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Tag: gig economy

Speed Grocery Delivery Workers Are in a Dangerous Race

Posted on by Maggie Duffy
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A new industry of venture-capital-backed startups claim their workers are fast. Are they faster than regulations?

NEW YORK?—?Anthony Hom offers tips to delivery workers on his YouTube channel, Ride With Anthony. In one 15-minute, day-in-the-life video titled ?“Delivering Groceries Almost Kills Worker NYC,” Hom records himself on an electric bicycle delivering groceries through the streets of Manhattan, through a 20 mph wind he says is ?“pushing him sideways,” past a street barrier that blows into his path and avoiding a car that swerves without signaling.

That day, Hom was delivering for startup 1520, which launched in Manhattan in January 2021. It promised delivery in 15 to 20 minutes ?“or it’s free,” hence the name.

Grocery speed-delivery services surged in New York in 2021, heavily backed by venture capital. Already, expansion is outpacing protections, experts and advocates say (though 1520 has now shuttered, having drained its initial funding of $7.8 million). Delivery workers for the startups commute using e?bikes, and sometimes e?scooters, often provided, and branded, by the company they work for.

The ads are hard to miss, complete with neon color palettes and obscure names (see JOKR and Gorillas) and websites claiming the pasta will be ?“delivered before the water boils.”

The 20-minute delivery window is possible because of strategically located, company-owned micro-warehouses that each stock a limited supply of curated products, with an operating radius of about 2 miles (New York City Councilwoman Gale Brewer has alleged the ?“dark stores” are illegally located in commercial and residential zones.)

Hom started as a full-time delivery courier for 1520 in September 2021, motivated by the prospect of being an employee with hourly pay and the requisite benefits and protections, which he would not receive as an independent contractor, where pay scales can be radically different each day. On paper, the difference seems like a big move for the delivery and gig-economy industry; the majority of delivery workers for third-party apps are classified as independent contractors, which leaves them ineligible for minimum wage protections, sick pay, workers’ compensation, unemployment insurance and other benefits.

Without robust, enforced regulations, however, some advocates say the move is more about public relations than social responsibility.

“Speed delivery is testing new business models to maximize their profit, create competitive advantage and grow in the app delivery market,” says Ligia Guallpa, executive director of the Worker’s Justice Project. ?“They need a reliable workforce that can be 24/7— and this means paying the minimum and giving minimum protections, so they can control the labor more rapidly.”

Speed-delivery workers in New York City are covered under Administrative Code 10?–?157, which sets standards for businesses using bicycles for commercial purposes, according to Vincent Barone, press secretary for the city Department of Transportation. But Hildalyn ColĂłn Hernández, policy director for the Worker’s Justice Project, says speed-delivery companies often do not comply. She cites examples such as providing reflective uniforms for safety and company identification on the bikes, guidelines that restaurant delivery services are required to follow, while some speed-delivery services are lacking, she says.

Meanwhile, the delivery industry itself is rapidly changing. ?“We have an industry that is emerging extremely fast, with a slower government sector,” ColĂłn Hernández says. In September 2021, for example, the New York City Council passed legislation granting workers for third-party delivery apps (like Uber Eats and DoorDash) new protections, including access to restaurant bathrooms and transparency about daily compensation?—?but that particular legislation does not cover speed-delivery from micro-warehouses.

Hom quit 1520 because of ?“a lot of close calls” and the inflexibility of his schedule, he says. The average shift for 1520 workers was 12 hours according to Hom, but he says no delivery worker should be out longer than 8 hours: ?“Your body gets fatigued, not just your muscle but your instincts. That’s when human error takes place.”

As an employee, he says he was on the clock regardless of weather conditions. ?“When it’s raining, snowing, really cold outside, the hazardous work conditions, you still gotta deliver these groceries,” Hom says, adding: ?“If you refuse to, you’re probably going to get written up.”

When remnants of Hurricane Ida swept through New York in September 2021, images of delivery workers fulfilling orders for those hunkered down at home circulated online. One video, which shows a rider carrying an order through waist-deep water, prompted Rep. Alexandria Ocasio-Cortez to tweet, ?“If it’s too dangerous for you, it’s too dangerous for them.”

To ColĂłn Hernández, the unacceptability of this risk should be obvious. ?“If there is a hurricane, no one should be out there,” she says. She adds that, even in wintry conditions, ?“They are out there doing the work that nobody wants to do. They need to be compensated fairly.”

Veena Dubal, a San Francisco-based law professor whose research centers on the gig economy, says, ?“In an industry where there is such a high rate
of injury, so much wear and tear on one’s body and health, there has to be a wage premium,” Dubal says. ?“These have to be good jobs, not make-it-by-the-seat-of-my-pants jobs.”

Josh Wood, a delivery worker for Uber Eats covered by the new delivery legislation, says his experience with Los Deliveristas Unidos (“Delivery Workers United”), an organizing collective created by the Worker’s Justice Project, has bolstered his beliefs in workers’ rights. 

“Every worker,” Wood says, ?“should have a union, have a group of advocates for them, and should be in an industry that’s regulated.”

This blog post was printed at In These Times on April 21, 2022.

About the Author: Maggie Duffy is a Brooklyn-based writer and an In These Times editorial intern. She is a graduate of Occidental College where she earned a degree in sociology. She most recently worked as a researcher for American Friends Service Committee. 


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Here’s What’s in the New Bill Jointly Backed by Uber and the Teamsters in Washington State

Posted on by Luis Feliz Leon
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Uber’s lobbyists, after clinching an agreement with UFCW Canada to launch a charm offensive at the Ontario provincial government for employee-like benefits on behalf of an estimated 100,00 drivers, weren’t done hobnobbing with unions.

Next up, the Teamsters in Washington state are working on a deal with Uber and Lyft.

The legislation would give ride-hail workers new benefits—sick pay, a process to appeal deactivations, protections against retaliation, and workers’ compensation—in exchange for codifying their status as independent contractors rather than employees, and preempting cities from regulating the rideshare companies as Seattle has done.

Washington lawmakers passed the bill, HB 2076, backed by Teamsters Local 117,
with 55 yeas to 42 nays on February 23. The Senate will hold a public hearing February 26.

“HB 2076 exemplifies Washington State’s spirit of leadership and innovation,” Teamsters Local 117 Vice President Brenda Wiest wrote to House representatives February 22 in an email obtained by Labor Notes. “This bill is supported by both Uber and Lyft, as well as the Teamsters, their affiliated Drivers Union, and dozens of labor and community-based organizations across the state. Moreover, it is backed by the people who matter most—the drivers themselves.”

The Teamsters international declined to comment on the legislation.

FLASHPOINT OF DEBATE

It’s a flashpoint of debate in the labor movement: should unions keep fighting for employee status for gig workers, or cut a deal to head off worse odds down the road? After all, unions and drivers are squaring off against Uber and Lyft, who with their bottomless pits of cash forced their way in California in a 2020 ballot initiative, Prop 22.

