The Trump administration and the Republican leadership in the US Congress intend to take up the issue of the gig economy this spring and propose labor law reforms to address the unique circumstances of this segment of the workforce, Sean Higgins reports at the Washington Examiner:
The big issue: When do workers for those companies stop being contractors and become employees? Business groups are eager to limit those circumstances, which the Obama administration and court rulings have chipped away at. The Trump [administration] will offer its take when the Bureau of Labor Statistics publishes its Contingent Worker Survey in the spring that will offer new data on workers doing short-term, nonsalaried “gig” jobs. …
A source in the Labor Department who requested anonymity said the study probably will be published in April. It will become a springboard for legislation to clarify a host of issues, including potentially the most controversial one: the contractor-or-employee issue. … The Trump administration has been tight-lipped on its plans, saying only that it wants to modernize the rules.
The Contingent Worker Supplement to the Current Population Survey was reintroduced during the Obama administration by former Labor Secretary Tom Perez in January 2016. Independent estimates of the size of the alternative workforce in the US vary dramatically, whereas the dearth of official data has limited policy makers’ ability to address the challenges created by the advent of the gig economy.
Speaking at an event in October, Labor Secretary Alexander Acosta expressed support for overhauling US employment laws to account for the advent of the gig economy and the changing relationship between workers and employers. The government needs to “keep pace with the pace of change in the private sector” and “re-examine the rules that regulate the employer-employee relationships that have an impact on the ability of individuals to work in a modern system,” Acosta said.
US Magistrate Judge Jacqueline Scott Corley issued her ruling on Thursday in a case brought against GrubHub late last year by former food delivery driver Raef Lawson, who claimed that the company’s gig economy business model had violated his rights as an employee under California law. Corley was not persuaded, however, by Lawson’s argument that GrubHub exerted enough control over when and how he worked for him to qualify as an employee and instead found that the company was correct to treat him as an independent contractor, TechCrunch’s Megan Rose Dickey reports:
A key element of the case centered around the Borello test, which looks at circumstances like whether the work performed is part of the company’s regular business, the skill required, payment method and whether the work is done under supervision of a manager. The purpose of the test is to determine whether a worker is a 1099 contractor or a W-2 employee.
On the basis of the Borello standard, Corley concluded that “GrubHub’s lack of all necessary control over Mr. Lawson’s work, including how he performed deliveries and even whether or for how long, along with other factors persuade the Court that the contractor classification was appropriate for Mr. Lawson during his brief tenure with GrubHub.” She also expressed concerns over Lawson’s honesty, noting that he misrepresented his education in his résumé and “intentionally manipulated the app to get paid for not working,” undermining the credibility of his testimony.
Being the first to weigh in on whether gig economy workers enjoy rights as employees, Corley’s ruling could set a precedent with implications for other gig economy companies. However, as Dickey notes, the judge hesitated to cast her ruling as dispositive with regard to the gig economy as a whole:
The Work and Pensions and Business Committees in the UK Parliament have unveiled a bill meant to close what its supporters call loopholes in current law that let employers misclassify employees as self-employed as a means of saving labor costs and evading their legal responsibilities to those workers, Sky News reports:
It says personnel should be classed as a “worker by default” to ensure access to basic rights such as sick pay because hundreds of thousands are currently being “burdened” by risks associated with flexible working. …
Labour’s Frank Field, who chairs the Work and Pensions Committee, said: “The two committees are today presenting the Prime Minister with an opportunity to fulfil the promise she made on the steps of Downing Street on her first day in office.” He said the draft Bill “would end the mass exploitation of ordinary, hard-working people in the gig economy.”
Opponents of the bill, such as the Confederation of British Industry, say it is shortsightedly cracking down on all forms of flexible employment. As the CBI’s managing director for people and infrastructure Neil Carberry put it to Sky News: “Based on a very limited review of the evidence, the committees have brought forward proposals that close off flexibility for firms to grow and create jobs, when the issues that have been raised can be addressed by more effective enforcement action and more targeted changes to the law.”
Over at Personnel Today, Jo Faragher digs deeper into the bill, which also recommends:
In a San Francisco courthouse, US Magistrate Judge Jacqueline Scott Corley recently heard closing arguments in a case brought against GrubHub by former food delivery driver Raef Lawson, challenging the platform’s gig economy business model and claiming protections for drivers as employees under California law. Corley’s ruling in this case is highly anticipated, as she will be the first US judge to weigh in on whether gig economy workers like Lawson have a right to those protections—while Uber and Lyft have both faced similar lawsuits, both of the ride-sharing platforms settled these disputes out of court.
