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What California’s New Gig Work Law Gets Wrong About Gig Work

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Two weeks ago, California legislators passed a bill that requires Lyft, Uber, and other similar service platforms to treat the workers that provide services through them as employees rather than independent contractors. Other states are likely to follow suit.

However, ruling on whether “gig” workers are employees or contractors just highlights the inadequacy of the traditional binary classification of workers in today’s economy. The truth is that they may be neither.

It is important to recognize that marketplaces for products or services choose a position on a continuum defined by how much control they exert over the interactions or transactions they enable. At one end of the continuum are pure marketplaces, which exert little or no control over the terms of the transactions between independent suppliers or professionals and customers (e.g., Airbnb, Craigslist, eBay, Poshmark, TaskRabbit, Thumbtack, Turo, Upwork). At the other end of the spectrum are resellers that buy products from suppliers and resell or rent them on terms they completely control to customers (e.g., iTunes, Netflix, Wayfair, Zappos, Zipcar) and employers that hire professionals providing relevant services and almost entirely control how those services are delivered to customers (e.g., Hello Alfred, Infosys, McKinsey). Many firms have chosen to occupy intermediate positions along this continuum (e.g., Apple’s App Store, Gerson Lehrman Group, Handy, Lyft, Postmates, Uber, Wag).

The notion of control over supplier-customer interactions has many dimensions: price, equipment, how the relevant product or service is presented or advertised, how the product or service is delivered or performed, work schedule, and so on. What’s more, the stringency of the rules governing each of these dimensions can vary all over the map. As a result, there is a fine-grained spectrum of intermediate business models between pure marketplace and pure retailer or employer. For example, Postmates has full control over the delivery price charged to customers, but its couriers can choose to use any vehicle they wish for performing their deliveries (including bicycles, cars, and trucks) as well as their work schedules.

Marketplaces are driven to adjust the control dials for the various elements of their business model by a number of different factors: the importance of consistency of the buyer experience (across different sellers), the extent to which the platform vs. the suppliers have better information relevant for different choices (e.g., demand information for setting prices or marketing activities), whether the platform has some cost advantage of centralizing certain activities, and so on. In particular, there may be very good efficiency reasons for choosing different levels of control across various elements: for details, see our previous work here, here and here.

In this context, trying to force-fit all marketplace companies into one of only two categories will lead to over-inclusive employee classifications in some contexts and under-inclusive employee classifications in others. As firms inevitably adjust in order to avoid being misclassified, this will lead to several inefficiencies, as we discuss in depth in a recent research paper on this issue.

First, firms will most likely “run for the corners” by choosing either a pure marketplace model with as little control as possible over how workers conduct transactions with customers or a pure employment model with full control over workers. This will likely eliminate many intermediate business models (with intermediate degrees of control), which could be more efficient.

The California bill, for instance, heavily favors the employment model — i.e., even companies that are quite close to the pure marketplace model may have their workers classified as employees. For certain services, it may indeed make sense to give workers more benefits and training, and employ them, so they can be dedicated and committed to the service they provide on behalf of the company. This is the approach chosen by Hello Alfred, whose home managers provide a wide range of in-home services. However, forcing companies to do that for all services defeats many of the advantages and efficiencies of the sharing economy model, which in cases like ride sharing and delivery, provides a way for many individuals to pick up extra work, if and when it fits their schedules.

Second, when businesses that would have preferred to choose an intermediate model are categorized as employers (which comes with 20% to 30% higher costs), they are likely to take more control over how workers interact with customers (following the California bill, Lyft has already informed its drivers that it may soon restrict them to specific time shifts and geographic areas). This results in less flexibility for workers and will almost certainly penalize workers that wanted the flexibility of running their own schedule and moving freely between different jobs. This explains why some Uber and Lyft drivers (nearly half of whom drive less than 10 hours a week) are unhappy with the new California law.

Third, when businesses that would have preferred to choose an intermediate model are driven to the pure marketplace model by the threat of higher costs associated with the employment model, they might cease investing in activities that would have made workers or customers (or both) better off. Two examples are worker training (e.g., Postmates offers its drivers free access to online college course and professional certifications) and group health care plans (such as the one offered by Uber): Because providing training and health care coverage are among the criteria that make an intermediary more likely to be classified an employer, companies that wish to remain marketplaces will become more reluctant to provide such benefits, to the detriment of workers.