The companies have made explicit the threat that, if they don’t get this legislative compromise, they will pursue a ballot initiative in Washington. Lyft has put $2 million into a newly formed political action committee Washington Coalition for Independent Work with clones in New York, Illinois, and Massachusetts. It also has the backing of Instacart, DoorDash, and Uber, which have committed to contribute to the PAC.

What’s curious about this bill is that it has the backing of Teamsters Local 117 and its affiliate Drivers Union, which previously supported efforts to boost gig worker protections. Drivers Union members said the rationale for throwing their support behind a legislative deal with Uber and Lyft is the ballot initiative threat.

“They’re also holding the gun at our heads with the possibility of an initiative,” said Don Creery, 68, a ridehail driver since 2013 and a board member of the Drivers Union. “They spent $200 million on California. It comes down to the reality that we don’t have the money to buy TV ads. They do. They will misinform the public with a barrage of TV ads, so we will lose an initiative. We could lose everything.”

Jake Laundry, 29, has been an Uber driver since 2015; he is a member of both the Drivers Union and IATSE Local 15, where he is an audiovisual worker. He considers himself a Teamster and didn’t want to say anything that would jeopardize the union. But he’s heard that pitch about the initiative threat too many times. Laundry views this bill as making “a deal with the devil.”

“It’s great you have a wage floor and then will improve wage conditions in outlying areas [outside] of Seattle,” he said. “But this contractor relationship also locks in a sort of technocratic feudalism.”

Creery has no qualms with contractor status. “I’m not really concerned about us not being designated as employees,” he said. “In our union, we abandoned that seven years ago, eight years ago. We can be independent contractors and get rights. These are laws that can be changed by us, and we did.”

The Drivers Union’s biggest victories, though, were won at the city of Seattle—and this bill would put an end to that by reserving the regulation of rideshare companies to the state.

“Now you’re just kind of at the whim of the state legislature, which swings really moderate,” Laundry said. “Here in Washington, we have crazy secessionists that want a holy war. We’re not gonna get any labor victories out of them.”

PAY RAISES

What Creery feels “conflicted” about is the pay raises in the bill. “If you’re a Tacoma driver, it’s really outstanding pay rates,” he said. Currently, “once you leave Seattle city limits, our pay drops by 40 percent.” Drivers in Tacoma, who now get 80 cents a mile, would increase to $1.17.

Waiting time and travel miles without a passenger in the car would be uncompensated, though, and the base fare would be between $3 and $5.17 per trip. “To pay one of us $3 is class warfare,” said Creery.

The bill establishes two tiers of pay. For trips originating in cities with more than 600,000 people (Seattle), the rate would be $1.38 per mile driven with a passenger in the car and 59 cents per minute. Those figures are based on Seattle’s Fair Pay Law, which took effect January 1, 2022. Elsewhere, the rate would be $1.17 per passenger mile and 34 cents a minute.

Yearly pay increases based on the cost of living would begin September 30, 2022.

Mohamed Diallo, 33, has been driving for Lyft and Uber since 2017. He’s in favor of the legislation because his rent in Kent has skyrocketed. He also wants to extend the benefits like sick pay and the right to contest deactivations through an appeals process beyond Seattle to Kent and other parts of Washington state.

He said other drivers from his native Guinea are also in favor of the bill, describing it as “wonderful news.”

“Last year, my two-bedroom used to be $1,500,” Diallo said. “Today I talked to my leasing office because my lease is going to be over and I have to sign a new one. It’s $2,030.” He also feels the financial strain at the gas pump; he’s averaging $180-$200 to fill the tank of his Toyota Highlander SUV. He says the new legislation will increase his average earnings from about 90 cents per mile in Kent to $1.17, and spare him the commute into Seattle where the rates are higher.

Diallo works six days a week, 12-hour shifts, with only Tuesdays off. He has two young children, a boy of six months and a two-year-old girl. “The most important thing about the bill is I will get more money to put food on the table,” he said.

Uber touts “flexibility” as a perk it offers to drivers. But “I don’t think flexibility is as important for the guys with the Teamsters,” said Laundry, who connected me with Diallo. “They’re driving 70, 80 hours a week. They’re just scrambling to support their families. They’re working their tails off, so they don’t really have a flexible life.”

THE BEST WE CAN GET?

Why would any union agree to be involved in these compromise bills? The argument goes that we’re not going to win on employee status, plus there are innumerable hurdles to organizing gig workers at scale… so creating a third category, an independent contractor with at least some labor rights, is the best deal the labor movement can get.

Nicole Moore from Rideshare Drivers United in California finds a contradiction in that position. “There’s more demand for unions, a better minimum wage, and labor rights,” she said. “Compromise is absolutely the wrong direction. This is not to say we can’t get legislation on the road to employee status—but not at the cost of our labor rights.”

The app-based companies and their labor collaborators tout the notion of creating “portable benefits” that follow you from gig to gig. But “labor rights are portable benefits,” Moore said. “I have my rights to unemployment. If I get hurt on the job, I have portable benefits to workers’ compensation. Anything other than that is taking some people completely out of the picture.”

For Moore, the defeatist attitude that employee status isn’t winnable harks back to the National Labor Relations Act’s exclusion of agricultural and domestic workers. Like those workforces, the gig workforce is largely people of color and immigrants.

A personal vehicle makes for a very isolated and lonely workplace, which is why most gig workers’ organizing kicks off online. “We know each other in the parking lot of the airports,” Moore said. “We know each other online, because we find Facebook pages and Reddit in order to share information and understand. We are ready to organize.”

DEVIL IN THE DETAILS

In the breezy language of Wiest’s email to state representatives, the benefits of the deal appear excellent. But not all that shines is gold. It can be a spear.

One of the sharpest daggers in the bill is preemption—giving the state government the exclusive power to regulate rideshare companies, so that Seattle could no longer enact wage increases or new rules about drivers’ working conditions.

“The Teamsters-affiliated Drivers Union has already won the nation’s leading labor standards for Uber and Lyft drivers at the local level in Seattle,” said Kerry Harwin, communications director for the Drivers Union, in a statement to Labor Notes. “Seattle’s first-in-the-nation protections have demonstrated a meaningful impact for Uber and Lyft drivers, who enjoy the highest minimum wage in the country, the nation’s first paid-sick days for gig workers during the pandemic, and the country’s only legal protections against unfair deactivations.”

Seattle’s City Council passed the Gig Worker Paid Sick and Safe Time ordinance, backed by Teamsters Local 117, in June 2020. Since then the city’s Office of Labor Standards has reached a $3.4 million settlement for violation of the policy with Uber and a $1 million settlement with the online food delivery company PostMates. It also reached a $350,000 settlement with DoorDash and PostMates in violation of a pandemic-related hazard pay law for food delivery workers; each company had to pay restitution to about 3,000 workers.

In September 2020, Seattle hiked the minimum wage for Uber and Lyft drivers to $16.39 per hour (it’s now $17.27) and required the ridehail companies to pay drivers at least 56 cents per minute drivers are traveling to pick up a passenger or carrying one; it also covers driver expenses.

