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Gig work could change under Biden’s Labor secretary. Here’s how

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U.S. Labor Secretary Marty Walsh sent massive ripples through the “gig economy” last week by stating that he believes gig workers should be classified as employees instead of independent contractors “in a lot of cases.”

What happens next could mean upheaval for the multibillion-dollar companies and the tens of millions of workers on which they depend. Labor leaders and academics have advocated for interpreting federal law in favor of workers who they say have been misclassified for too long, while Walsh told Reuters he will be holding talks with gig companies as he considers the issue.

Uber Technologies Inc.
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DoorDash Inc.
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and the App-Based Work Alliance stated last week that they “look forward” to working with Walsh, but the rest of their statements signaled their positions loud and clear: They plan to keep fighting to develop new laws tailored to their business model, after succeeding in their California effort.

“We look forward to coming together with Secretary Walsh to have these much-needed discussions about advancing modern policies that protect worker independence and flexibility, while strengthening benefits and protections,” said App-Based Work Alliance, which represents Uber, Uber-owned Postmates, Lyft Inc.
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DoorDash and Instacart.

Workers for the app-based platforms accept “gigs” on their phones from the companies, which contend they act as platforms for connecting workers to customers, not as an employer that would provide benefits such as unemployment insurance and a minimum hourly wage. Walsh, a former union leader, told Reuters in an interview that the Labor Department will be talking with the companies about workers’ wages, sick time and other benefits “that an average employee in America can access.”

With Walsh at the helm of President Joe Biden’s worker-friendly administration, labor experts and worker organizers are feeling cautiously optimistic.

“What a 180-degree reversal this seems to be from the days of Trump,” said William Gould, professor emeritus at Stanford Law School and a former chairman of the National Labor Relations Board.

The Labor Department last week asked the White House to approve repealing a rule Donald Trump’s administration put in place right before the end of his term that would have made it easier for gig companies to classify workers as independent contractors. The government could issue a completely new rule on worker classification, or bring companies before the National Labor Relations Board.

See: Labor Department wants to rescind Trump-era rules it says hurts independent workers, wages

Veena Dubal, a professor at UC Hastings College of the Law, believes that Walsh could threaten charges against gig companies under current federal law.

“It’s great that [Walsh] sees quite clearly that these workers are employees that need and deserve the same benefits,” Dubal said. “I’m eager to see how he goes about enforcing the law.”

In California, where voters passed Proposition 22 in November, Uber and the other companies spent a record-breaking $200 million-plus to put the measure on the ballot to ensure they could continue to avoid treating drivers as employees. Now they could face federal enforcement actions and lawsuits that would supersede the rules in California and other states.

“Federal law in the wage and hour arena is supreme,” Gould said, meaning that if the companies don’t comply with either the Labor Department’s interpretation of labor laws or any possible updates to the rules, the government could sue them.

The Labor Department said Monday it would have no additional comment about when the talks between the companies and the department might take place, or what they will look like. Uber and DoorDash said they would have no more comment. The App-Based Work Alliance has not responded to further requests for comment.

What gig workers want

The App-Based Work Alliance also said in its statement that “Over 70 percent of app-based workers have repeatedly said they do not want to be reclassified into a rigid and outdated employment model. We can do better. We must all listen to workers.”

Gig companies regularly tout the flexibility they offer their workers, and cite mostly self-commissioned polls that bolster their assertion that most workers want to stay independent. In its statement, DoorDash said its workers average just four hours a week of work.

But many others on the on-demand app platforms are working full time. A survey by the UC Santa Cruz Institute for Social Transformation found last year that in San Francisco, a majority of respondents said platform work was their primary source of income, with 71% working more than 30 hours a week, including 50% who work more than 40 hours a week.

Chase Copridge says he has “since worked on nearly every app” for the past six years but is now doing deliveries for Amazon Flex in the Bay Area after moving to California from Kentucky a couple of years ago.

“The truth is I have almost no flexibility,” he told Sen. Sherrod Brown, D-Ohio, during a virtual briefing with the Banking, Housing, and Urban Affairs Committee last week. “I’m either working or looking for my next gig,” he added.

After “running his car into the ground,” Copridge said he now lives in a van. “Every investor putting money into these companies should know what’s really going on,” he added.

