The number of Americans seeking unemployment benefits recently fell to 751,000 according to the U.S. Labor Department. Some of the decline in unemployment was attributable to people finding new jobs or being recalled to their old ones. However, much of the decline was due to workers becoming self-employed. Today’s 7.3 million unemployment rate in the U.S. would be considerably higher were it not for the fact that many workers have left the traditional job market and headed out on their own as members of the growing self-employed labor force.
According to the Bureau of Labor Statistics, about 15 million Americans, representing over 10% of the population, reported they were “self-employed in 2015.” Five years later one in every six new jobs created since the pandemic devastated the economy in March are reported as “temporary,” and many of them are self-employed.
For years, most the self-employed included lawyers, actors, artists, independent businesspeople, and those operating their own businesses. The recent growth in the self-employed work force is owed to firms like Lyft and Uber, and others. These “gig” workers tend to value their independence and do not wish to be tied down to specific working hours and other restrictions imposed by employers. Some undertake their gig jobs to supplement the income they receive from more traditional employment.
Of course, there are costs associated with being a gig worker. They are not eligible for workers’ compensation. They must declare their own income and taxes are not withheld placing a significant burden on gig workers to maintain their own business records and tax payments. They receive no employee benefits such as health care, vacation time or sick pay. While gig workers often tout the freedom that self-employment affords them, they clearly lack the benefits many working Americans enjoy.
The gig economy can be an important safety net during recessions, especially ones that develop rapidly like the pandemic-forced recession that began last February. Unemployed people who want to work can shift rapidly into gig jobs and make up for the loss of more structured employment. Many of them find they enjoy the flexibility that gig employment offers.
A reoccurring issue for gig workers is their lack of employment benefits. This was one of the key bones of contention during the recent California election. Proposition 22 asked Californians if gig workers should be allowed to remain independent contractors. Over 60% said yes and by doing so defied organized labor’s strategy to unionize gig workers. Uber, Lyft, DoorDash, and similar firms mounted a major public relations campaign in favor of Proposition 22. It eradicated the impact of Assembly Bill 5 passed by the California Assembly in 2018, requiring ride-sharing firms to hire drivers as full-time rather than contract employees. According to the companies the benefits that the firms would be required to cover would add 30% to the cost of a ride share.
Now that Proposition 22 has passed several ride sharing executives, including Logan Green, CEO of LYFT, have called for more balanced discussions with ride-sharing workers about ways to ameliorate their concerns including providing stipends to help cover health and auto insurance for drivers. The reasoning is that devoid of legislative mandates the companies and their independent contractors can now develop strategies to effectively benefit drivers and customers thereby assuring continuing success of both.
Overall, the flexibility that gig economy gives to workers as well as the cushion it offers the entire economy in good and bad times makes them an essential part of the job market in the U.S. today. It promotes entrepreneurship as suggested by the fact that when the demand for ride sharing services declined earlier this year due to the pandemic, that many drivers began delivering food and groceries. The gig economy also employs workers who otherwise might be unemployed. And it provides a safety-valve in a dynamic and changing global economy driven by technology and entrepreneurship. Florida seems to understand the importance of gig workers and has encouraged their growth.
It is heartening that Californians approved Proposition 22. If California, one of the most liberal states in the country, overwhelmingly agreed that greater labor flexibility and innovation is a key to future citizens’ well-being, then perhaps more states will follow.
Micahel A. MacDowell is President Emeritus of Misericordia University and a Director of the Calvin K. Kazanjian Foundation. He lives in Estero, FL.
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Prop 22 should influence states to provide benefits to gig-workers
- Californians across the political spectrum voted to pass Proposition 22, affirming the importance of flexible work and the need to include new benefits and protections for gig-workers.
- It is time to push forward, focused on better, permanent, collaborative solutions for millions of workers across the country.
- Tony Xu is the co-founder and CEO of DoorDash.
- This is an opinion column. The thoughts expressed are those of the author.
- Visit Business Insider’s homepage for more stories.
2020 has been a year of enormous upheaval. So many of the decisions we faced have been incredibly consequential, shaping the kind of future we want for this country. In one of those decisions, voters in California chose to embrace a new future for work in a decision that has taken on even greater importance in light of our nation’s present challenges.
