The US Department of Labor has finalized a new regulation that will enable more small businesses and self-employed Americans to buy health insurance through association health plans (AHPs), which proponents say will help lower health insurance costs for smaller employers, but which critics say undercuts the essential coverage requirements created by the Affordable Care Act. The core impact of the nearly 200-page rule is to broaden the definition of the term “employer” under the Employee Retirement Income Security Act (ERISA), establishing new criteria under which employers can join together in an association that would still be regarded as a single “employer” for ERISA purposes. SHRM’s Stephen Miller discusses what that means for how small businesses buy group health insurance:
The broader interpretation of ERISA will let employers anywhere in the country that can pass a “commonality of interest” test join together to offer health care coverage to their employees. An association could show a commonality of interest among its members on the basis of geography or industry, if the members are either:
- In the same trade, industry or profession throughout the United States.
- In the same principal place of business within the same state or a common metropolitan area, even if the metro area extends across state lines.
Sole proprietors will be able to join small business health plans to provide coverage for themselves as well as their spouses and children.
Previously existing AHPs, which were allowed under a more limited set of restrictions, will not be affected, unless they choose to expand in ways allowed by the new rule. The rule change, which President Donald Trump ordered the department to study last year, effectively exempts AHPs from ACA regulations that apply only to individual and small group plans by allowing them to operate in the more lightly regulated large group market. These regulations include the core package of health care services known as essential health benefits, which all plans in the individual and small group market are required to include but larger plans are not.
A year ago, UK plumber Gary Smith won a case in the Court of Appeal against Pimlico Plumbers, where he had worked for six years and from which he contended he was unfairly dismissed after seeking to reduce his hours. Pimlico considered Smith a self-employed independent contractor and contended it had no obligations to him as an employee. The Court of Appeal accepted that he was not an employee, but ruled that he was properly classified as a worker, entitling him to some (but not all) the rights enjoyed by regular employees, such as holiday and sick pay.
The company chose to appeal that ruling further, and on Tuesday, the UK Supreme Court began hearing arguments in the case, the BBC reports:
The case hinges on the distinction between Mr Smith’s status as either a self-employed contractor, or a worker for the company. He was VAT-registered and paying tax on a self-employed basis, but worked solely for Pimlico Plumbers. After he suffered a heart attack in 2010, Mr Smith, from Kent, wanted to work three days a week rather than five. Pimlico refused his request and took away his branded van, which he had hired. He claims he was dismissed. …
[Charlie] Mullins, the founder of London-based Pimlico Plumbers, says that plumbers were hired on the basis that they were self-employed, provided their own materials and did not have workers’ benefits, but were paid significantly more as a result. He argues that the case has nothing to do with the gig economy and that Mr Smith is not in the same as an Uber driver.
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:
Martha White at NBC News passes along a new survey from MBO Partners, a business services company that helps independent contractors manage relationships with their clients, that looked into what motivates people who work for themselves and turned up some interesting gender dynamics:
MBO Partners asked independent workers whether or not they agreed with several statements about their motivations and priorities for working independently. While roughly 74 percent of women said flexibility is more important than making the most money, fewer than 60 percent of men agreed — and this gap has been widening. When MBO asked the question just two years earlier, 63 percent of men and 68 percent of women prioritized flexibility over money.
The survey also found that the number of women who said that controlling their own schedule was more important than making the most money was 11 percentage points higher than the number of men who said the same. … Although 57 percent of female respondents said they don’t like answering to a boss and nearly as many said they like being their own boss, 69 percent each of men said the same — another split that has widened in just two years.
Experts tell White that “outdated gender roles are to blame” for these differences, surmising that women value flexibility over pay to a large extent because women still bear most of the burden when it comes to caregiving and other responsibilities in the home—and the delicate act of balancing these responsibilities with work as a regular employee eventually becomes too difficult for many professional women:
Deliveroo, a UK technology company that connects restaurants with delivery workers through an Uber-like gig economy platform, has simplified and changed the terms of its agreement with couriers, removing several controversial provisions that had attracted unwelcome attention from lawmakers, Sky News reports:
The company has removed a stipulation in earlier contracts saying that couriers could not challenge their self-employed status at an employment tribunal – a clause that had been described as legally invalid and which people close to Deliveroo said had never been enforced. The document also includes the explicit clarification that couriers can work for other companies at the same time as they undertake work for Deliveroo – a key change that MPs had urged in a critical report on the so-called “gig economy” earlier this year. …
At four pages, the new “contract” is a quarter of the length of those used by Uber, the ride-hailing service, and one-fifth of those used at Amazon, the internet retail behemoth, according to details submitted this year to the Work and Pensions Select Committee.
A new report from the UK House of Commons’ Work and Pensions Committee paints a pretty dismal picture of the gig economy in Great Britain and warns that the growing number of self-employed workers there (A total of 5 million, or 15 percent of all UK workers) “presents fundamental challenges for the welfare state.” Mark Eltringham at Workplace Insight peruses the conclusions of the MPs’ inquiry, which found “appalling practices” among gig economy employers:
In its report the Work and Pensions Committee says Government must close the loopholes that are currently allowing “bogus” self-employment practices, which are potentially creating an extra burden on the welfare state while simultaneously reducing the tax contributions that sustain it. … Companies relying on self-employed workforces frequently promote the idea that flexible employment is contingent on self-employed status, but the Committee says this is a fiction.
The Committee says: “The apparent freedom companies enjoy to deny workers the rights that come with “employee” or “worker” status fails to protect workers from exploitation and poor working conditions. It also leads to substantial tax losses to the public purse, and potentially increases the strain on the welfare state. Designating workers as self-employed because their contract offers none of the benefits of employment puts cart before horse. It is clear, though, that this logic has taken hold, enabling companies to propagate a myth of self-employment. This myth frequently fails to stand up in court, but individuals face huge risks in challenging their employment status that way.”