As reported on our Wage & Hour Law Blog just a few days ago, the U.S. Department of Labor (DOL) has announced that it will revive its historical practice of issuing Opinion Letters in response to specific inquiries from businesses and workers about the application of (among other things) the Fair Labor Standards Act of 1938 to their real-world issues. This development is welcome – and extremely important – to the businesses fueling the growth of the gig economy, businesses that may feel understandable uncertainty about how the 80 year-old FLSA will be applied to the emerging business models that were not contemplated when the statute was first drafted.
Late last week, NPR aired a story discussing the governmental efforts to bring portable benefits to gig workers. You can read a transcript of the story or listen to it by clicking here. I was fortunate enough to have been interviewed by Yuki Noguchi for the story, discussing one of the biggest reasons most companies do not offer benefits to their workers benefits: “They don't want to have them categorized as ‘employees.’ Under the law, employees have more rights than independent contractors — for benefits, to unionize, and other worker protections.
Many workers are leaving the comfort and stability of traditional 9 to 5 jobs in favor of more flexible options. This paradigm shift may be new to the general public, but it certainly does not appear to be a passing fad. In fact, in 2016, almost 53 million Americans made a living working in the gig economy. To be clear: that’s nearly 34% of the American workforce (wow!). Recent projections forecast that by 2020, nearly 43% of the American workforce will be comprised of freelancers. So why are workers opting for opportunities in the gig economy over more traditional employment options?
The on demand economy is now far more expansive than transportation or food delivery. In fact, lawyers now make up a growing aspect of this market as an increasing number make themselves available as “contract attorneys” hired to perform limited tasks. For example, large law firms may hire a contract attorney to participate in a massive discovery project or assist with general document review. These jobs can last a day or two, or perhaps up to several months. The appeal to law firms (and their clients) is that contract attorneys often come at a lower hourly rate than a more traditionally employed attorney. This is especially true when firms in large cities enlist the work of out of town attorneys who can often work remotely.
Back in October, we reported that there appeared to be the first crack in the wall when it came to classifying Uber drivers as employees instead of independent contractors. At that time, it was reported that the New York State Department of Labor made the determination while granting the drivers unemployment benefits. We weren’t sure how much of an impact these cases would have, however, and concluded by saying “it's unclear how far worker advocates will push these decisions. If they do go to their next levels of review, it is possible for New York's appellate courts to be called upon to step into the fray.”
Recent studies have reported that race and gender disparities are not uncommon in the sharing economy. For example, it’s been reported that some gig workers were discriminating against customers with names that “sounded Black.” Women and workers of color are more likely to garner negative reviews from customers. And now, a recent study found that people with disabilities are more likely to be rejected through Airbnb than their comparators without disabilities. The study, conducted by Rutgers University, found that 75% of travelers who made no mention of a disability were granted pre-approval. For those who mentioned a disability, the pre-approval rate dropped from anywhere between 25% to 61% depending on the disability.
Earlier this week, the U.S. Department of Labor dropped a bit of a bombshell when it announced the immediate withdrawal of two informal guidance letters issued back when President Obama governed the executive branch. The 2015 guidance on independent contractor (IC) misclassification and the 2016 guidance on joint employment were wiped from the books; if you search for them now on the agency’s website, you’ll find a blank page reading: “Page Not Found – The page you requested wasn’t found on our website.” What should gig economy companies take from this development, especially the withdrawal of the IC guidance? Yesterday I spent some time talking to a BNA reporter about this issue, and put some talking points together to sum up my take.
Gig economy companies in Texas were on the receiving end of two pieces of good news in the last several weeks. Most recently, the state legislature passed and the governor signed into law a bill that will all but assure ride-sharing companies that their workers will be classified as independent contractors and not subject to costly misclassification cases. As my Dallas partner Art Lambert wrote in a legal alert from earlier this week, H.B. 100 ensures that any driver working for a transportation network company (TNC), defined as any entity using a digital network to connect a rider to a driver to provide prearranged rides, is properly classified as an independent contractor as long as long as four simple requirements are met.
A recent article citing the 2017 Deloitte Global Human Capital Trends report notes that “the accelerating rate of change in business, the economy, and society challenges both business and HR to adopt new rules for leading, organizing, motivating, managing, and engaging the 21st-century workforce.” Here we go again! Rewriting the rules to keep up with rapid changes in this new era. Only this time even larger scale changes at an even more furious pace.