In an interview with MarketWatch, Copridge said he used to do deliveries for DoorDash and Instacart but “they pay so little it’s not worth it.” With Amazon
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Flex, he says he works seven days a week, usually for four hours at a time — “seven or eight if I’m lucky” enough to get two separate shifts a day — and averages about $20 an hour.

Copridge said he was excited to hear Walsh’s comments about gig workers. “I hope he can enforce that, and maybe it can circumvent Prop. 22 in California.”

What unions and others want

The possibility that this administration’s actions could upend the gig economy comes as Copridge and others are urging Congress to pass the Protect the Right to Organize Act, which they believe would give workers like them the right to form unions and collectively bargain.

The U.S. House of Representatives passed the PRO Act in March, but it faces an uphill climb in the Senate, where there are three Democratic holdouts: Mark Kelly and Kyrsten Sinema of Arizona, and Mark Warner of Virginia.

See: PRO Act, called ‘most important labor legislation in several generations,’ passes House

One sticking point in the PRO Act is that it uses the “ABC test” to determine whether a worker should be classified as an employee. That test, which California and other states have adopted, can affect other workers. Freelance writers and others have said they have lost work because of it.

But John Logan, a professor and director of the Labor and Employment Studies Department at San Francisco State University, said the PRO Act will not “do away with freelancing. There will still be a lot of that around.”

In the case of workers for Uber and other gig companies, Logan said, “the issue is employees are controlled by the companies and the algorithms,” which is why the worker-classification issue has for years been debated in courts, legislatures and at the ballot box.

It is possible the Labor Department could wait to act on Walsh’s comments until after the PRO Act question is settled, but the timeline is unclear. Gould said he expects possible action in the summer or sometime this year.

What companies want

In California, Uber, Lyft, DoorDash and Instacart spent more than $200 million, a record, to bring Proposition 22 before voters. After nearly 60% of the state’s residents voted for the measure, the companies said they want to expand the model.

Uber, Lyft and the other companies are pushing for a “third way,” effectively an expansion of what they have managed to carve out in California and elsewhere. Uber has branded that scenario as IC+, a separate category for drivers and delivery workers that gives them guaranteed incomes and some health benefits under certain circumstance, but falls short of treating them as employees with all the rights and benefits that entails.

Dubal said other ways the companies might avoid employee classification include going through temporary staffing agencies or adopting a franchise model, in which they license their brands to operators of vehicle fleets.

What’s at stake

The classification issue affects taxpayers whether or not they have used any of the ride-hailing or delivery platforms.

For example, the UC Santa Cruz Institute for Social Transformation survey last year, conducted before the pandemic, also found that 15% of San Francisco gig workers received some sort of public assistance, such as food stamps or housing assistance.

And as the coronavirus pandemic has shown, when demand for rides fell sharply, drivers who suddenly had no income did not qualify for regular unemployment benefits because they are not classified as employees. The gig companies do not pay into state unemployment insurance funds. In California, a UC Berkeley Labor Center study estimated that Uber and Lyft would have had to pay $413 million into the state’s unemployment insurance fund from 2014 to 2019 if they had been required to do so.

In the past year, some drivers got unemployment funds only because of the U.S. government’s Pandemic Unemployment Assistance program.

What Walsh does in saying gig workers should be employees is “really put his finger on a major inequity — a scandalous inequity,” Gould said. “The federal government had to jump in and provide unemployment compensation. Uber and Lyft got a free ride.”

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‘More than a job’: the meal delivery co-ops making the gig economy fairer | Gig economy

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Cristina González did a lot of waiting in 2018. Back then, the 29-year-old was a courier for the Spanish food delivery platform Glovo in her Basque home town, Vitoria-Gasteiz. She talks about feeling as if she was on standby the whole time: “You’re effectively having to be working constantly.”

While Glovo serves restaurants, customers can also order from supermarkets. This, Gonzalez says, was “a complete shitshow: supermarket orders are really easy to screw up”. If the supermarket did not have an item in stock and González completed the order, she might get a poor rating from the customer because of the missing item. If she turned down the order, González worried that it might affect her score on the platform. “It was very, very stressful.”

Gonzalez is still a courier but is making €10 (£8.70) an hour after tax and social security contributions, more than double her previous wage. She says customers of Eraman, the delivery cooperative she now rides for, are more understanding about minor issues, the jobs are more varied;she despatches as well as delivering, there is better communication, and she feels like she has more control.