For Uber and Lyft, this combination of a progressive city council and workers organizing was too much. Their business model depends on misclassification, and on state government footing the bill for benefits that employers are traditionally on the hook to provide. So they went to the legislature.

NO BENEFITS DURING ROVING TIME

In the email to state representatives, Wiest said the bill would provide rideshare drivers with workers’ compensation under the “same robust state-run program that protects employees in Washington State.”

But in fact, workers’ comp would only be in effect when a driver is on the way to pick up a passenger or actually has a passenger in the car; the legislation describes these activities as “dispatch platform time” and “passenger platform time” respectively.

This leaves workers vulnerable if they get injured between fares, while they are roving and awaiting a new trip request. A 2020 UC Berkeley Institute for Research on Labor and Employment study estimated this cruising without a passenger is 35 percent of their work time. This method is also used to calculate the premiums that Lyft and Uber will pay into state coffers for workers’ comp.

Weist championed the paid sick protections, which she said would be “at the same accrual rates for all workers.”

But paid sick leave would not accrue at the same rates for independent contractors as it does for employees. Again, it would exclude the time drivers are waiting for passengers, and in this case also the time they drive to fetch them after being pinged for a trip. Drivers would only earn paid sick time when a passenger is in the car, which the same study estimated to be roughly 53 percent of their work time. As a result, drivers will have to work twice as long as other workers to qualify for the same amount of time off.

“We are frontline workers—providing trips to nurses and other essential workers during the pandemic,” said Ahmed Farah, a Drivers Union member who has driven for Uber and Lyft since 2016, in an emailed statement. “As a father of three, paid sick days is a very important protection when my kids get sick.”

Drivers would be eligible for unpaid sick leave after working for 90 days for a ridehail app.

Paid family leave was included in an earlier draft of the bill, but was scrapped from the final legislation. Weist’s email doesn’t mention the change, but Drivers Union staff continue promoting the idea that it is in the current bill.

Unemployment insurance will be studied by a “work group of stakeholders” drawn from labor and the gig industry with the deadline of producing a report by December 1, 2022.

â€DRIVER RESOURCE CENTER’

Protection from retaliation and an appeals process to negotiate driver deactivations are critically important for drivers. How would the legislation address this? It would provide a direct line of funding for the Drivers Union, which presumably meets the criteria in the legislation to serve as a “driver resource center.” (It may be the only group to qualify, since the bill says such a group must be able to demonstrate that it has past experience representing rideshare drivers and “providing culturally competent driver representation services.”)

A driver resource center’s services will be paid through a 15-cent per-trip surcharge on riders, with dues membership modeled after the Independent Drivers’ Guild (IDG) in New York City, a Machinists-affiliated company union of Lyft and Uber drivers that receives an undisclosed amount of funding from both companies.

And what would it do? The legislation makes scant mention of what services drivers would receive from the resource center. Asked about that, Harwin, the spokesperson for the Drivers Union, didn’t elaborate much: “It will provide support services to drivers, including representation” when faced with a deactivation.

??The state treasury would oversee the fund. The state director of the Department of Labor would choose the driver resource center through what the bill describes as a “competitive process.” Workers won’t have a say in choosing the non-profit organization, nor in how the money is spent.

The legislation also says the “driver resource center may not be funded, excessively influenced, or controlled by a transportation network company.”

Joe DeManuelle-Hall wrote last year when a similar draft legislation was floated in New York that at a 10-cent surcharge, a similar resource center would have netted $75,000 per day—a staggering $27.5 million per year, based on a calculation of 750,000 rides daily in New York City shortly before the pandemic.

FOLLOW THE MONEY

The idea of bringing an IDG-like deal to the West Coast can be traced back to disgraced ex-Teamsters leader Rome Aloise.

Aloise, once a vice president of the international union, was eventually found guilty of taking gifts from employers, negotiating a sham contract, and using union resources to rig a local union election—and then of running Local 853 and Northern California’s Joint Council 7 while he was suspended from the union for these offenses. He has been â€śpermanently barred from the Teamsters” and “permanently enjoined from participating in union affairs” effective January 31, 2022.

But back in 2018, Aloise was still in power and trying to cut a deal with Lyft and Uber. Among the many exhibits and court documents compiled when he was brought up on internal union charges were various emails from that fall discussing plans (never realized) to create employer-linked driver guilds in Seattle and San Francisco.

Aloise proposed that Seattle’s Teamsters Local 117 and the Workers Benefit Fund, which has ties to Uber and Lyft, should jointly “support the creation of legislation and a guild infrastructure for Seattle Drivers.” In a document shared with WBF CEO Benjamin Geyerhahn, Aloise wrote: “WBF will provide with [sic] polling, legislative support, legal support, its expertise and its relationships with Uber and Lyft. This support includes financial support for these items carrying through until legislation is passed. In exchange, it receives the Teamsters full support and exclusive right to provide benefits to the Seattle drivers…”

In a revealing email to a few other California Teamsters leaders on November 21, 2018, Aloise wrote: “Maybe it is worth talking about setting up a Driver’s Guild in SF, and then of course expanding it at a later date… In NY, a lot of money is pouring into the Guild and back to the Machinists who were behind the establishment of the Guild.”

One year later, he wrote on February 1, 2019: “[Local] 117 heavily involved and substantial negotiations this coming week with both companies. The issue, of course, is how to stop any legislation which would give our core industries any loop hole [sic] to move into this TNC [Transportation Network Company] type model, while allowing Lyft and Uber to operate with some type of meaningful representation for the drivers.”

In 2018, he exchanged emails with former Service Employees president Andy Stern about the need to protect “core industries” for the Teamsters– package delivery and freight transportation– in order to enter into an agreement with Uber. “For any of this to get any traction in California, it will need to have some language about staying out of certain functions, which are core industries to the Teamsters, i.e.; such as package delivery, freight transportation, etc. If there is to be a carve out of their â€industry,’ this will be essential, and perhaps a model for the other companies to deal with the ramifications of the Dynamix decision.” (At the time, the state’s Supreme Court in its Dynamix decision ruled against misclassification, creating a framework for standards to determine employee status.)

Last-mile transportation and delivery has gigified rapidly since 2018. Think: Uber Freight and Uber Eats. In September of 2020, United Parcel acquired Roadie, a crowd-sourced, same-day delivery company. FedEx bought Shoprunner. Amazon, Walmart, and Target have adopted and expanded their speedy gig-delivery business models to everything from yoga pants and furniture to pet food.

“Online competitors are shipping it from a distribution center going across multiple zones where we’re taking it in the back of a DoorDasher’s car for the same cost as if it was a tennis ball, delivering it the same day, and delivering it at lower cost,” said Petco CEO Ron Coughlin in a March 2021 interview.

What’s to protect UPS Teamsters from their work shifting to Roadie?

Update: this article has been updated to clarify that paid family and medical leave aren’t included in the current bill. But Weist and Drivers Union staff continue to promote the perks of the bill with those as included benefits. It has also been updated to reflect what the passage of the bill would mean for Teamsters in freight and transportation. —Editors

This blog originally appeared at Labor Notes on February 25, 2022

About the Author: Luis Feliz Leon is a staff writer and organizer with Labor Notes.


