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Purcell: The fate of gig workers could turn on ballot question | State

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Become an employee with full paid benefits, or remain a mostly independent gig worker? That debate’s raging in California as November’s general election approaches, and its outcome is likely to affect the entire country.

According to The Washington Post, “Uber, DoorDash and other gig economy companies are bombarding TV airwaves, social media and even their own apps with ads and marketing materials promoting a ballot initiative that they say would improve drivers’ financial situation and working conditions but that would also deny them the right to be classified as employees in California.”

Proposition 22 would give gig workers limited benefits and wage and worker protections, but establish them as an independent class of workers — and undo a 2019 California law, Assembly Bill 5 (AB5), that “would guarantee drivers access to the minimum wage, employer-provided health care and bargaining rights.”

I’ve long been self-employed, with the exception of some recent cybersecurity consulting contracts in which I was paid as a full-time employee with benefits, but that’s been my choice.

Being fully self-employed is not for the faint of heart. Besides cybersecurity consulting and writing a newspaper column, I have an apartment-rental business. I recently earned a real estate license and am selling properties, too.

I manage my own invoicing and taxes. I know to the penny — once my CPA explains it to me and I drop whatever mug of coffee I’m holding — how high my income taxes are. Few employees are aware of how much they pay in taxes or what their benefits cost their employers — which would be helpful to know before voting for new government policies that will increase both.

I manage my own health-care insurance, which has gotten plenty expensive in recent years for individuals who don’t qualify for subsidies, in part because of government attempts to expand health insurance to everyone.

But, again, I choose to be self-employed. I like the freedom it provides. But it also makes me keenly aware of the unintended consequences of government regulations and policies.

California’s 2019 AB5 law would require Uber, for instance, to hire drivers as full-time employees with health insurance, paid sick leave and other benefits. Benefits are wonderful, but come at a price.

Uber claims that “if the company were forced to make all drivers across the country employees, for example, it could only support 260,000 full-time roles,” reports The Post. “That compares to 1.2 million active drivers the company was hosting on its app before the coronavirus pandemic.”

Uber also says fares would increase and drivers would be less available and timely — which means you might have to wait a while for your ride home to arrive after a night of enjoying the pub.

What it comes down to is that some politicians believe individuals shouldn’t have the freedom to exchange their skills and services for money from organizations, because organizations take advantage of those individuals. Joe Biden and Kamala Harris support AB5, not the watered-down Proposition 22.

Others think that in a free society, individuals should be able to offer their professional talents to anyone willing to pay for them, and government shouldn’t restrict the terms they negotiate. President Trump’s campaign supports that approach and is critical of AB5 (but has not, to my knowledge, supported Proposition 22).

That’s something else to think about when you vote in November’s election.

Tom Purcell is a Pittsburgh Tribune-Review humor columnist and is nationally syndicated exclusively by Cagle Cartoons Inc. Send comments to Tom at Tom@TomPurcell.com.

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DOL withdraws opinion letters on gig worker arrangement, truck driver hours

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Dive Brief:

  • The U.S. Department of Labor (DOL) withdrew Feb. 19 a pair of wage-and-hour opinion letters issued in 2019 by the agency’s Wage and Hour Division, according to its website.
  • Published in April 2019, the first letter determined that a virtual marketplace company’s on-demand workers were correctly classified as independent contractors under the Fair Labor Standards Act (FLSA). DOL said the letter was withdrawn because it was “based on rules that have not gone into effect.”
  • The second letter, published in July 2019, stated that the hours truck drivers spend off-duty in their trucks’ sleep berths do not qualify as compensable time under the FLSA. This letter was “inconsistent with longstanding WHD interpretations” and “[s]everal courts have declined to follow this letter,” DOL said in giving its rationale for withdrawal.

Dive Insight:

The actions mean both letters “may not be relied upon as a statement of agency policy” as of Feb. 19, per DOL.

While potentially helpful to employers in their compliance operations, opinion letters have limitations, legal sources previously told HR Dive. A letter may not apply to an employer’s particular situation and, as DOL noted, courts may not defer to the agency’s interpretation of a given subject.