Fourth, specifically in the case of transportation platforms like Lyft and Uber, it is important to recognize that this is a very competitive industry, mainly due to the fact that drivers have the ability to “multi-home,” i.e. drive for two or more platforms, as many do. However, if Lyft and Uber drivers are classified as employees, then each platform will be able to legally restrict its drivers from driving for a competing platform. Perversely, this would limit drivers’ choices (again, following the California bill, Lyft has informed its drivers that it may soon require them to drive for Lyft only). And ultimately, as the platform that manages to lock up more drivers becomes more attractive for riders through lower wait times, and more riders attract more exclusive drivers, it could lead to tipping whereby one platform dominates (in any given city).

In an ideal world, firms would be able to choose among all possible intermediate steps between pure marketplace and pure employer — subject to the constraint that their costs (including the benefits paid to workers) will increase relative to some aggregate measure of the control exerted.

Needless to say, this is not practically feasible: There are just too many possible intermediate configurations, and it would be prohibitively complex to assign a different legal status to each of them. But it is not too much to ask for the introduction of at least one intermediate step such as “dependent contractors,” for whom firms would cover some costs but not others (such a third category already exists in Canada, Germany, Italy, South Korea, and the United Kingdom).

Critically, any worker expenses or benefits that the new category requires firms to cover should be proportional to the work that these workers actually do with each of the firms (e.g., the number of hours worked or the value of the jobs carried out). Any expenses or benefits that are fixed irrespective of the actual work carried out would make engaging workers for short shifts unattractive and incentivize the firms to engage their workers exclusively to prevent rival firms from free-riding on their investments.

A case in point is the requirement that gig workers be paid a minimum wage per hour they are available on the marketplace rather than based on the actual work carried out. A recent case in Australia illustrates the point, in which a Uber Eats driver claimed she was not receiving the minimum wage because she worked as long as 96 hours in some weeks — most of it spent waiting for orders to be placed via the Uber Eats app — but earned as little as $300 for those periods. However, the Fair Work Commission in Australia rejected her claim, pointing out that she had rejected more than 550 food delivery requests and cancelled a further 240 after having accepted them. Requiring a minimum wage that is based on the hours a worker is available on the platform would almost certainly push each firm to require that workers meet a minimum number of hours on its platform and that they do not work for rivals during these “shifts”.

Yes, there would still be the problem of drawing the boundaries between the intermediate status and the other two. Nevertheless, this would be a big step forward in terms of freeing firms to explore a variety of intermediate business models and arrangements with their workers.

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It’s not just pipelines; everyday gig workers are getting phished too

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Not long ago, “getting Phished” meant waking up in a festival field wearing nothing but cargo shorts — 23 hours into a 3-day jam session, smelling like patchouli oil.

Now, the hackers are ruining it for us all.

Recently, high-profile cyberattacks of pipelines, meat factories, and ferry operations have cast new light on the existential risk of a digital society.

But it’s not just large organizations feeling the hack heat

A recent Protocol article details the rise of phishing attacks among DoorDash gig workers (AKA Dashers).

Here’s how these DoorDash attacks work:

  1. A DoorDash worker receives an order needing fulfillment
  2. The worker receives a call from someone pretending to be a DoorDash support representative, saying the order has been canceled
  3. The worker is unable to remove the order from their app (because it has not been legitimately canceled)
  4. The scammer offers to send the worker a link to clear their app
  5. The link prompts the worker to provide their username and password

The hackers then access and drain the Dasher’s account

Although Protocol was unable to confirm the number of scammed DoorDash workers, Reddit threads indicate a growing number of gig worker victims (Postmates couriers have been hit, too).

DoorDash suggests these are one-off problems. But gig workers are particularly vulnerable to phishing scams because of their relationship with their work. Often, they have no boss or co-workers to consult with and the money is just dropped into their account.

They simply follow the prompts of an app…

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Celtics assistant Jerome Allen reportedly interviews for Boston gig, expected to interview for Portland job

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Celtics

Allen’s been with the Celtics since 2015.