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Gig workers could end up losers in Covid relief bill

Posted on by Brian Faler
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Airbnb, Etsy and other pillars of the gig economy are shaping up to be rare losers in Democrats’ coronavirus relief package.

Buried in the legislation are provisions that will require them to provide a lot more information to the IRS about the money millions of people earn through their platforms, which is likely to bring in billions of dollars more in federal taxes.

That will generate cash Democrats can use to reduce the total cost of their stimulus plan.

But the industry says it’s getting ambushed, complaining it didn’t even know lawmakers were planning the tax crackdown until shortly before it was approved last week by the House. Company officials worry that asking people for their Social Security numbers — which the companies will need to produce the tax documents — and raising the specter of the IRS will scare many away from their platforms.

“We’re concerned that the proposal could unintentionally dissuade many casual and one-time sellers, who could be forced to share their Social Security number with online platforms before listing anything for sale,” said a spokesperson for Etsy. That could “turn away would-be entrepreneurs at a time when many desperately need the extra income.”

It’s not entirely clear who pushed for the provisions, though efforts to require more reporting by the industry aren’t new. A spokesperson for the tax-writing House Ways and Means Committee did not respond to a request for comment.

The wrinkle comes as Senate Democrats debate the stimulus plan, which lawmakers aimed to get to President Joe Biden’s desk by March 14, when expanded jobless benefits expire. Much of the focus on the stimulus has been on its winners, though there would be a few losers as well.

For those in the sharing economy, the issue is provisions that would dramatically reduce the threshold at which companies like eBay, GrubHub, Doordash and others would have to report to the IRS the earnings of people who use their platforms to make money. The users would also have to be given the information.

Currently, that’s only necessary when someone earns more than $20,000 through at least 200 transactions. Democrats would drop that to anyone earning more than $600, regardless of the number of transactions.

That’s projected to generate a lot of money — $8.4 billion over the next decade, according to an official forecast — because people are more likely to pay taxes on their earnings when they know someone else is telling the IRS how much they made.

Unlike more traditional jobs, there is relatively little independent reporting of how much people in the gig economy earn. Many in service-related businesses are treated by their employers as contractors, for example, so they may not be having taxes withheld from their pay. They’re supposed to instead be paying estimated taxes each quarter.

Others, like people selling goods on eBay, Etsy or Facebook, are just average people trying to make some extra cash.

Many may not track how much they’ve earned or realize that it’s subject to tax, in part because they don’t make enough to trigger the current income reporting requirements, the nonpartisan Government Accountability Office said in a report last year.

“Platform workers may not receive information on their earnings, creating compliance challenges for them and enforcement challenges for IRS,” GAO said.

That makes the area ripe for tax cheating.

The issue has been on lawmakers’ radar for several years, though much of the focus had been on a competing proposal by Senate Minority Whip John Thune (R-S.D.). He has a more sweeping plan that would deal with things like worker classification rules while also imposing tougher income-reporting requirements, although not as stringent as Democrats are proposing.

Industry lobbyists say they did not anticipate Democrats swiping Thune’s idea and repurposing it for their coronavirus measure.

Said Thune: “I will continue to support a comprehensive approach to truly help workers in the gig economy.”

Proposals to raise money via so-called third-party reporting have long been popular with lawmakers searching for cash because they generate revenue but are neither tax increases nor spending cuts. And the $8.4 billion the gig worker proposal raises helps keep Democrats within their $1.9 trillion budget for the coronavirus relief.

The industry says it does not condone tax cheating. But it says Democrats’ reporting threshold is too low and would affect too many people who only sometimes use their platforms.

The companies say the tax requirements may come as a surprise to many, who might not understand what is being reported. The IRS form the companies would use — the 1099K — would report the gross amount of money someone has earned.

That isn’t necessarily what they’d have to pay tax on, though. The tax would only apply to their profits, after their own costs or expenses are deducted.

So if someone sold a bike on eBay for $800, for example, they’d get a form showing that. But if they had originally paid $1,000 for the bike, they likely wouldn’t owe the IRS.

“This is not about skirting tax obligations,” said Katie Vlietstra, vice president for government relations and public affairs at the National Association for the Self-Employed.

“A lot of people are cobbling together different ways to make it to the next paycheck,” she said.

“And this is going to be whiplash for a whole community of people.”

This blog originally appeared at Politico on March 5, 2021. Reprinted with permission.

About the Author: Brian Faler is senior tax reporter at Politico. Before coming to Politico in 2013, he was a congressional reporter at Bloomberg News. Before that, he was an assistant to the late, great David Broder at the Washington Post.


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Surveillance, Stress, and No Bathrooms: Life as an Amazon Driver

Posted on by Jake Alimahomed-Wilson
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Part 2 of a series on Amazon’s delivery drivers. Part 1, “Building Its Own Delivery Network, Amazon Puts the Squeeze On Drivers,” is here.

The Amazonification of logistics has created a new group of highly exploited workers: delivery drivers. Amazon itself increasingly relies on an expanding network of subcontracted drivers and independent contractors to deliver packages to customers’ doors.

The working conditions facing Amazon’s last-mile drivers are defined by a frantic pace, low wages, and relentless pressure to meet tight delivery deadlines. Workers of color and immigrants are overrepresented, as they are in all the lowest-paying segments of last-mile logistics. 

When an Amazon Prime member orders an item, the first step in the delivery process begins at an Amazon Fulfillment Center, where the item is picked by a worker and put into a box, and an address label is created.

From there, the package is typically sent to an Amazon Sortation Center, where it is sorted. Then it’s sent either to the post office or, increasingly, to an Amazon Delivery Center, where Amazon’s subcontracted Delivery Service Provider (DSP) drivers pick up their routes.

Each Amazon Delivery Center typically contracts with 12–20 DSPs. Most of the drivers I spoke with said they usually have the same daily route. As the workday starts at the delivery center, hundreds of drivers pick up their “racks”: pallets of Prime packages. Any package that arrives at a delivery center must be delivered that day.

â€WATCHING ME DRIVE’

To get a sense of what work is like for these subcontracted drivers, I accompanied 30-year-old Miguel on some of his shifts throughout the Los Angeles region. Miguel is an undocumented immigrant; he was born in Mexico and migrated to the U.S. as a baby in the early 1990s. He grew up in L.A. and worked in fast food for 10 years before becoming a delivery driver.

Miguel typically works four 10-hour shifts each week, with an occasional opportunity for an extra day of overtime. He earns $15.50 per hour and receives no health benefits. While Amazon is not technically his employer, Miguel exclusively delivers Amazon Prime packages.

Miguel’s shift starts at 7:30 a.m., when he picks up his “bag.” A driver’s bag contains the keys to the delivery van and an Amazon “Rabbit” delivery device.

The Rabbit is an Android smartphone, which tracks the driver’s movements in real time and dictates each step of the delivery route. It provides information on each delivery, access codes to enter apartment buildings, and notes on where to leave packages.

