“Anything you can do, I can do better.” That’s essentially the sentiment floating around Albany these days as New York lawmakers look enviously towards California and its groundbreaking new law that will soon revolutionize the way workers are characterized as contractors or employees. In the wake of California’s AB 5 – a bill that will codify the stringent ABC test into state law and make it extremely difficult for companies to classify their gig economy workers as independent contractors – New York legislative leaders are lining up to be next to reshape the state’s misclassification test, according to Newsday, “on a scale that one veteran lawmaker said would be similar to sweeping changes made during the Industrial Revolution.”
It’s been a busy week on the Dynamex front, and the news for businesses continues to get worse. As we recently discussed, the 9th Circuit held just last week that Dynamex and the ABC test should be applied retroactively. The very next day, California’s Division of Labor Standards Enforcement (DLSE) released an opinion letter concluding that the ABC test applies to both IWC Wage Order Claims and certain Labor Code provisions that enforce Wage Order requirements.
As I wrote previously, it is no secret that labor laws have been unable to keep pace with the changing economy, despite challenges from the bench to address the needs of the gig economy. Certain state legislatures (e.g. Washington) have taken steps to address needs of gig workers, with their ‘Paid Family and Medical Leave’ program expanded to include self-employed workers. And efforts to make portable benefits available to the gig workforce are ongoing, mostly at the state level. However, federal legislative and regulatory entities are seemingly mulling their options and allowing the change to occur from the bottom. Voices from the gig upper strata are becoming impatient, and want immediate legislative change, at the top.
We can safely say that one of the biggest supporters of the gig economy is Virginia Senator Mark Warner (D). Back in 2016, he advocated for the Labor Department to update its statistics to help us get better insight into the size of the gig economy. In 2017, he crafted a concept and introduced a bill to assist local governments with funding and development of portable benefits for gig workers, then followed that up with a proposal designed to tackle tax issues that arise for gig workers. He’s at it again.
Online digital marketplaces such as Uber, Handy, and PostMates are now firmly rooted in many American’s daily lives. With the seemingly overwhelming and growing presence, these companies continue to face uncertainty when classifying their workers which may result in longstanding financial, legal, and social implications. The business models of online digital marketplaces rely on their workers being classified as independent contractors, not employees, which are significantly less expensive to hire than employees and are not subject to most labor protections.
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.
As we have previously discussed, one of the hottest gig economy issues to dominate political and public policy debate has been “portable” benefits – the concept that gig economy workers should have flexible, portable benefits that they can take with them from job to job. States and local governments are increasingly moving forward on their own with proposals to explore the provision of benefits to individual performing work in the gig economy. Most notable are proposals that have been set forth in the state legislatures in Washington, New York and New Jersey. The movement also got a boost in January when Uber and SEIU announced a joint call for the state of Washington to develop a portable benefits system that would cover gig economy workers.
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.
The month of February and its immediate aftermath is always an exciting time for California legislation. That’s the month when legislators submit all of the new bills that will be sought for passage in the state legislature, and gives a clear window into what could be coming down the turnpike in new laws in the years to come. Some bills are proposed time and time again, only to be lost in committee or vetoed, but still showing up again the following year. Others disappear entirely. Some pass or fail, and cause shockwaves in the legislative landscape.