Administrations have also varied widely in their approach toward opinion letters in recent years. The Obama administration, for example, favored the use of “Administrator’s Interpretations” over opinion letters, and it also withdrew several letters issued by the administration of President George W. Bush.

Aside from the two letters withdrawn Feb. 19, the Biden administration previously withdrew a batch of letters including one that addressed the ability of employers to maintain a tip pool that includes both tipped employees for whom an employer takes a tip credit as well as nontipped employees.

More broadly, DOL’s decision to withdraw the letter addressing on-demand workers may be representative of the Biden administration’s broader approach to worker classification under federal law. Earlier this month, the agency proposed a delay of the Trump administration DOL’s independent contractor rule, which would have revised its interpretation of the FLSA’s classification provision for determining whether a worker is an employer or independent contractor.

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how the Supreme court ruling will change the gig economy – The Oxford Student

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Image description: A row of cars waits for a pedestrian to cross the street.

On Friday 19th February, the Supreme Court handed down its decision in Uber v Aslam and Others. It held that the group of Uber drivers who had applied to the court were “workers” under the Employment Rights Act 1996.

This was not a legal revolution. Nobody familiar with employment law was surprised at the outcome or the court’s reasoning. The judgment engages serious questions about the future of Uber, gig workers and employment rights in general, but this does not mean that unaccountable judges have taken a major decision on the economy. Instead, they applied the current legislation to the facts and came to a unanimous agreement.

This was not a legal revolution.

The reasoning of the Supreme Court was relatively simple. The Uber drivers claimed they should be classified as “workers”. They argued that Uber had sufficient control over various aspects of their work to confer this status. With this classification comes the possibility of important rights including a minimum wage, working time protections and so on. Uber claimed that these drivers were not workers because the platform merely connected drivers to the passengers (in reality, no Uber user would recognise this description).

The court held that Uber had missed the point. The starting point of the question about whether or not the drivers were “workers” was not the contract between Uber and its drivers, but instead to understand the purposes behind the relevant law, namely, the Employment Rights Act 1996. The purpose of the legislation was to protect vulnerable workers from exploitation by granting them certain rights. If Uber’s argument was accepted, it would be allowed ‘to determine for itself whether or not the legislation designed to protect workers will apply to its drivers.’ Allowing Uber to exempt its drivers from statutory rights, conferred by Parliament, would seriously undermine the meaning and efficacy of the legislation.

Bearing in mind the purpose of the legislation and applying it to the facts, it is hard to see how Uber’s denial that their drivers were their workers matched the reality. Whilst it is true that drivers decide when and where to operate, they do not decide:

  1. The remuneration paid to them, which is determined entirely by Uber;
  2. The contractual terms on which they provide their services;
  3. Their ability to accept or refuse requests for rides (once a driver is logged onto the Uber app);
  4. The type of car used, the location at which they pick up passengers and the passengers’ destination.
  5. Whether they can establish a relationship with the passengers with the hope of providing their services in the future.

The opinion of the court was that these factors, among others, meant the drivers were properly classified as “workers” because Uber exercised a degree of control which was not commensurate with them being self-employed.

Whilst the actual decision of the court directly affects only the drivers in the case, it has implications for Uber’s other drivers and for gig economy workers generally. As Jeremias Adams-Prassl has put it, companies have heard, loud and clear, that “you don’t get to choose whether the law applies to you or not”.

The problem Uber now faces is a difficult one. It can change its practice, giving the drivers more control and making them genuinely self-employed. This may negatively impact the current uniform service that Uber offers, and it was this uniform service which partly influenced the court’s decision. The alternative is to alter the contracts between Uber and its drivers so as to conform to the judgment, which will inevitably lead to higher costs. Either way, the current business model of Uber in the UK will have to change and London is currently one of Uber’s relatively few profitable markets.

This will not be an instantaneous overhaul of the gig economy. However… the precedent has been set, the largest taxi-hailing service in the UK has been stunned, and an update to the labour legislation may be needed.