The Rabbit also gives the driver information about the Prime customer (name, address, phone number) and the size of each package. As soon as a package is delivered, the driver must take a picture to prove it.

“The Rabbit stresses me out,” Miguel said. “I’m constantly staring at it and thinking someone at Amazon is constantly watching me drive.”

Once Miguel finds his van in the parking lot, he proceeds to the Amazon Delivery Center and waits for his rack. There’s a long line of other DSP drivers also waiting. Each rack has between 225 and 350 packages.

On one particular day I joined him, Miguel’s rack contained 227 packages, amounting to 161 stops. A driver typically puts all the small envelopes and packages up front in the cab and leaves the large boxes in the rear of the van. Since I was riding in the front seat, I had to hold dozens of small packages on my lap.

If drivers finish their shifts early, the DSP may assign them as “rescue drivers” to assist others who have fallen behind on their delivery routes.

CONSTANTLY RUSHING

“One thing that can be stressful is that my boss always knows exactly where I am because of the Rabbit,” Miguel told me. “So if I am behind on my route they tell me about it… They call me on the radio and tell me to hurry up.

“On most days, I don’t even have time to take a full lunch break, so I just go to a drive-through. And if I’m lucky I’ll just eat in the van as I am working… You are constantly rushing. You can’t find parking, or the Rabbit gets screwed up…

“I’ve also been accused of stealing packages, especially in rich white neighborhoods. They see a Hispanic driving around and think I am a package thief. My [company] will soon be giving us Amazon-branded uniforms and blue Amazon vans, which I’m happy about because that will help people realize that I am not a porch pirate…

“Also, I wish we got paid more. I think we deserve it. I work really hard and I don’t have health benefits, so if I get sick or hurt, I have to pay out of pocket.”

Miguel and many other drivers I interviewed emphasized that it is Amazon, not the DSPs, that needs to pay better wages.

Drivers described a physically demanding work environment. They feel pressured to drive at dangerous speeds, blow stop signs, and skip breaks and meals to meet the tight deadlines. Traffic and congestion stress them out. They also reported safety violations, wage theft, intimidation, favoritism, and a lack of overtime pay.

“I lost over 30 pounds since I started this job,” said Rogelio, a 26-year-old Latino driver. “This job takes a lot of running… I twisted my ankle stepping off a curb a couple months ago… it really slowed me down. I had to keep working though, but it was really swollen.”

Rogelio told me that he only stops to use the bathroom once per shift, usually at the same public toilet near a park along his route. “During Prime week,” Rogelio said, “I was way behind on my route. All I ate that day was a granola bar and an apple—for almost 11 hours! I hate Prime Day.”

â€ONE PACKAGE COST ME $150’

When a DSP driver fails to deliver a package, or even when a package is stolen from the doorstep of a customer’s home, Amazon contacts the DSP with what drivers call a “concession.”

Concessions occur when Amazon Prime members submit a complaint to Amazon over a missed delivery. When a concession is issued, the individual driver is reprimanded by a superior.

Alex is a 37-year-old Latino driver who has been working for his DSP for 10 months. He told me, “Amazon put a concession on me a few months after I started. My boss called me in, and he asked why I didn’t take a picture of the package that disappeared. I told him that I did, but for some reason it didn’t get logged by the Rabbit. I was written up [by my boss] and he took away one of my shifts that week as punishment. That one package cost me 150 bucks.

“For the next few weeks, my boss tightened the screws on me… He was always on me, calling and texting me to hurry up… When an item gets stolen, they blame the drivers.”

“Here’s the thing,” Justin, a Filipino driver, told me. “I’m 42 years old. I have four kids and I make $15 an hour. I get about $1,250 every two weeks. That’s not enough to make it out here in LA. If I didn’t have a family, I’d leave this area.

“I basically do the same work as a UPS driver, but those guys get paid double what I earn, at least. We don’t have representation with any union. So that’s why I take as much overtime as possible, my boss knows I’ll take any extra work—but it’s a really tiring job at times.”

This blog originally appeared at Labor Notes on February 9, 2021. Reprinted with permission.

About the Author: Jake Alimahomed-Wilson is a sociology professor at Cal State-Long Beach. He is the co-editor, with Ellen Reese, of The Cost of Free Shipping: Amazon in the Global Economy (Pluto Press, 2020). This piece is an edited excerpt from the book. 


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Amazon to pay huge settlement in wage theft case

Posted on by Laura Clawson

This week in “Amazon is scum” news, on Tuesday the company reached a $61.7 million settlement with the Federal Trade Commission over a longstanding practice of stealing tips from delivery drivers.

Drivers for Amazon Flex were recruited with the promise of $18 to $25 an hour plus customer tips, and that’s how it worked in 2015 and 2016. But then Amazon started taking some customer tips, while telling the drivers that that wasn’t happening. According to the FTC, “In late 2016, the FTC alleges, Amazon shifted from paying drivers the promised rate of $18–25 per hour plus the full amount of customer tips to paying drivers a lower hourly rate, a shift that it did not disclose to drivers. Amazon used the customer tips to make up the difference between the new lower hourly rate and the promised rate. This resulted in drivers’ being shorted more than $61.7 million in tips.”

This wasn’t innocent and it wasn’t out in the open. Amazon “then intentionally failed to notify drivers of the changes to its pay plan and even took steps to make the changes obscure to drivers.”

Such wage theft and sneaky changes to payment practices are common at gig economy companies. DoorDash similarly took tips from drivers and used them to cover the drivers’ base pay and was forced by an outcry to change its practices. Other companies have repeatedly changed algorithms for pay, insisting to workers that it wasn’t a pay cut—inevitably a lie.

Drivers who were stiffed should eventually get the money Amazon owes them, but it may take some time. “An FTC spokesperson said Amazon Flex drivers who think they may have been impacted should sign up for email updates here,” Vox reports. “The settlement also prohibits Amazon from misrepresenting driver earnings and tips, and requires the company to notify drivers before making any future changes to how it handles tips.”

”Rather than passing along 100% of customers’ tips to drivers, as it had promised to do, Amazon used the money itself,” Daniel Kaufman, acting director of the FTC’s Bureau of Consumer Protection, said in a statement. “Our action today returns to drivers the tens of millions of dollars in tips that Amazon misappropriated, and requires Amazon to get drivers’ permission before changing its treatment of tips in the future.”

“The @FTC has long been lax when it comes to abuses in the gig economy and anticompetitive conduct targeting workers,” Rohit Chopra, the FTC commissioner who is President Biden’s nominee to head the Consumer Financial Protection Bureau, tweeted. “The agency’s order against @Amazon will provide restitution to the tech giant’s driver victims. I hope it also turns the page on the FTC’s era of inaction.”

This blog originally appeared at Daily Kos on February 2, 2021. Reprinted with permission.

About the Author: Laura Clawson has been a contributing editor since December 2006. Clawson has been full-time staff since 2011, and is currently assistant managing editor at the Daily Kos.

