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.
One of my favorite workplace law reporters, Tyrone Richardson of Bloomberg Law, had two stories in the past week addressing the issue of Congress and the gig economy. They present two sides of the same coin when it comes to the possible action that our nation’s federal lawmakers might take with respect to gig workers and the companies that retain their services.
During Fortune’s Most Powerful Women Summit earlier this week, Uber’s CEO Dara Khosrowshahi dropped a bombshell: the company wants to soon provide benefits to its drivers in an effort to close the gap between what is received by its contractor fleet and its employee workforce. If this comes to fruition, it could revolutionize the way that gig workers are compensated, could lead to even more people jumping into the gig worker pool—and could spark a renewed misclassification battle over contractor status.
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.
As an increasing number of workers continue to join the gig economy, it is increasingly imperative for lawmakers and regulators to create a new retirement system that allows for freelancers and individuals working for multiple businesses to easily save for retirement. Although the American workforce is changing, the traditional retirement system does not yet present an option for the changing workforce. Gig workers are currently not entitled to enjoy a traditional employer-based retirement plan because such plan are only permitted to cover employees and not independent contractors.
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.
Offering health, retirement, and workers’ compensation benefits to the varied gig workforce, while maintaining some affordability to the worker while also avoiding the 30 percent cost increase to businesses, has proven to be an extremely tall task. The situation gets even more complicated because gig businesses also need to be concerned that charges of worker misclassification could be supported by the offering of such benefits to their contractor workforce.
Of all the public policy debates surrounding the gig economy of late, one of the hottest topics 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, or “gig to gig.” This push just got a major jumpstart that may turn out to be a game-changer.
There are obvious “benefits” to participating in the gig economy: Gig companies get to use as little or as much labor as they need. Gig workers are able to work at their chosen capacity. And customers get new products and services. But there are other “benefits” that are receiving more attention of late: “employee benefits.”
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.