As if gig businesses haven’t had enough bad news to digest in the past few weeks... fresh off the heels of the California Supreme Court’s decision in the Dynamex Operations case, members of Congress are now focusing on increasing workplace rights for gig economy workers while handing them the ability to bargain collectively.
Last week was a big week when it comes to shining the spotlight on sexual harassment in the gig economy arena. On Thursday, Nathan Heller wrote a piece for the New Yorker that garnered a lot of attention entitled, “The Gig Economy Is Especially Susceptible to Sexual Harassment.” The premise of the article is that freelance workers of all stripes outside the sphere of protection that typically covers W-2 employees, noting that human resources departments, collective bargaining, and federal and state laws cannot offer coverage over most independent contractors. Because of that, Heller writes, “freelance workers are highly vulnerable [to sexual harassment]. They have little institutional support and few, if any, supervisors. They are transient and easily replaceable as well. Those who gig with algorithmic ratings systems must stay on the good side of capricious clients. Others, who depend on word-of-mouth referrals, are obliged to embrace any gift horses that come.”
Bad news out of Washington, D.C. late yesterday. Chris Opfer of Bloomberg BNA reports that the current version of the Senate tax reform bill, released yesterday, no longer includes the protection that had initially been proposed that would have prevented misclassification challenges against most gig economy companies. We discussed the proposal in a blog post last week with high hopes that we might start to see some movement on the federal regulatory front, but this latest development means that gig companies will be waiting longer for protection from the federal government.
Reports out of Washington, D.C. indicate that gig economy businesses could be in for an end-of-the-year treat in the form of game-changing legislation. Chris Opfer and Tyrone Richardson of Bloomberg BNA report that Senate Republicans will insert language in the upcoming tax reform bill that will “protect businesses that mistakenly classify workers as independent contractors.” Given the dozens and dozens of times we’ve talked about misclassification claims as the biggest scourge facing the industry today, this proposal could radically alter the industry as we know it.
Should the legislative branch of the federal government focus its efforts on regulating the gig economy at the present time, or should they stick to bigger picture topics to occupy their time (such as healthcare or updating the federal tax code)? Should Congress step in and develop a system to provide employee benefits to gig workers? And the million dollar question: should our federal representatives take a stab at revising the independent contractor misclassification test to account for the changes in modern society brought about by the advent of gig work? Due to the growth and sheer breadth of the gig economy, these are but a few of the issues that need to be resolved.
For years, businesses have struggled with properly identifying workers as either independent contractors or W-2 employees. The hundreds of thousands of jobs created by the gig economy has complicated matters even further. Over the years, administrative bodies have attempted to craft tests to be used in the classification process. These tests, in many respects, have not been helpful. Our courts, too, have attempted to solve the riddle, but have largely been unsuccessful due to inconsistent rulings. As a result, businesses that have attempted to properly classify workers in good faith have found themselves in hot water with the Internal Revenue Service and state taxing authorities, state employment departments, workers’ compensation boards, and the courts.
Several weeks ago, we asked if the concept of portable benefits for gig economy workers was one step closer to reality, with rumors swirling of imminent federal legislation forthcoming. Well, this issue just took a big leap forward with the introduction of legislation by Senator Mark Warner (D-Virginia).