Why companies based on gig work are hurting more than their employees

Posted on by Kyle Rowe
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Imagine that one of two people will be responsible for your safety. The first receives health and dental benefits, earns more than minimum wage, has clear advancement options within their company, and may even belong to a union. The second has no insurance benefits, works wildly erratic hours, feels no allegiance to their company, and makes less money. Which person would you pick?

The ride-share and micromobility industry is under the microscope for worker violations and safety concerns. Major shared e-scooter companies are facing lawsuits from injured riders. Revel, a moped company operating in New York City, recently reopened operations after a shutdown earlier this year, as complaints about reckless driving and fatalities involving its vehicles mounted. Ride-sharing companies Uber and Lyft face a number of lawsuits related to allegations by passengers of injury, assault, and harassment. A California ballot measure asking voters whether gig workers should count as employees has shown that many Americans are understandably focused on legal and legislative methods to introduce more order and security to the gig economy.

Like most startup industries, the companies providing these new mobility options are scrappy, doing things on the fly, and, at times, operating shortsightedly. This needs to change. As these forms of transportation edge their way to being a supplementary public transportation in a pandemic and beyond, we need to take this responsibility seriously.  After all, when the public gets on a bus, they don’t imagine the bus’s tires were changed not at a company-designated station but in someone’s garage.

Companies themselves would be wise to consider moving away from the gig economy and choosing to play a greater role in ensuring the well-being of their workers because doing so is fundamentally linked to the safety of their consumers and the success of their business.

Outdoor apparel giant Patagonia is famous for taking this approach: With generous time off, on-site child care, and the doors locked on weekends, the company has doubled in size since 2008 and is currently expanding into new markets. Employee turnover is minimal. CEOs and business school professors are increasingly aware that giving workers better wages and benefits also tends to be a recipe for greater profitability and employee retention in the long run.

Of course, any business has to keep an eye on the bottom line, but the damage done from rider injuries and safety lawsuits gives pause—financial pause, especially with potential liabilities tied up. But also pause because if you are hurting your customers, it’s not great for your brand. Investing in worker safety and well-being is more expensive in the short term, certainly. But in the long term, it leads to a more profitable company.

In 2019, my company, Spin, chose to make more than 90% of its workers employees with benefits, as opposed to contractors. In all markets our lowest starting wage is $15 per hour, with incremental increases based on tenure. We did this in part because research has shown that companies with healthy employees have better business performance. Companies with excellent safety, environment, and health programs outperform the S&P 500 by 3%-5%. But also because gig workers are less likely to have been thoroughly trained, more likely to leave for another job, and are often incentivized to cut corners in order to keep a high number of scooters on the streets and boost their own apparent productivity. This is unacceptable. Carefully training and fairly compensating the employees who work to keep our scooters safe for riders ensures that employees face no perverse incentives to rush through their work.

Safety out there also begins with safety in the home base. Designating our workers as employees with benefits—as opposed to contractors—allowed us to put protocols in place in both operations and maintenance and high standards endorsed by the Occupational Safety and Health Administration (OSHA). This operation would have been much less achievable with an ad hoc staff.

In order for companies in the ride-share and shared mobility space to truly unleash their potential, we must first gain public trust by improving the job we do on safety. Part of this will require that city planners and urban voters reimagine the nature of transportation infrastructure away from cars and toward biking, walking, and scooter transportation. It’s also vital that companies themselves give their workers every reason to do careful, excellent work in maintaining their fleets. As private-public partnerships create another way for people to move around, we need to make sure our workers are as supported as the workers behind transit agencies.

As the pandemic continues to demonstrate, the choice between safety and economic growth is a false reality, and companies should not pose these options against one another. At the end of the day, treating workers well is ultimately the safest choice for both businesses and their customers.

This blog originally appeared at Fast Company on October 27, 2020. Reprinted with permission.

About the Author: Kyle Rowe is the global head of government partnerships at Spin, the micromobility unit of Ford Mobility.


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Why Many Uber Drivers Couldn’t Afford To Stay Home During Australia’s Fires

Posted on by In These Time Editors
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Australia’s bushfire crisis has killed tens and incinerated an area two-thirds the size of Illinois. The resulting blanket of smog reduced air quality in the nation’s capital, Canberra, to third worst among all major cities. But the latest manifestation of the climate crisis has hurt an already hard-done by group: gig workers delivering food for Uber Eats. While state governments have advised people to stay home, for gig workers relying on Uber to survive that’s tantamount to asking them to starve, miss rent, or fall behind on loans. All Uber has done, according to these workers, is warn them that going outside hurts their health. Concerning itself as little as possible with its employees’ well-being is a central part of Uber’s business model, defining its workers as independent contractors so it can skimp on providing health care, benefits, or a minimum wage.

But viciously exploiting its drivers—or changing the ‘norms’ that led to a “culture of sexual harrasment” at the company—didn’t stop Uber from losing $1.2 billion between July and September of last year. Their balance sheet from the three months prior to that had them $5.2 billion in the red. Despite never fulfilling the capitalist imperative to turn a profit, ridesharing services like Uber have managed to remake urban life, destroying the licensed taxi industry at a substantial human cost and worsening traffic in major American cities. As the numbers show, the daily reality of Uber drivers is no more rational or fair than one would expect from a company that loses billions while awarding its CEO a $3 million salary.

  • 3,900,000 – Uber drivers worldwide in 2019
  • 36% – U.S. adults who say they used a ride-hailing service in 2018
  • 30% – Uber’s cut of each driver’s fares as of 2019
  • $9.73 – Estimated hourly net income (including tips) of Uber drivers in 2018, factoring in vehicle expenses and Uber’s cut
  • 13 – Major U.S. markets where Uber drivers’ hourly compensation (before taxes) was below the mandated minimum wage in 2018, including the three largest: Chicago, Los Angeles and New York
  • $20,000 – Estimated annual salary, after expenses but before taxes, for an Uber driver working 40 hours per week in 2018
  • $20 million – Amount the Federal Trade Commission fined Uber for falsely claiming its NYC drivers could make $90,000/year in 2017; the company couldn’t produce a single driver who made that much
  • $143 million – Total compensation for Uber’s top five executives in 2018
  • $90 million – Amount pledged by Uber, Lyft and DoorDash to fight a 2019 California law that would classify rideshare workers as employees rather than contractors
  • 0 – Latinx or Black employees who held Uber tech leadership roles in 2018

This article was originally published at In These Times on January 30, 2020 by the editors of In These Times. Reprinted with permission.


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Uber CEO Forgives Saudi Arabia for a Brutal Murder, But Punishes Drivers for Small Errors

Posted on by Audrey Winn
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Image result for Audrey Winn"In an Axios interview that aired on HBO last Sunday, Uber CEO Dara Khosrowshahi made a troubling analogy. Discussing Uber’s ties to Saudi Arabia—whose sovereign fund is one of Uber’s largest shareholders—Khosrowshahi described the assassination of Washington Post columnist Jamal Khashoggi as a “mistake” comparable to the company’s own “mistakes” in reckless automation. This “mistake” was brushed off casually, with no mention of its place in the context of other Saudi “mistakes,” including an ongoing violent war against Yemen and a long history of brutally silencing domestic critics.

