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 UK government on Wednesday announced a series of planned labor market reforms to improve the working conditions and protect the rights of the millions of Britons employed in the gig economy and other flexible or contingent models of work, based on the findings of the Independent Review of Employment Practices in the Modern Economy, led by Matthew Taylor, which were published last July. The government says is intends to adopt almost all of the Taylor Review’s recommendations, the BBC reports:
The changes include stricter enforcement of holiday and sick pay rights, and higher fines for firms that breach contracts or mistreat staff. … The government says it is going further than the Review’s recommendations by:
- Enforcing holiday and sick pay entitlements
- Giving all workers the right to demand a payslip
- Allowing flexible workers to demand more stable contracts
The quantity and quality of jobs in the gig economy will be monitored and steps will be taken to make sure flexible workers are aware of their rights. The government is also asking the Low Pay Commission to consider a higher minimum wage for workers on zero-hour contracts, and says it may also repeal laws that allow agencies to employ workers on cheaper rates.
The reforms have not yet been fleshed out in much detail, while some of the plans announced on Wednesday involve not changing laws or regulations, but rather more strictly enforcing those already on the books. “The government’s plan will make sure that everyone knows what they’re entitled to when they start working for a company and the rules will now be enforced by HMRC, so people actually get what they’re owed,” BBC Business Correspondent Theo Leggett explains.
The European Court of Justice ruled on Wednesday that Uber should be regulated as a transportation company, not a technology company, potentially exposing the ridesharing platform to new licensing and tax requirements within the European Union and hinting at how the court will likely rule on other regulatory issues involving gig economy companies.
The court’s finding that Uber “must be classified not as ‘an information society service’ but as ‘a service in the field of transport’” means that under European law, it may be regulated differently in each member state, Sky News’s Bethany Minelle explains—in contrast to digital platforms, which are held to a single set of rules throughout the EU. This opens the way for EU countries and cities to hold Uber to the same standards as other transportation services in their jurisdictions:
While the long-running case, which originated in Spain, is not legally binding it is likely to foreshadow the decision in the majority of EU cases. The Barcelona-based legal firm representing the cabbies who filed the lawsuit said that the ruling was “a social victory” with “great judicial significance”. …
Employee monitoring technology is often depicted as “Big Brother” watching over employees to enforce maximum productivity. However, as these technologies become more common, organizations are finding opportunities to use them in ways that benefit employer and employee alike. TechCrunch’s Steve O’Hear reports on one London startup, Zego, which has devised a way for delivery workers on gig economy platforms to insure their vehicles at an affordable rate by charging them only for those hours when they are logged into the platforms they use to find work:
The startup has also developed good relationships with the platforms it supports, meaning its insurance app is able to connect to those on-demand food delivery platforms so that Zego-insured drivers don’t need to manually tell Zego when they are and aren’t working. Instead, the cover kicks in as soon as they log on for a delivery shift.
And because Zego knows when a person is or isn’t out driving and where, it is potentially able to use this data to adjust its risk assessment accordingly. The startup is also exploring telematics — the use of tracking hardware and software — as another way of more accurately pricing its pay-as-you-go cover or helping to reduce risk by perhaps warning drivers when they are being unsafe.
Zego’s product responds to a demand for ways to give workers in the UK’s ever-expanding gig economy at least some of the benefits and protections enjoyed by full-time employees, in a flexible, portable form that fits with their work lives. It also collects a lot of data on its users, but Zego is betting that they will be perfectly happy to trade that data for reduced insurance costs. In fact, the pay-as-you-go insurance policy is one of their main branding points on their site. Because Zego is offering a value proposition where workers benefit from the collection of their data, they don’t mind the company knowing when and where they work.
Employers can benefit from a similar approach when implementing employee monitoring technologies or otherwise collecting employee data. Research we at CEB, now Gartner, conducted last year found that most employees don’t consider it unacceptable for their employers to monitor their activity at work. Among millennials, 70 percent don’t mind being monitored as long as the purpose of the monitoring is to help improve their performance. Our findings suggest that employees are less resistant to these new forms of monitoring than employers may think, but also that they are even less likely to object when they see a direct benefit.
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:
A British employment tribunal has rejected Uber’s appeal on a case involving the employment status of its drivers. While the popular ride-hailing app believes drivers should be considered self-employed, and insists the vast majority of them prefer it that way, the tribunal has ruled that the drivers are employees and thus entitled to minimum wage, overtime/holiday pay, and other protected benefits.
Uber’s appeal came in response to a tribunal ruling last year which reached the same conclusion. Following this rejection, the company says it will take the opportunity to elevate its case to the Court of Appeals or the Supreme Court. Uber is embroiled in other legal battles in the UK, as the company is also in the process of appealing a ban issued by London authorities, who deemed the service unfit due to “public safety and security implications.”
This case has major implications for the gig economy, the long-term viability of which may be called in question due to the potential closing of this employment loophole. Deliveroo and Addison Lee are appealing similar decisions at the moment in the UK, and a similar case is underway in California involving the food-delivery app GrubHub. Additionally, Uber has settled class-action lawsuits on drivers’ employment status in California and Massachusetts, and other states are following suit. Not being on the hook for benefits and regular wages has helped gig economy companies grow at scale while keeping labor costs low and making it easier to deal with fluctuating demand for their services.