facebook post yesterday that the NWC will reconvene this year. The council made its annual wage guidelines in March this year.

Institute for Human Resource Professionals (IHRP) chief executive Mayank Parekh said that without the prospect of a near-term recovery of demand, there could be more job losses and wage cuts on the horizon.

“It is timely for the NWC to review its earlier recommendations and seek support for additional measures to safeguard jobs and enhance employability,” he said.

“More aggressive wage measures, higher support for job redesign and re-training and additional guidelines on retrenchment payments could be considered.”

Singapore Human Resources Institute president Low Peck Kem suggested the council look at whether the Jobs Support Scheme of wage subsidies can be extended, as well as the need for funding to facilitate job redesign for future-ready jobs.

It could also propose the setting up of a tripartite office to help and protect gig workers, who tend to fall under the radar because they do not have employers, she said.

National Trades Union Congress (NTUC) assistant secretary-general Zainal Sapari said the NWC should continue to push for wage increases for low-wage workers, even amid the pandemic.

“Instead of recommending a quantum wage increase, I would like NWC to set a long-term target of where wages of these vulnerable low-wage workers who are performing essential services should be at. This could then act as a guideline for the wage increases and the necessary productivity initiatives that must be embarked upon to make it sustainable,” he added.

This is only the fourth time since being set up in 1972 that the council has been convened twice in the same year.

Aside from 1998, it also released revised recommendations in 2001, after the Sept 11 attacks on the United States, and in 2009 amid the global financial crisis.

In January 2009, the council updated its guidelines to recommend – among other things – that companies work with unions and workers to manage costs, such as through wage freezes or wage cuts, to save jobs.

The NWC had in March this year considered whether to recommend reducing CPF contribution rates to cut wage costs.

But Permanent Secretary for Manpower Aubeck Kam had said then that as the Jobs Support Scheme wage subsidy far exceeds the employer CPF contribution rates of up to 17 per cent, the Government did not feel that a cut to the rate was warranted.

DBS Bank senior economist Irvin Seah said that short of extending the JSS payouts for worst-hit industries, a temporary cut in employer CPF contribution rates could be an option the NWC considers.

But he cautioned that such a move would need to be weighed very carefully. “It would be a reduction in workers’ savings, on top of already widespread wage cuts.”

Amid reports of major retrenchment exercises in recent weeks, Mrs Teo also commented yesterday on the Fair Retrenchment Framework proposed by the NTUC last month. It includes protecting the Singaporean core of the workforce, while foreigners with special or critical skills could be retained as well.

She said in her Facebook post that the Singapore National Employers Federation will consider the framework and discuss a mutually acceptable way forward with NTUC.

In the meantime, the Manpower Ministry will continue its work on the Fair Consideration Framework, she said, adding that there would be updates soon.

“Tripartite partners are aligned on one thing – the need to support our workers and businesses through the storm brought about by Covid-19. Much work ahead,” she said.



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Trudeau says feds will create EI-like benefit for gig, contract workers – Red Deer Advocate

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OTTAWA — Prime Minister Justin Trudeau says the government plans to move out-of-work Canadians into the employment insurance system and provide parallel support for millions set to exhaust emergency pandemic aid who don’t have EI to fall back on.

The $80-billion Canada Emergency Response Benefit is set to wind down over the coming weeks, with those who are EI-eligible to start drawing assistance that way.

Speaking this morning, Trudeau said many people who don’t qualify for the program, such as gig or contract workers, will gain access to a transitional, parallel benefit that is similar to EI.

It will also include access to training, and the ability to work more hours without having as steep a clawback in benefit payments, Trudeau said.

He said more details will be unveiled at a later date.

The most recent figures on the CERB show that as of July 26, the government had paid out $62.75 billion in benefits to 8.46 million unique applicants since its launch.

About half those costs have gone to EI-eligible workers, leaving millions who don’t pay into EI unable to access the program once the emergency benefit ends.

“No one will be left behind,” Trudeau promised.

The economy started to reawaken after severe lockdowns in March and April as Statistics Canada reported the gross domestic product grew by 4.5 per cent in May.

The average economist estimate was for a 3.5 per cent increase in gross domestic product for May, according to financial data firm Refinitiv.

The national data agency said rebounds in May were seen across multiple industries with the easing of COVID-19 restrictions. Retail trade registered a 16.4 per cent bump to mark its largest monthly increase since comparable readings began in 1961.

Motor vehicle and car sales contributed the most to the retail growth. Statistics Canada says the sector would have grown by 11.4 per cent had they been excluded from calculations.

In a preliminary estimate for June, the agency said the economy continued to pick up steam, with a five-per-cent increase for the month.

Despite the two months of growth after two months of negative readings, Statistics Canada’s preliminary estimate is that economic output contracted by 12 per cent in the second quarter compared to the first three months of 2020.

The June and second-quarter figures will be finalized late next month.

CIBC senior economist Royce Mendes said in a note that a 12 per cent drop in the second quarter would be the largest decline ever by a long shot, even if such a decline is expected.

The Bank of Canada’s most recent economic outlook expected the second quarter of 2020 to be worse than the first, estimating a three-month drop in GDP of 14.6 per cent.

Overall, the central bank expected an economic contraction of 7.8 per cent this year, warning that after an immediate turnaround as restrictions eased, a recovery would be long and bumpy with some businesses and jobs not surviving the downturn.

Statistics Canada says economic activity still remained 15 per cent below pre-pandemic level despite the gains over May as business activity was slowly allowed to resume.

This report by The Canadian Press was first published July 31, 2020.

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