“It’s a serious mistake,” Khosrowshahi said, referring to the order from Saudi crown prince Mohammed bin Salman’s to kill and dismember Khashoggi at the Saudi consulate in Istanbul in October of 2018. “We’ve made mistakes too, right, with self-driving, and we stopped driving and we’re recovering from that mistake. I think that people make mistakes, it doesn’t mean that they can never be forgiven.”

The self-driving “mistake” Khosrowshahi alluded to was the death of pedestrian Elaine Herzberg, who was killed by an Uber self-driving car in 2018. According to documents released by the U.S. National Transportation Safety Board (NTSB) last week, there was “a cascade of poor design decisions that led to the car being unable to properly process and respond to Herzberg’s presence as she crossed the roadway with her bicycle.” She was thrown 75 feet in the air by the collision and died on site.

Though Khosrowshahi scrambled to backtrack his statement, his apology seems disingenuous given his previous record of emphasizing the importance of forgiving corporate wrongdoings. In a 2018 interview, Khosrowshahi defended Uber COO Barney Harford, who left the company after allegations of making racial slurs and sexist comments.

“I don’t think that a comment that might have been taken as insensitive and happened to report by large news organizations should mark a person,” Khosrowshahi said. “I don’t think that’s fair. And I’m sure I’ve said things that have been insensitive and you take that as a learning moment. And the question is, does a person want to change, does a person want to improve?”

This attitude reveals a larger issue at Uber—the jarring double standard for forgiving corporate “mistakes” while punishing driver errors, even though corporate leaders have far more power to perpetrate large-scale harm.

Since its inception, Uber has faced a steady stream of public controversies. In 2014, former Uber CEO Travis Kalanick joked that the company’s nickname was “Boober” because of the way it boosted employees’ sex appeal. That same year, it was also revealed that Uber’s self-named “God View” could be used to track riders’ locations, including the locations of journalists the company sought to intimidate. From spying on Beyoncé and competitors, to systemically underpaying drivers, to firing over 20 employees who filed sexual harassment claims, the company is quick to seek leniency for itself and drop its “mistakes happen” attitude the moment it turns its attention toward drivers.

In contrast to its internal corporate policies, Uber’s attitude toward drivers is unforgiving. Uber has a militantly single-minded emphasis on high ratings. Given this mindset, it is not surprising that Uber drivers are at risk of getting fired if they maintain a rating below 4.6. This policy remains unchanged, despite the fact that studies have shown that Uber’s rating system allows riders to express biases and evaluate drivers in ways that violate federal anti-discrimination laws.

When drivers are deactivated for low ratings they are told they can rejoin the platform if they complete costly, time-consuming training courses run by Uber’s third-party partners. Many can’t afford these classes already, due to Uber’s dropping wages and vanishing bonuses. Instead of getting training course discounts from the tech giant, however, this requirement remains.

The lack of sympathy is unsurprising given Uber’s history of holding drivers’ poverty against them. Who can forget the now-viral six-minute exchange, where former-CEO Travis Kalanick responded to a driver’s complaints about plummeting rates by telling him that he wasn’t a hard worker—that “some people don’t like to take responsibility for their own shit. They blame everything in their life on somebody else.”

Even when drivers have “worked hard” and excelled in their ratings, however, Uber still has ways to punish them. Any number of offenses can lead to deactivation, including, according to Uber, “certain actions [drivers] may take outside of the app, if we determine that those actions threaten the safety of the Uber community, or cause harm to Uber’s brand, reputation, or business.” Though some attempt has been made to clarify these guidelines, confusion remains. Drivers have been allegedly deactivated for a punishing range of issues, including allegedly reporting when passengers called them anti-Muslim slurs and making private Facebook posts.

Uber has a new CEO, but it’s still business as usual. The company’s continued operation is premised on forgiveness for the rich and powerful, and punishment for workers. Khosrowshahi’s statement shows this injustice remains, without any evidence of corporate self-reflection.

This article was originally published at InTheseTimes on November 13, 2019. Reprinted with permission.

About the Author: Audrey Winn is a Skadden Fellowship Attorney working and writing in New York City. She is passionate about workers’ rights, algorithmic transparency, and the inclusion of gig workers in the future of the labor movement.

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How Does the Passage of AB 5 in California Affect Me and Others in the Gig Economy?

Posted on by Patrick R. Kitchin
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Today Governor Gavin Newsom signed into law Assembly Bill 5.  The untitled new law will have a significant impact on the gig economy in California.  It will be increasingly difficult to lawfully classify California workers as independent contractors.  With the exception of several significant carveouts, which I discuss below, the definition of “to employ” announced by the California Supreme Court last year in Dynamex v. Superior Court (2018) 4 Cal.5th 903 will define the relationship between the hired and the hirer moving forward.  The core of the new law takes effect January 1, 2020.

Dynamex is Now the Law of the Land (Most of the Land, At Least)

Assembly Bill 5 codifies the ABC Test adopted in Dynamex for most California workers currently classified as independent contractors.  The ABC Test states that a hiring party “employs” a person (as an employee) unless it can prove each of the following:

  • The hired person is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.
  • The hired person performs work that is outside the usual course of the hiring entity’s business.
  • The hired person is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.

This three-pronged definition of “to employ” describes the prototypical independent contractor relationship:  a plumber, for example.  First, when I hire a plumber to fix a leak in my office, I do not exert any control of the performance of their work.  The plumber does their job based on their best judgment using their own tools.  Second, the plumber is not performing tasks that are within the scope of my law firm’s work.  While my legal practice is broad in scope, plumbing repairs is not something Kitchin Legal offers to any client.  Third, when the plumber finishes their work at my office, they will drive away in their company truck to another plumbing job for another client.  They are engaged in an independent trade.

But there are significant exceptions under the new law.  For a wide range of professionals exempted under AB 5, an older test of the employer-independent contractor will apply.  However, even the exemptions themselves have multiple requirements.

The Existing Borello Test Will Still Apply to a Substantial Number of Workers in California

Prior to the passage of Dynamex last year, California courts relied on the “economic realities test” or “Borello Test” to determine whether someone was engaged as an independent contractor or as an employee.  This test was announced in 1989 by the California Supreme Court in a case called S.G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341.  In Borello, the high court set out a multiple-factor test for evaluating the relationship between the hirer and the hired.  While the most important indications of an employer-employee relationship under Borello are the hirer’s right to control the work of the hired person and the hirer’s right to terminate the worker at will, other factors are relevant to the determination as well:

  1. Whether the person performing work is engaged in an occupation or business that is distinct from that of the company;
  2. Whether the work is part of the company’s regular business;
  3. Whether the company or the worker supplies the equipment, tools, and the place for the person doing the work;
  4. The worker’s financial investment in the equipment or materials required to perform the work;
  5. The skill required in the particular occupation;
  6. The kind of occupation, with reference to whether, in the locality, the work is usually done under the company’s direction or by a specialist without supervision;
  7. The worker’s opportunity for profit or loss depending on his or her own managerial skill (a potential for profit does not include bonuses);
  8. How long the services are to be performed;
  9. The degree of permanence of the working relationship;
  10. The payment method, whether by time or by the job; and
  11. Whether the parties believe they are creating an employer/employee relationship.

