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.
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.
US Senator Mark Warner of Virginia and Rep. Suzan DelBene of Washington, both Democrats, proposed legislation on Thursday that would establish a fund to subsidize the development of portable benefits programs for the growing number of Americans making a living as independent workers in the gig economy. According to a press release from Warner’s office, the bill “establishes a $20 million grant fund within the U.S. Department of Labor to incentivize states, localities and nonprofit organizations to experiment with portable benefits models for the independent workforce”:
The Portable Benefits for Independent Workers Pilot Program Act … authorizes a total of $20 million for competitive grants to states, local governments and nonprofits for pilot projects to design, implement and evaluate new models ($15 million) or assess and improve existing models ($5 million) for portable benefits for independent workers such as contractors, temporary workers and self-employed workers.
One of the key questions raised by the advent of the ‘gig economy’ is how participants in that economy will obtain critical benefits like health care, unemployment insurance, and retirement savings outside of a traditional employer-employee relationship. Ridesharing platforms Uber and Lyft maintain that their drivers are independent contractors and have fought to keep them from being reclassified as employees, which these companies fear would wreak havoc on their business models by requiring them to provide unemployment benefits, paid vacations, regular work hours, and so forth. Gig economy platforms argue that the people who use them for work enjoy a level of freedom and flexibility that they could not maintain as employees, so everybody wins from the independent contractor model. Since gig economy workers look a lot like employees, but not exactly, some economists have proposed that a new type of classification is needed to account for this type of work.
In the meantime, some gig economy platforms have experimented with ways to provide their user-contractor-employees with benefits without breaking their business models: Last August, Uber piloted a retirement savings program for drivers, and Care.com is trying out a peer-to-peer platform that allows customers who hire caregivers through the platform to contribute to their caregiver’s benefits, much like a traditional employer would. Other companies say they would like to provide benefits to their contractors but don’t, because doing so would risk having them reclassified as employees.
New York State has been trying to develop a legislative solution to this quandary since last year, working from a draft bill circulated by the online home-cleaning company Handy that would establish a model for gig economy workers to receive portable benefits while remaining independent contractors under state law. At the New York Employment Attorneys Blog last month, Harman Firm attorney Edgar M. Rivera explained how the bill would work:
Etsy, the online handicraft retailer, published a detailed report this week proposing what it calls a “social safety net” for gig economy workers in the US, including Etsy sellers as well as on-demand workers such as Uber drivers. The premise of their public policy proposal is that gig economy participants need three things they currently don’t have:
A single place to manage benefits, regardless of income source
Tying benefits to employment excludes too many workers and results in economic inefficiencies. We propose creating a Federal Benefits Portal, which would tie all benefits (retirement, health insurance, paid leave, tax-advantaged savings accounts, disability, etc.) to the individual, providing a single marketplace to view, choose and pay for their benefits, regardless of where or how they earn income.
A simple, common way to fund those benefits
Although payroll has been a useful way to administer benefits, it excludes everyone working outside traditional employment. We propose using tax withholding as the universal means to administer benefits contributions, enabling both employees and 1099s to withhold their Social Security and Medicare taxes from their pay, as well as an additional percentage of pre-tax income to fund benefits. All withheld pay and matching contributions would be routed to an individual’s account on the Federal Benefits Portal, where they could allocate consolidated contributions across plans.
A way to manage income fluctuations
Those outside traditional employment often experience considerable income volatility, and lack income protections like minimum wage or unemployment insurance. We propose combining all existing tax-advantaged savings accounts (health, dependent care, parking and transportation) into a single MyFlex Account, which anyone could use to manage short-term income fluctuations throughout the year. To manage more catastrophic income loss, we propose expanding the Earned Income Tax Credit and allowing it to be administered quarterly.