By passing Proposition 22 with 58% of the vote, Californians affirmed the importance of flexible work and, crucially, the need to update that framework to include new benefits and protections. They rejected an approach that could have eliminated a critical source of supplemental income for millions of Californians, and instead ushered in a modern-day approach that meets the needs of today’s workforce.
This is a signal to the rest of America that change is vital and now is the time for innovative solutions across the country.
Flexible work is crucial to the future of the US economy
Flexible work opportunities with low barriers to entry are more crucial than ever, enabling people—particularly in communities that have been disproportionately impacted by the pandemic—to earn money literally at the touch of a button as unemployment rates skyrocketed throughout the crisis.
As the CEO of DoorDash, I saw this first-hand: since the first stay-at-home orders went into effect in mid-March, 1.7 million new Dashers joined the platform and together with existing Dashers earned nearly $3.5 billion during the first six and a half months of the pandemic. Importantly, $2.1 billion of that total was earned by Dashers who live in zip codes with above average Black and/or Latinx representation, delivering meaningful income to communities throughout the US.
I believe we need to build upon what began in California to find innovative solutions elsewhere. And that’s why we’re taking the lead and partnering with workers, policymakers, and a variety of stakeholders to build a framework for today’s workforce.
It’s a vision that reflects what Dashers have told us works best for them—not the workforce of 75 years ago.
Unlike other gig platforms where people may work more hours, 91% of Dashers work fewer than 10 hours per week, with an average of four or fewer hours. More than 4 out of 5 Dashers say that gig work is not their main source of income, and more than 3 out of 4 Dashers say they have another job or are in school. It’s clear: Dashing, and work like it, is filling a critical need for supplemental income in our country, whenever and wherever convenient for the worker.
Instead of getting caught in the no-win dichotomy of employment versus independent contracting, we need a third way that recognizes that this new approach to working is here to stay. That’s because workers want it and it provides the legal protections and benefits they deserve —it’s as simple as that. 76% of Dashers indicate that Dashing has had a positive impact on their ability to provide for themselves and their family. We need a portable, proportional, and flexible framework that is easy to access and allows app-based workers to maintain their independence, while also providing new benefits.
- Portable: Benefits should be connected to the individual so workers can move from platform to platform, taking their benefits with them without interruption or loss of funding.
- Proportional: Benefits such as accident coverage and on-the-job injuries should be able to scale up in proportion to the engagement a worker has with a company. And protections against discrimination and harrassment should exist for every worker in America—full stop.
- Flexible: Allow workers to choose the benefits they want or need, accounting for the different ways people work with app-based platforms like DoorDash.
Prop 22 is one example that works for California, but each state is different, and this is a nationwide issue that requires a thoughtful and tailored approach. We are committed to working with lawmakers and other stakeholders across the country and across the political spectrum to develop solutions that reflect the multiplicity of needs of workers in the 21st century economy.
Now is the time to push forward, focused on better, permanent, collaborative solutions for millions of workers across the country, and DoorDash is committed to leading that effort.
Tony Xu is the CEO of DoorDash.
This is an opinion column. The thoughts expressed are those of the author(s).
Don’t Hire Gig Workers to Wait In Line for Your COVID-19 Test
Over the weekend, a TikTok video went viral advertising a tip to bypass waiting in long lines for COVID-19 testing: hiring a gig worker to wait for you.
A now-deleted TikTok video from user @thetipguyNYC explains that viewers looking to hire someone else to wait for hours among possibly-infected people should use TaskRabbit, a platform for hiring people to do just about anything you don’t want to. The video advises viewers to “filter by cheapest available” and to instruct the worker to give them a call when they’re at the front of the line.
In a statement, TaskRabbit said it is aware of the practice of hiring workers to wait in line for COVID-19 tests, and that it’s fine with it.
“The Wait in Line category has historically been popular during the holidays,” a TaskRabbit spokesperson told Motherboard. “This year, there are some Taskers choosing to wait in line for clients seeking COVID-19 tests.” They also added that “because details of all tasks are shared by clients in advance, Taskers know the types of lines in which they will be waiting, and the decision about whether to accept the task lies with the Tasker.”