Cristina Gonzelez at work for Eraman
Cristina Gonzelez at work for Eraman. Photograph: Paul Iano/Eraman

She could, she says, imagine staying in this version of the gig economy far longer than she might have at Glovo – five to 10 years, she says. “It’s a job, but it’s also more than that. In Eraman you are a link in a chain, a member of a team, in Glovo you are a pawn, the last position in a hierarchy.”

In Berlin, Mattia Carraro experienced a similar trajectory: the 33-year-old courier worked at Deliveroo for two years before joining Khora, a 30-person food delivery collective set up in March last year. Germany offers relatively decent conditions for food delivery couriers – those working for the big platforms are employees with social security generally paid by the hour rather than per delivery as is the case for most couriers in the UK.

While satisfied with the pay, Carraro was bothered by the deep insecurity of the job, “that from one day to the next it might go away”, as well as the anonymity. Deliveroo ceased operations in Germany in 2019 and when Khora came along he signed up. Although his role involves significantly more administration – a two-hour weekly general meeting where decisions are reached via consensus, plus approximately 15 hours of unpaid managerial duties a week – Carraro feels happier working as part of a cooperative.

“For me, it’s OK to earn less money but to work in an environment that always makes me feel good, where I know problems are going to be solved and we’re all friends. This is something we don’t want to do for just a season or until we find something better, but a job you really want to keep and you like.”

Mattia Carraro of the Khora collective taking a break at Hermannplatz, Berlin
Mattia Carraro of the Khora collective taking a break at Hermannplatz, Berlin. Photograph: Marvin Systermans

Carraro doesn’t just do bike deliveries: like other members of the cooperative, he handles some of Khora’s dispatching work. “I go for a nice walk with my dog and eat breakfast outside, then at noon I start work, while chain-smoking, eating yoghurt and popcorn as I dispatch. Then at 10pm my shift is over and I eat properly.”

At different ends of Europe, these cooperatives are worker-led and pride themselves on being democratically governed. Eraman’s co-founder, Paul Iano, 28, says the 10-person cooperative reaches decisions via discussion. “The thing I like to say about cooperatives is that if you’re having to vote on it, you’ve already got a problem.”

But neither venture could exist without the bike delivery software they rely on.

Enter CoopCycle, the brainchild of Alexandre Segura, a computer programmer from Marseille. Back in the spring of 2016, Segura found himself heading to the Place de la République in Paris almost every evening for Nuit debout, a French protest movement that has been compared to Occupy.

Segura helped build a website for the movement and spent much of his time talking about how the gig economy could be exploitative and harmful, and how more of it should be run by the users. “It planted seeds in my mind,” he says.

So, later that year, when his brother-in-law along with thousands of others lost his job as a courier for the Belgian food delivery startup Take Eat Easy, it prompted Segura to start a new venture in his spare time “as an intellectual exercise”.

He says he wanted to reverse-engineer the technology offered by Deliveroo, Uber and other big platforms to empower couriers. The result was a delivery app that offered software and support but required users to fulfil two conditions: they had to be worker-owned and all profits had to be distributed among the worker-owners.

“No CoopCycle, no party,” is how Carraro puts it, telling me that the cost of getting a bespoke delivery app designed would be prohibitively expensive for the average collective.

Recently, the world seems to have started thinking more like Segura does. Spain’s supreme court ruled in September that riders working for Glovo are not self-employed but salaried employees with the right to paid holidays and sick leave.

At least 40 legal challenges to employment conditions for riders and drivers have been raised against gig economy companies including Uber and Deliveroo.

Deliveroo’s shares plunged 26% in its much-anticipated London stock exchange debut in March, with many investors expressing concerns about the conditions faced by its self-employed riders.

This increased scrutiny came with rolling lockdowns that shut down much of the hospitality industry and sent meal delivery orders through the roof. The Amsterdam-based Just Eat Takeaway reported a 79% increase in orders for the first three months of 2021. And despite its disastrous stock market launch, Deliveroo is reporting a doubling of order volumes in the same period.

Segura’s colleague Adrien Claude says 90% of non-profit food delivery cooperatives have also reported a boost in business during lockdown.