Jerome Allen seems to be drawing interest for multiple head coaching vacancies. (Photo by Jamie Sabau/Getty Images)

The Celtics might have some competition in finding their next head coach.

Celtics assistant coach Jerome Allen has interviewed for the job to replace Brad Stevens and is expected to interview with the Trail Blazers for their head coaching spot, The Boston Globe’s Gary Washburn reported Saturday.

Allen, who played professionally for 14 years in the NBA and overseas, joined the Celtics as an assistant coach in 2015. Allen has “been a positive influence, forging close relationships with the players” during his time in Boston, according to Washburn.

Prior to joining the Celtics, Allen was the head coach of the University of Pennsylvania’s men’s basketball team for six seasons. In 2020, Allen received a 15-year show-cause penalty from the NCAA due to accepting bribes to help a student get on the recruiting list in order to get accepted into Penn during his time as head coach.

Celtics assistant coach Jay Larranaga is expected to interview for the job while assistant coach Scott Morrison will interview for the job, HoopsHype’s Michael Scotto reported. Larranaga’s been a Celtics assistant since 2012 while Morrison’s been a Celtics assistant since 2017. Morrison was the head coach of the Maine Red Claws for three years prior to coaching the Celtics, winning the D-League Coach of the Year Award in 2015.

Not long after Stevens stepped down as Celtics head coach to become their president of basketball operations, it was reported that the Celtics would interview internal candidates before looking at external candidates for the job.

The Trail Blazers became the second team to have a head coach opening after they agreed to part ways with Terry Stotts on Friday. Blazers star point guard Damian Lillard already publically vouched for his team to hire either Lakers assistant coach Jason Kidd or Clippers assistant coach Chauncey Billups to be the team’s next head coach. Both Kidd and Billups have been rumored candidates for the Celtics job.

In addition to internal candidates plus Kidd and Billups, Duke women’s basketball head coach (and ex-Celtics assistant coach) Kara Lawson, 76ers assistant coach Sam Cassell, and Nets assistant coach Ime Udoka are just a few of the names that have been rumored to replace Stevens.

The Magic entered the head coach search Saturday when they agreed to part ways with Steve Clifford. The now ex-Magic coach has prior ties with Kemba Walker. Clifford was Walker’s head coach for five seasons in Charlotte.



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Bay Area Reporter :: News Briefs: Kendell lands new gig

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Kate Kendell, the former longtime executive director of the San Francisco-based National Center for Lesbian Rights, is now the first chief of staff for the California Endowment.

Kendell began the new position June 1, after having served for nine years on the endowment’s board of directors, a news release stated.

“The endowment is excited to have Kate Kendell continue to serve our foundation, now as chief of staff,” stated Dr. Robert K. Ross, CEO and president of the endowment. “Kate’s career is steeped in racial justice, LGBTQ advocacy, and civil rights. She will be a strong leader for our work in the next decade.”

According to the release, Kendell’s hiring comes after recent retirements of executive team members and a major transition of staff. Kendell will assist and support the executive team, and will play a key role in the development and implementation for the endowment’s future work, helping to deepen the racial equity efforts of the organization. She will also support grant making from the CEO’s office, and ensure the prioritization of critical issues and required information for the CEO to help facilitate efficiency and provide timely decision-making.

Kendell stepped down from NCLR at the end of 2018. Most recently, she served as interim chief legal officer at the Southern Poverty Law Center.

Kendell said she’s enthusiastic about the new job.

“After serving on the board of the California Endowment, I am especially excited to join the staff of an organization committed to health and social and racial justice,” she stated in an email. “For 25 years the endowment has empowered and partnered with youth and residents to create vibrant communities where all can thrive, including LGBTQ residents. I look forward to helping the passionate and talented team at the endowment deepen and grow that work for all Californians.”

The California Endowment has a budget of about $3.5 million, according to the audited financials on its website. It works to provide grants to develop social justice and health equity for all Californians. Learn more at https://www.calendow.org/

Glide announces Pride festivities
Glide Memorial Church and the Glide Pride Team have announced various activities to recognize LGBTQ Pride Month in June. There will be tributes, special offerings, and Pride-inspired Sunday celebrations.