One person who did this told Time Out that they couldn’t “fathom how people can disagree—it’s giving people jobs who may have lost theirs during this pandemic, so if they do it and get paid for it, that’s their decision.” They blamed access to testing and “the lack of organization” for the lines, adding that “people should absolutely be taking the opportunity to get paid for it.”
All of that conflicts with what’s actually going on, however. Some of the overcapacity is from a lack of adequately distributed resources, but another part is thanks to the hordes of people who are ignoring CDC guidelines and planning to travel for Thanksgiving.
The pandemic has already led to an increase in demand for gig work (for example, food delivery) while exacerbating the divide between those who deliver and those who make the orders from behind phone screens at home. People need money in the middle of a massive employment crisis during a plague, but it doesn’t justify the exploitative work that has popped up in the gap in lieu of a competent and compassionate societal response.
Masses of out-of-work people standing in line for a COVID-19 test on behalf of wealthy people ignoring guidance that could end the pandemic isn’t any kind of solution, it’s a perfect example of why things got this bad to begin with.
Reconciling the Gig Economy in California: Changes to Worker Classification Laws Since AB 5 | Hanson Bridgett LLP
Assembly Bill 5, (AB 5), signed by Governor Gavin Newsom in September of 2019, which went into effect on Jan. 1, 2020, codified the California Supreme Court’s landmark decision in Dynamex Operations West, Inc. v. Superior Court of Los Angeles. Dynamex created the presumption that a worker is an employee rather than an independent contractor unless the hiring business can prove each prong of an ABC test, as follows:
(A) The person is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.
(B) The person performs work that is outside the usual course of the hiring entity’s business.
(C) The person is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.
Though AB 5 outlined a number of exemptions, the law left many who previously relied on contractor work confused as to how to classify workers that would no longer be presumed independent contractors under the strict ABC test. Dissatisfaction with the new law quickly led to challenges at the Legislature, leading to the passage of AB 2257 and approval of Proposition 22 by voters this year.
AB 2257, drafted by the same author of AB 5, was signed into law by Governor Newsom on Sept.4, 2020. The bill primarily relates to creative work. Under AB 5, certain specified occupations and business relationships were exempted from the application of the ABC test. AB 2257 revised and recast these provisions substantially. The bill additionally specifically exempts certain occupations in creating, marketing, promoting, or distributing sound recordings or musical compositions. The law exempts a musician or musical group for the purpose of a single-engagement live performance event, and an individual performance artist presenting material that is their original work and creative in character, and the result of which depends primarily on the individual’s talent.
AB 2257 narrowed the professional services exemption for services provided by still photographers, photojournalists, freelance writers, editors, and newspaper cartoonists. The bill establishes an exemption for services provided by still photographers, photojournalists, videographers, or photo editors (as defined under law) who work under a written contract that specifies certain terms, subject to prescribed restrictions. The bill also establishes an exemption for services provided to a digital content aggregator (as defined under law) by a still photographer, photojournalist, videographer, or photo editor, and establishes an exemption for services provided by a fine artist, freelance writer, translator, editor, content contributor, advisor, narrator, cartographer, producer, copy editor, illustrator, or newspaper cartoonist who works under a written contract that specifies the terms, subject to prescribed restrictions.
While the majority of the changes established by AB 2257 relate to creative work, the bill also created additional exemptions for certain other narrowly tailored professions and occupations, such as for people who provide underwriting inspections and other services for the insurance industry, manufactured housing salespersons, people engaged by an international exchange visitor program, consulting services, animal services, and competition judges with specialized skills. The bill also creates exceptions for licensed landscape architects, specialized performers teaching master classes, registered professional foresters, real estate appraisers and home inspectors, and feedback aggregators.
The bill revised the conditions under which business service providers providing services pursuant to contract to another business are exempt. The bill also revised the criteria under which referral agencies and service providers providing services to clients through referral agencies are exempt and revised the applicable definitions.
Finally, AB 2257 created an exemption for business-to-business relationships between two or more sole proprietors, and provides that a hiring entity need only satisfy all of the conditions of one of the exemption provisions to qualify for the exemption from the ABC Test.
With respect to enforcement, AB 2257 expanded the possibility of enforcement actions by authorizing any District Attorney to prosecute an action for injunctive relief, in addition to the Attorney General or any City Attorney authorized previously by AB 5.
