In anticipation of New York’s 2020 legislative session, state lawmakers are beginning to develop a proposal to regulate the gig economy – and the news isn’t good for businesses. As we discussed in an entry back in September, New York seems intent on developing a law including California-like elements that might lead to a version of the ABC test in the Empire State. But recent news means we might see things get taken a massive step further. Some legislative leaders are also seeking to introduce the country’s first collective bargaining law that would permit gig workers to unionize.
Things were starting to get dicey in the Garden State as the legislature debated a California-like proposal that would have caused serious problems for gig economy companies and other businesses utilizing contract labor. But a measure of good news emerged last Friday as Senate leadership announced there would be changes to the draft legislation to protect a greater number of independent contractors. While we still cannot be sure about the extent of the changes and whether the resulting amendments will permit the typical gig economy company to continue business-as-usual, there is reason for optimism that the state will look to balance both the interests of workers and the needs of business when it comes to legislation in this area.
As we reported just a few weeks ago, Congress has begun to gather information and consider the “future of work,” with considerable emphasis on the role of the gig economy. Although this emergency economy is growing rapidly, tension is also growing within its ranks. In particular, gig workers are attracted to earning money while maintaining all the flexibility and control they can exercise in these arrangements. But they are not entirely comfortable with the concept of being an independent contractor (IC) if that means they have no fringe benefits, are not covered by the minimum wage, and have no protection from non-discrimination laws. In this way, and in a much truer sense, ICs are “on their own.”
Lawmakers have begun to hold a series of hearings to discuss the “future of work,” and it may be no surprise that the two political parties have differing ideas about how that should impact the gig economy. The House Education and Labor Committee held the first of three such meetings on October 23, aiming to ensure that the law keeps up with modern developments such as automation, artificial intelligence, and the gig economy. While Democratic lawmakers seem to want to increase restrictions on the industry, their Republican counterparts are looking toward more flexible options. According to an article by Jaclyn Diaz of Bloomberg Law, the working subcommittees will recommend specific legislation early next year. What might such legislation look like, and what chances of success might it have?
“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.