The co-ops say their business model offers a better deal for restaurants as well as riders. Eraman, for example, charges restaurants between 10-20% of the value of the order, while Deliveroo takes 32%, Glovo’s average fee is 35% and Just Eat and Uber Eats’ commission is 36.20%. In Berlin, Khora offers a flexible system which gives restaurant-clients more autonomy than if they were to pay a set percentage.

But whether worker-led delivery co-ops can provide a real alternative to the delivery giants remains to be seen.

A Glovo food delivery courier in Madrid during the first wave of the pandemic
A Glovo food delivery courier in Madrid during the first wave of the pandemic last year. Photograph: Juan Medina/Reuters

Prof Vera Trappmann of the University of Leeds, one of the co-authors of Global labour unrest on platforms: the case of food delivery workers, thinks the cooperative model shows us the possibility of a different future – “of alternative ways of dividing up risks and earnings”. A radical change in working conditions for couriers ushered in by Coopcycle seems unlikely, she says. Yet, she believes this amalgamation of digital platforms with worker-led co-ops is here to stay.

“We know that young people especially don’t like working in the bureaucratic, exploitative environments offered by many companies and as such, often opt for self-employment. They’re more prone to questioning the value of working for corporations, and co-ops may become more and more of a home for such people.”

CoopCycle now has 67 co-ops across seven countries in its “federation” and has extended from Europe to Canada and Australia. It is on the cusp of deals with collectives in Argentina and Mexico for the first time, though there is a debate in process over whether motorcycles would be a breach of the federation’s environment-friendly values.

Claude sounds both fired up about the future and gently exhausted. “We’re trying to change the world – it’s tough because we’re human and nothing’s perfect. It probably never will be perfect but we’re trying to make things better by the day.”

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The Big Gig: FinTech Australia’s new board member

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Former senior advisor to the Turnbull and Morrison governments Harry Godber has been added to the board of FinTech Australia as an independent director.

Mr Godber acted as an advisor to Minister for Superannuation, Financial Services and the Digital Economy Jane Hume, where he led initiatives in fintech and financial regulation. He also worked on Australia’s Consumer Data Right, superannuation reform and the introduction of new payment regulation.

Mr Godber was an Industry, Innovation and Science Adviser to Ministers Arthur Sinodinos and Michaelia Cash, and, in a separate role led product and strategy at the CSIRO’s Data61.

“With the right policy and regulatory settings in place, fintech is poised to lead Australian consumers and business through our economic recovery,” Mr Godber said.

Mr Godber currently works as head of strategy for Flare, a fintech focused on HR, banking and superannuation.

Harry Godber, a former senior advisor to the Turnbull and Morrison governments has been added to the board of FinTech Australia. Image: Twitter.

Deloitte has promoted Rob Hillard to be its Asia Pacific consulting leader, where he will oversee around $2 billion worth of consulting work in the region.

Mr Hillard has worked as the consulting giant’s chief transformation officer for the past year and was previously Deloitte’s chief strategy and innovation officer. After being made a managing partner in 2015, Mr Hillard oversaw the doubling of Deloitte professionals to over 3,000 by 2018.

Mr Hillard is a member of the Deloitte global board and the Chairman of the Australian Information Industry Association.

Australian Competition and Consumer Commission (ACCC) Commissioner Sarah Court is leaving the watchdog after more than a decade to join the Australian Securities and Investment Commission (ASIC). Ms Court joins ASIC after wide involvement in the ACCC’s work, including chairing the its enforcement, compliance, Consumer Data Right and legal committees and as a member of the merger review and competition exemptions committees.

“This is a well-deserved reflection of the experience, expertise, and wisdom Sarah brings to the table,” ACCC Chair Rod Sims said “ASIC’s gain is very much our loss.”

The new Australian Public Service Academy will be led by Grant Lovelock, who has been responsible for skills funding and apprenticeship policy at the Commonwealth Department of Education and Training. Most recently Mr Lovelock has worked at the Department’s National Careers Institute.

The University of Sydney’s United States Studies Centre (USSC) has added three more non-resident experts: former chief of staff to President Trump Mick Mulvaney, former Director General of ASIO Duncan Lewis and Sir Roland Wilson Scholar at the Australian National University’s National Security College Jennifer Jackett.