On Tuesday, Nov. 3, 2020, California voters overwhelmingly passed Proposition 22. Proposition 22, the most expensive initiative sponsored in California history, backed by Uber, Lyft, and Doordash, codifies the Protect App-Based Drivers and Services Act drafted in response to the restrictions passed under AB 5.
Many companies utilizing contractors have difficulty meeting the B-prong of the ABC test, and thus face significant misclassification risk. This is especially so in the gig economy, where contractors are used to perform work that a hiring entity is in the business of providing to end-customers. AB 5 provides little to no relief for employers within the gig economy, as none of the enumerated exemptions apply.
Proposition 22 is targeted to the gig economy and carves out a specific exemption from AB 5 for “app-based drivers” retained by “network companies.” The Proposition defines “app-based driver” as an individual who is a courier or driver for a company that maintains an online-enabled application or platform used to facilitate delivery services on an on-demand basis or to connect passengers with drivers using a personal vehicle. App-based drivers will be presumed independent contractors so long as a minimum standard is met:
- the network company does not unilaterally prescribe specific dates, times of day, or minimum hours during which the app-based driver must be logged into the platform,
- the network company does not require the app-based driver to accept any specific rideshare services or delivery service requests as a condition of maintaining access to the platform, and
- the network company does not restrict the app-based driver from working in any other lawful occupation or business. These requirements emulate the A-prong of the ABC Test and traditional jurisprudence on independent contractor classification.
Proposition 22 provides a number of legal employment benefits and protections that are required in California for workers classified as employees. For example, app-based drivers now have a guaranteed “net earnings floor” comprised of 120 percent of the applicable minimum wage of the worker’s “engaged time,” guaranteed tips and gratuities, and a guaranteed quarterly healthcare subsidy. For drivers that average 25 hours per week of engaged time during a calendar quarter, the subsidy will equal 82 percent of the average California Covered premium for each month. And for drivers who average between 15 and 25 hours, the subsidy will equal 41 percent of the average California Covered premium. Proposition 22 also requires the applicable companies to provide occupational accident insurance to cover at least $1 million in medical expenses and lost income resulting from injuries suffered while a driver is online, and disability payments of 66 percent of a driver’s average weekly earnings before the injuries suffered. Proposition 22 further requires the applicable company to provide accidental death insurance for the benefit of a driver’s spouse, children, or other dependents when the driver dies while using the app.
In addition to the employment-like pay benefits, Proposition 22 requires network companies to develop anti-discrimination and sexual harassment policies, and develop training programs for drivers related to driving, traffic, accident avoidance, and recognizing sexual assault and misconduct. The ballot measure also criminalizes the impersonation of an app-based driver as a misdemeanor.
Proposition 22 is most likely here to stay. The new law contains a provision which permits the Legislature to amend the law only with a statute passed in each house by seven-eighths of the membership. While a big win for gig economy companies using app-based drivers, Proposition 22’s reach is otherwise very limited. It only applies to companies that maintain an online-enabled application or platform used to facilitate delivery services on an on-demand basis, who also maintain a record of the amount of engaged time and miles accumulated by its couriers, or “transportation network companies” as defined in Public Utilities Code section 5431. i.e., a company operating in California that provides prearranged transportation services for compensation using an online-enabled application or platform to connect passengers with drivers using a personal vehicle. In other words, taxi or courier service companies that utilize an online platform to provide on-demand service are the only ones benefiting from the new law.
In sum, Proposition 22 creates a separate classification for app-based drivers. App-based drivers are thus no longer independent contractors or employees in the traditional sense, but rather a hybrid maintaining the independence traditionally enjoyed by contractors with some of the benefits and protections mandated for employees. The overwhelming support for this new classification in California could see ripple effects across the nation where app-based driving companies operate. Likewise, other industries that utilize an app-based model to provide services by contract workers to end-consumers may see value in developing similar legal exemptions for their gig workforce. Further changes to AB 5 or the expansion of Proposition 22-like legislation for other sectors are therefore expected while the law and the economy reconcile how to deal with the gig economy.
Prop 22 should influence states to provide benefits to gig-workers
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