Led by Marvin K. White, Glide’s minister of celebration, the church is dedicated to unconditional love, radically inclusive faith, and social justice.

“Glide Memorial Church has a long history of LGBTQ+ inclusion,” White stated in a news release. “Our congregation has been a spiritual home for the LGBTQ+ community from the beginning. … We celebrate Pride because we know that the LGBTQ+ stories that make up our beloved community will endure.”

There are drag and spirituality shows on Friday, June 11, featuring Afrika America; Monday, June 14, with Lotus Boy; and Monday, June 21, with Honey Mahogany. All start at 7 p.m.

“Black Trans Lives: Breaking the Silence” will be held Tuesday, June 22, at 6 p.m. There will be a virtual watch party for the classic drag ballroom film “Paris is Burning” Friday, June 25, at 6 p.m. On Sunday, June 27, at 2 p.m. there will be a virtual Pride party on Twitch with DJ David Harness.

For more information and to register for the events, go to https://www.glide.org/

LGBTQ first-time homebuyer seminar
The LGBTQ+ Real Estate Alliance will hold a virtual national first-time homebuyer seminar for queer people Wednesday, June 16, from 4 to 5 p.m. Pacific Time. Organizers said they believed this is the first such program ever offered specifically for the LGBTQ+ community.

This is also the first public program offered by the alliance, a 501(c)6 nonprofit with more than 1,200 members that launched last October. According to a news release, it will feature a variety of important topics for potential homeowners, including discussions about down payments, mortgage types, pre-approval, and the lending process. The program will offer insight into selecting an agent, home, and neighborhood while offering perspectives on the offer, negotiations, and the different steps to closing. The alliance will also provide resources to help combat potential housing discrimination against sexual orientation and gender identity.

“Today’s market conditions have heightened the challenges facing first-time homebuyers and we believe it is important to provide members of our community with the tools and resources they need to navigate the buying process,” stated Ryan Weyandt, CEO of the alliance. “Along with discrimination, and fear of it, we have found a lack of education focused on the LGBTQ+ community that would allow more to better prepare for the process.”

Weyandt pointed out that the LGBTQ+ homeownership rate is just 49.6%, according to the Williams Institute, an LGBTQ think tank at UCLA School of Law. This is far below the national mark of 65.6% cited by the U.S. Census Bureau.

One of the featured speakers will be Josh Pringle from Better Homes and Gardens Real Estate Leaskou Partners in Palm Springs. Other speakers include Kassandra Alicea, the alliance’s San Antonio, Texas chapter president and an agent with Coldwell Banker’s D’Ann Harper Realtors, and Ron Waterson, a loan officer with PrimeLending in Dallas.

There is no cost to attend. To register, go to https://realestatealliance.org/event/first-time-home-buyers-course/

According to a new report from the National Association of Realtors that was released June 9, LGBTQ buyers purchased older and smaller homes more than non-LGBTQ buyers, and expect to live in their new homes five years less than non-LGBTQ buyers.

CA Hispanic chamber launches LGBTQ business initiatives
The California Hispanic Chambers of Commerce has announced its LGBTQ+ Business Initiative launch. The initiative will promote an inclusive ecosystem at the CHCC through regional collaboration, maximizing resources, and leadership development, according to a news release.

The CHCC has committed to building bridges between its regional Hispanic chambers, affiliates, and the regional LGBTQ+ chambers or business associations in launching the initiative.

“LGBTQ+ rights this decade has seen a range of positive changes. Companies have come a long way putting in place policies that promote and protect diversity,” stated Julian Canete, president and CEO of CHCC. “But there’s still more that can be done, in particular a formal collaboration between the CHCC and the LGBTQ+ business community.”

The CHCC will work on cultivating certified LGBTQ+ diverse suppliers, connecting them to opportunities. It will also assist its corporate partners in diversifying their supply chains, and advocate on behalf of LGBTQ+ and allied business communities.

Help keep the Bay Area Reporter going in these tough times. To support local, independent, LGBTQ journalism, consider becoming a BAR member.



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