Mr Mulvaney and Mr Lewis join as non-resident senior fellows while Ms Jackett joins the University’s Foreign Policy and Defence Program as a non-resident fellow.

DXC Technologies lost associate partner Pewter Klement, who joined Avande this month. Mr Klement leaves DXC after three and a half years for the Microsoft focused Avande.

Alan Cameron has stepped down from the board of PEXA, the online property exchange network he helped establish in 2010, to fulfil a COAG initiative to deliver a single, national e-conveyancing solution to the Australian property industry.

Mr Cameron will be replaced by finance industry veteran Mark Joiner as independent non-executive Chairman.

Construction software firm Asite has announced the appointment of Kyle Hamer as chief marketing officer. Mr Hamer will lead the global marketing and communications team from the company’s Houston office.

AUmake, the ASX-listed company that connects Asian influencers with Australian brands has a new chief financial officer, with Tony Guarna joining this month. Mr Guarna has held finance chief roles at several ASX companies and joins AUmake as its user base hits more than 27,000 after launching in October last year.

Global semiconductor technology and equipment firm Revasum appointed Rebecca Shooter-Dodd as chief financial and operating officer, formalising her operating responsibilities in addition to her current role as Revasum’s chief financial officer and company secretary.

Former Gartner director Rhys Binney has been announced as Axe Group’s senior vice-president of growth strategy. Mr Binney joins the insurance software provider after three years as a director at Gartner for their CIO and CEO advisory groups.

UK fintech Marqeta has named Duncan Currie as country manager for Australia and New Zealand as part of its plans to establish an Asia Pacific Headquarters in Melbourne. Mr Currie is an industry veteran with almost two decades of payments experience, serving as a consultant and advisor to local fintechs, alongside stints at ANZ, Visa and Tuxedo Money.

Do you know more? Contact James Riley via Email or Signal.

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Free the Gig Economy! | City Journal

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Last week, the Biden administration made another effort to drag the U.S. labor market back into the past. The Department of Labor withdrew the independent-contractor rule, a Trump-era regulation that made it easier for firms to classify workers as contractors instead of employees. It’s not yet clear what will replace it, though President Biden says he supports the ABC test that California tried to implement, which would classify most contractors as employees—including not just drivers for Uber and Lyft but even freelance writers.

The Labor Department and the media are framing the administration’s move as a way to ensure that workers in the gig economy are protected and paid overtime and minimum wage. Yet many workers prefer the flexibility of contract work, which lets them set their own hours and work for other companies. According to a Fed survey, most gig workers report high levels of satisfaction with the arrangement. When California tried to classify gig workers as employees, the state faced pushback not just from companies but from gig workers themselves.

They have good reasons to prefer it. The nature of work is changing, as it has throughout history. It once was considered dehumanizing that most workers should be beholden to a single employer. Today, we’re forcing this arrangement on people who don’t want it.

The rollback of the Trump rule joins a list of policies—efforts to increase unionization, low-skill manufacturing, and “shovel-ready” infrastructure jobs—by which the Biden administration is attempting to shoehorn the modern labor market into a 1950s mold. The problem with these policies is that the labor market has changed. When work was more uniform, workers were easier to replace, so forming strong ties to one’s employer made sense for job security. Unionization also made sense because it allowed the large numbers of lower-skilled workers to pool together for similar pay and benefits.

Over time, however, manufacturing, construction, and most other jobs have become more technical, requiring skilled workforces. The more skilled the workers, the less incentive they have to attach themselves to individual jobs or to pool risk with fellow workers. The more skills you have, the less unionization makes sense because you’re effectively subsidizing lower-skilled workers. And workers today also place a higher premium on flexibility. This may explain why the unionization drive at Amazon has not succeeded.

As we emerge from the pandemic, we should expect the value placed on flexibility in work arrangements to increase. The expanded availability of remote work, combined with the continuing unpredictability of school re-openings and child-care arrangements, make benefits like the ability to set your own hours and the freedom to work for multiple employers more important than ever.

Some Biden policies, like making it easier to buy health insurance without an employer, move in the right direction. The administration would do well to pursue more measures like these that embrace the new economy, rather than trying to force workers into structures better suited for the economy of more than a half-century ago.

Photo by Drew Angerer/Getty Images



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