The wider effect on the gig economy further solidifies this judgment as evolutionary and not revolutionary. Workers at other companies will have to apply to the Employment Tribunal to enforce their rights, before waiting for months to receive a judgment that may be appealed. This will not be an instantaneous overhaul of the gig economy. However, Lord Leggatt’s reasoning in the Uber case is clear and it should be easy to apply; the precedent has been set, the largest taxi-hailing service in the UK has been stunned and an update to the labour legislation may be needed. Other companies employing gig workers will have to review their practices and contracts, but whether they pre-empt any litigation and adapt before being told to do so by the courts is another matter.

Amidst the calls for new legislation to accommodate gig workers, it’s important to remember that legislation cannot predict the future. Workers who have uncertain status and uncertain rights have one form of redress: an application to the courts. It is not ‘judicial activism’ for the court to rule on such matters. Any new legislation will also have to be interpreted by the courts and yet more ways of working may develop which operate in the grey area between ‘gig worker’ and ‘self-employed’. The courts, using Uber v Aslam, will not lose sight of the ultimate goal; ensuring that companies cannot duck legislative obligations.

Image credits: Akash Rai on Unsplash

 

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Gig workers vs. companies like Uber, DoorDash: Why the fight continues

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A bike messenger carries a DoorDash bag during a delivery in New York, Wednesday, Dec. 9, 2020.

Michael Nagle | Bloomberg | Getty Images

Still fresh off of a landmark victory in California, companies like DoorDash, Instacart, Lyft and Uber are preparing to bring their message supporting an independent workforce nationwide.

But the companies will face new hurdles in passing similar legislation outside of California. The tradition of direct democracy through ballot measures that exists in the state is less common elsewhere, meaning companies will have to win over lawmakers, not just voters. And in Washington, they will have to face a new federal administration led by a president who openly opposed the California proposition while on the campaign trail.

Nearly 59% of California voters voted yes on Proposition 22, the ballot initiative supported by the gig companies to maintain their workers’ status as independent contractors, rather than employees. The measure would save the companies costly expenses that come with an employed workforce, but it would also require them to provide some new protections for app-based ridesharing and food delivery workers. Those would include benefits they could carry between apps and guaranteed minimum earnings.

The proposition essentially undermined a California law known as AB5 that took effect in early 2020. AB5 targeted the gig companies by establishing a three-part test to determine if workers should be classified as employees. 

Prior to Election Day last year, Uber and Lyft were still fighting a lawsuit from the California state attorney general in court that claimed the companies illegally maintained their workers as independent contractors under the new law. A judge had granted a preliminary injunction requiring the companies to reclassify their workers, determining that the state had a good chance of prevailing on the merits.

The passage of Prop 22 seems to have reversed the fates of Uber and Lyft in California and reinvigorated the fight for their business models across the country. The gig companies point to the relatively high level of support California voters showed for their ballot measure as a reason why lawmakers in other states should see that the independent model is supported by their constituents. 

But state lawmakers working on bills to protect gig workers in places like Illinois, Massachusetts and New York told CNBC that the outcome in California does not necessarily portend the future in their own states. 

California casts a shadow

State and local lawmakers working on their own legislation to protect gig workers had hoped California would serve as proving ground for some early ideas. But confusing execution of AB5 bred resentment among some workers who were unexpectedly caught up in the new rules.

AB5 painted the workforce with a broad brush, later adding exemptions for industries where its protections weren’t really needed. But that led to lots of confusion for workers who had long been independent, casting a shadow over the legislation. Freelance writers, for example, were furious that their regular contracts had to be cut to remain below the threshold to be considered contractors.

Diane Savino, a New York state senator working on her own legislation to address gig work issues, said that it was a mistake for lawmakers in California cast too wide a net with AB5. 

“Not a single worker’s life was changed the day after AB5 was enacted into law,” she said, making it difficult for Californians to see its benefits when they went to the polls. “It’s hard to extol the virtue of legislation if no one ever sees how it works.”

New York City Council Member Brad Lander had been “optimistic” prior to the pandemic and during the introduction of AB5 in California that his legislature could soon pass new protections for gig workers. But the new reality that took place throughout 2020 seemed to slow down any momentum that existed.

“A lot was riding on California,” Lander said. “There was a lot of optimism that AB5 was going to start the ball rolling, build the momentum for state-level changes.”