Lawson is represented by Shannon Liss-Riordan, the same Boston-based attorney who pressed the cases of the Uber and Lyft drivers and is also challenging the independent contractor status of gig economy workers at other platforms. SF Gate’s Joel Rosenblatt looked in on the GrubHub case last week:
As the first case of its kind in the U.S., the GrubHub trial “will inevitably be treated as a bellwether,” said Charlotte Garden, an associate law professor at Seattle University. “That’s especially true because the lawyers in this case are also involved in other larger and higher profile misclassification cases, including the Uber case,” said Garden, who has followed the Uber litigation closely.
At an event organized by the Jack Kemp Foundation last week, US Secretary of Labor Alexander Acosta expressed support for a speedy overhaul of US employment laws to account for the advent of the gig economy and the changing relationship between workers and employers today, Chris Opfer reported at Bloomberg BNA. The secretary said the government needed to “keep pace with the pace of change in the private sector” and “re-examine the rules that regulate the employer-employee relationships that have an impact on the ability of individuals to work in a modern system.”
Acosta’s concern reflects a growing understanding that the employment laws and regulations written in the 20th century don’t account for the way many people work today and in particular, that some new form of employment classification may be needed to reflect the situation of people like Uber and Lyft drivers, who work as independent contractors but resemble regular employees in many aspects. The rights and obligations of these individuals and the platforms through which they find work are currently a legal gray area, being defined in the courts through litigation rather than by Congress.
That US employment laws need updating to account for today’s very different labor economy is not especially controversial, but what those updates should look like is hotly debated: Labor activists want gig economy workers to enjoy the same protections as traditional employees and progressive gig economy companies want a new social safety net for these workers based on portable benefits, whereas other businesses and lobbying groups want to limit regulation of this emerging economy as much as possible.
London Taxi Protest Against Uber in 2016 (Dinendra Haria/Shutterstock.com)
In a bombshell decision last October, a UK employment tribunal ruled that Uber drivers were employees of the ride-sharing platform, not independent contractors as Uber contends, and as such had the right to paid vacation and a minimum wage. Uber immediately appealed the ruling. On Wednesday, less than a week after losing its license to operate in London, the company was back in court to plead its case for why the court’s understanding of its labor model is misguided, Reuters reports:
At the two-day appeal hearing starting on Wednesday, Uber said its drivers were self-employed and worked the same way as those at long-established local taxi firms. The self-employed are entitled to only basic protections such as health and safety, but workers receive benefits such as the minimum wage, paid holidays and rest breaks. This would add to Uber’s costs and bureaucracy across Britain.
“The position of drivers who use the App is materially identical to the (familiar and long-established) position of self-employed private hire drivers who operate under the auspices of traditional minicab firms,” Uber said in its court submission. Minicabs, or private hire vehicles, sprung up in Britain more than 50 years ago. Minicabs cannot be hailed in the street like traditional taxis, but can be booked for specific times and places via a registered office with a call or via the internet.
The comparison to minicab companies is not going over well with Uber’s UK critics, Bloomberg’s Jeremy Hodges notes, as the company had previously argued before the tribunal that it was a technology company, not a transportation company, and played no role in the transport business beyond connecting its self-employed drivers to customers:
In the latest case concerning the classification and rights of workers in the gig economy, the National Labor Relations Board has filed a complaint against Handy Technologies, an on-demand platform for home cleaning services, arguing that its cleaners are employees of the company and not independent contractors as Handy claims, Bloomberg’s Josh Eidelson reports:
The complaint, issued Monday by the agency’s Boston-based regional director and provided to Bloomberg by the workers’ attorney, alleges that Handy “has misclassified its cleaners as ‘independent contractors,’ while they are in fact statutory employees” who are entitled to the protections of federal labor law.
The case concerns workers who are trying to bring wage and hour class-action claims against Handy, who argue the company is violating their rights as employees by trying to force them into arbitration instead. Unless there is a settlement, it now heads to an administrative law judge, and from there could be appealed to the labor board’s presidentially appointed members, and then into federal court.
The Handy workers are represented in the case by Boston-based attorney Shannon Liss-Riordan, who has made a name for herself as an advocate for gig economy workers in similar claims against other platforms like Uber and Lyft. “There are a lot of companies out there that are assuming they can get away with classifying their workers as independent contractors because they think everyone else is doing it,” Liss-Riordan told Bloomberg in an interview. “I would hope this complaint would give them pause.”
The NLRB complaint against Handy, which the company insists is without merit, is among the first cases the board has pursued to address the employment rights of the growing number of Americans who make a living through gig economy platforms. Last October, the NLRB accused the on-demand delivery company Postmates of violating its drivers’ rights as employees by requiring them to agree to resolve disputes through arbitration.