Ultimately, inaction benefits the gig companies, Lander said.

“The gig companies don’t have to win by winning. They could just win by stalemating, leaving the current situation,” he said.

But Will Guzzardi, a state representative in Illinois, sees things differently. He said the implementation of Prop 22’s protections for workers in California could give a tangible example of what’s lacking under that model.

“I think in fact the passage of Prop 22 is going to add a lot of momentum to our arguments because we’re going to be able to point to these examples that you’ve seen and say, ‘look what happens when you give the gig employers free rein. Look at the abuses,'” he said. “It’s bad for California but I think it does create an opportunity for us to say, ‘we can’t let this happen here.'”

A third way?

Dara Khosrowshahi, CEO of Uber Technologies, speaks during an Economic Club of Washington event in Washington, DC, June 11, 2019.

Saul Loeb | AFP | Getty Images

Under this model, a third classification group could allow for the flexibility of independent contract work while providing some of the protections of full employment, he argued. Khosrowshahi advocated for portable benefits that could move with workers from one gig to the next.

Some labor law experts have pointed out that nothing in the current law prevents gig companies from taking on part-time employees and providing them with flexible shifts. But the firms have said such a model would be impractical, in part because it would be too difficult to track working hours while maintaining its system built on pairing demand on both sides of the market.

In a statement for this article, an Uber spokesperson said, “Nearly 10 million California voters -including 47% of Democrats- voted to give gig workers what they themselves said they wanted: the choice to keep working independently with new benefits and protections. We hope other states will listen to the voices of drivers and delivery people who strongly support new laws that make gig work better.”

Indeed, a majority of gig workers have said in independent surveys long before Prop 22 came into the picture that they prefer to be independent workers. Those advocating for reclassification, however, point to the large spending power and megaphone of the gig companies.

DoorDash, Instacart, Lyft, Uber and its now-subsidiary, Postmates, poured $200 million into the campaign for Prop 22, while the opposition raised less than $20 million. Plus, the companies had access to voters right through their phones, pushing messages through their apps urging them to vote yes on the proposition and threatening to scale back their services if it did not prevail.

But the companies point back to the broad support Prop 22 garnered.

“Across the country, drivers have consistently said they want to remain independent contractors,” Lyft said in a statement. “That’s why Lyft is advocating for solutions that allow drivers to keep their independence while also gaining historic new benefits like those won with Prop. 22.”

In an interview with CNBC, DoorDash Head of Policy Max Rettig said he cares less about the labels for employment than creating a “legal system that recognizes and enshrines this really unique type of work, that recognizes its value that makes sure that it continues to exist, and that creates benefits on top of that.”

Creating portable benefits that workers can choose from is key, he said, since workers on DoorDash and other platforms often have other jobs that already provide them healthcare benefits, meaning additional offerings from DoorDash could be less meaningful to them. Instead, workers should have the option to put funds toward what they really need.

“The lesson that I would draw about Prop 22 … is this is a proof point that a third way can work and that a third way is ultimately politically popular across the political spectrum,” Rettig said. Rettig added that even though the specific language of Prop 22 won’t necessarily translate exactly to other states or on the federal level, it’s proof that the system can work by keeping the flexibility and benefits workers want.

Instacart similarly said in a statement that it was open to looking at other types of solutions outside of California.

“While Californians passed a first-in-the-nation solution that protected worker flexibility, we recognize there may be other approaches to meet the needs of app-based workers,” the company said. “Many lawmakers across the country are reimagining how to modernize existing labor systems and we look forward to engaging with them on innovative solutions.”

Providing a new model for work is really what will keep workers protected, some advocates say. 

Reverend Kirsten John Foy, founder of Uber-backed social justice group The Arc of Justice and a founding member of the New York Coalition for Independent Work (alongside several gig companies), said whatever the outcome is, he knows the current model of employment has not worked for traditionally marginalized communities. App-based gig work has provided people already working multiple jobs the ability to take on work that has more flexible hours and more agency, he said.

“To say that we can now use a model that has failed our communities in the past to now protect our communities in the midst of economic crisis is laughable,” he said, referring to Black, Brown and immigrant communities.

“Why do we think that the dependency model has served us well enough to continue it or expand it?” Foy said. “It hasn’t. It has served us at the very least marginally. We are running around looking for band aids to problems that are chronic … and the app-based paradigm is a systemic and chronic solution to a chronic problem.”

‘And then the pandemic hit’

The pandemic showed many gig workers and lawmakers just how precarious the entire sector really is. 

“People don’t understand their rights until they’re in a situation where they’re really in a jam,” said Jay Livingstone, a state representative in the Massachusetts legislature who introduced a bill last year that would require gig companies reliant on independent contractors to pay into the unemployment system. Because they currently do not, workers for apps like Uber and DoorDash were left without unemployment insurance early in the pandemic until the CARES Act allowed for them to be included in those payments.

Savino, the New York state senator, said she’s gotten “some of the nastiest commentary” of her political career from independent workers telling her to mind her own business when it comes to regulating their industries.

“And then the pandemic hit,” she said. “And what we saw is that working people who were employed by traditional employers, who had unemployment insurance coverage, had workers compensation coverage, had paid sick days, had the least disruption in their lives were the ones who fared the best in this environment. And the people who had been out there, these gig workers, were the ones who were really in the worst possible position.”

Soon, the emails took a different tone.

“I’m desperate, I can’t get into unemployment, I’m not eligible, I need help,” Savino recalled the messages saying. “And we don’t want to find people in that position. So what we need to do is figure out what makes sense in this modern world of work. Because no matter what we do, here’s one thing we know: People aren’t going back to the way things used to be.”

Livingstone said he remains concerned about “validating [the] business model” of gig companies, but he decided that the best way to get relief to workers would be to “avoid that dispute of what exactly is the employment relationship.” 

“There’s a more immediate concern of if there is another downturn or if this downturn continues and federal programs expire, how is the state going to provide for these people?” he said. “And as more of the economy is shifting to an independent contractor model, whether legally or illegally, it’s going to be more and more of an issue when there is a downturn moment like this.”

What’s next

While California provided an early win for the gig companies, it’s clear there’s still a long road ahead.

On his campaign website, President Joe Biden promised to “put a stop to employers intentionally misclassifying their employees as independent contractors,” including by enacting laws that would make misclassification subject to greater penalties. 

Biden openly advocated against Prop 22 and nominated a former union leader, Boston Mayor Marty Walsh, to lead his Labor Department. If confirmed, Walsh would have to figure out what to do about a rule the Trump administration created at the end of its term and set to go into effect in March. The “Independent Contractor Status Under Fair Labor Standards Act” rule would make it easier for gig companies to argue that their workers are truly contractors rather than employees. 

On Inauguration Day, the Biden administration froze the rule for regulatory review, delaying its effective day to May 7. The DOL could still further delay or take action to roll back the rule after going through mandatory processes.

In Congress, Democrats reintroduced the PRO Act, a broad labor rights bill, earlier this month that would establish an ABC test to determine worker classification at the federal level, similar to California’s AB5. 

And in New York, a federal court ruling in July determined Uber and Lyft drivers are eligible for unemployment payments from the state, though the judge also said the companies had made it unfairly difficult for drivers to receive those benefits. Savino said New York’s court rulings mean the state has a different dynamic from California’s.

“We could do it the easy way or the hard way,” she said. “The easy way is let’s come up with a legislative framework that we all understand and makes sense for workers. Or we could do it the hard way. We could just hand you [the gig companies] a bill for past due insurance premiums. Which would you like?”

Groups advocating for employment status for gig workers will likely look to where messaging worked and fell short in the California campaign. Will Coleman, CEO of rideshare service Alto, which employs W-2 workers, said he’s felt that the potential benefits to consumers of an employed workforce has been missing from the narrative.

“I think we need to do a better job of really articulating the consumer trade-off in addition to the employee trade-off,” Coleman said. Those could range from more consistency in service to a quicker ride with fewer cars on the road to lower emissions. 

“They may have won Prop 22 in California, but they didn’t win the war,” Savino said. “And it’s in their interest to do it the right way in New York.”

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