Are You Excluded from the New Definition of “To Employ”?

Labor Code §2750.3 lays out the exceptions to the ABC Test for which the Borello Test will continue to apply.  Exempted from the new definition of “to employ” are insurance brokers, doctors, dentists, lawyers, architects, engineers, private investigators, accountants, human resource professionals, investment agents, marketing professionals, certain salespeople, commercial fishermen, repossession professionals, construction sub-contractors, referral agencies, motor clubs (think roadside assistance) and real estate professionals.  Freelance media-makers, including journalists, also are carved out of the ABC Test if they limit their contributions to any one media outlet to 35 pieces a year.  AB 5 directs the courts to use the Borello Test definition of “to employ” in cases involving these professionals, and not the ABC Test.

Who Will be Affected by AB 5?

The media are reporting that up to two million workers will be affected as they are reclassified under the law from independent contractor to employee.  While the media have focused primarily on the hundreds of thousands of Uber, Lyft and DoorDash workers who will affected, it is likely that the vast majority of affected workers currently work for small companies across the state.

Based on my experience representing misclassified workers in California, I have found that small companies, particularly tech start-ups, frequently classify workers as independent contractors because they believe it is easier and less expensive than hiring employees.  These employers fail to factor in the cost of the wage and hour lawsuit that may follow.

What Do Misclassified Workers Have in Common?

In all of my employee-side, misclassification cases, my clients were trained and controlled by the employers.  Their work hours were often scheduled by the employers.  They were subject to discipline if they failed to perform as expected.  They performed work directly related to the core business of the employers.  Many of them worked full time, had company business cards, company email addresses and in one case, a company credit card.  Almost all of them were paid by the hour.  One of them earned performance bonuses.  But, none of them was entitled to unemployment benefits based on their time working for these employers none was provided with workers compensation insurance coverage.

All of these workers ended their relationships with the employing parties because of a dispute over what and how they were paid, or over their opportunity to take meal and rest breaks.  While some of them had issues about how they were scheduled for work, most of them accepted fairly strict control over their work schedules in exchange for their earnings.  They all looked a lot like employees.

Finally, none of these clients fully understood the scope of the damages and penalties they were entitled to under California law until they spoke with an employment attorney.  Their hirers’ decisions to classify them as independent contractors led to a wide range of violations and valuable claims.

What Do Companies That Misclassify Employees Have in Common?

I also have represented a number of employers in several different industries who faced misclassification claims.  Based on my own experience, discussions with colleagues and the rich case law on the subject of the meaning of “to employ,” it is clear that companies that misclassify workers also share a number of characteristics.

First, most of these companies think they are saving money by avoiding the expenses of employing workers.  Second, many of these companies fail to put into place wage and hour policies that comply with California law.  Third, these companies typically do not have mandatory written sexual harassment and retaliation policies, and do not provide sexual harassment training to their workers as required by California law.  Fourth, most do not provide their workers with paid sick leave in compliance with state and/or local laws.  Fifth, these companies do not provide workers compensation insurance coverage.  Fifth, these companies fail to reimburse their workers for business expenses, including cell phone plans, internet costs and transportation costs.  Sixth, these companies do not comply with federal and state tax laws.  Seventh, all these companies are vulnerable to costly lawsuits and governmental audits.

What Do I think About the Law?

Subject to the section 2750.3 exceptions, classifying someone else as an independent contractor who performs work within your business establishment and within the usual course of your business operations still most likely violates the Borello Test.  It certainly violates AB 5 and Dynamex.

Similarly, having someone perform work within the usual course of your business from a home office also likely creates an employer-employee relationship.  Under the ABC Test, it makes no difference whether the person signed an independent contractor agreement, sets their own hours, works relatively independently from direction or works from home.   The focus of the inquiry is much more limited.

As an employment attorney, I have always been suspicious of companies that have more independent contractors working for them than they have employees.  A disproportionate number of independent contractors might be evidence of an illegal scheme designed to avoid providing workers the benefits of employment: possible subterfuge.  Under the Borello Test (i.e., Economic Realities Test), the court should take into account what relationship the parties themselves were attempting to form when they entered into the working arrangement.  But the parties’ intentions do not matter under the ABC Test.  Even under Borello, however, the Supreme Court warned parties to classify workers with care. “The label placed by the parties on their relationship is not dispositive, and subterfuges are not countenanced.”

Finally, I have found that the harder it is to justify a decision to classify someone as an independent contractor, the more likely it is that the person is actually an employee entitled to all of the benefits given to employees under the law.

What Should a Misclassified Worker Do Now?

Claims for unpaid wages are governed by a three-year statute of limitations.  Under certain circumstances, a worker can reach back four years to recover unpaid wages pursuant to a misclassification claim.  If a person has been working as a misclassified worker for more than one year and has not been paid for all work time, and/or has worked overtime hours without overtime pay, and/or has not been provided meal and rest periods, and/or has not been provided complete and accurate paystubs, and/or has terminated for complaining about any of these things, that person should speak with a lawyer.

If a person is currently working as an independent contractor and wishes to make a smooth transition to becoming an employee of the hirer, they should also speak with an attorney.  As we move through this transition in California’s workforce, some employers are going to make efforts to pressure workers to sign illegal waivers of their right to obtain unpaid wages and penalties for past violations.  At this moment in our history, workers in transition should reach out to a competent lawyer for advice.

What Should an Employer Do Now?

The first step every employer who regularly relies on independent contractors should do is to consult with an employment lawyer.  This is a critical juncture for employers in California where risks that were once delayed for all sorts of reasons are at the door.  Assembly Bill 5 did not radically alter the law.  If a worker is deemed to be an employee under AB 5, it is most likely they will be deemed to have been an employee last week and last year in a lawsuit.

If hiring an employment attorney is not feasible, then employers should read about the new law.  Check with industry groups about the effect of AB 5.  Visit the website of the Division of Labor Standards Enforcement (“DLSE”) at https://www.dir.ca.gov/dlse/ I expect the DSLE will be issuing advisories he help in this transition.

Will AB 5 Slow “the erosion of the middle class and the rise of income inequality,” as it Promises in the Preamble?

By passing AB 5 into law, California has taken a substantial step in addressing the burgeoning gig economy and its impact on workers’ rights.  The law is based on the assumption that most workers are better off as employees than independent contractors.  Guaranteed minimum wage, paid sick and family leave, workers compensation coverage, unemployment benefits will be seen by many as a fair trade for giving up a little, or a lot, of scheduling flexibility.

Major critics of the law dispute this assumption and argue that this new law will be a jobs killer and will undermine the flexibility and profitability of the on-demand economy.  In June, Uber CEO Dara Khosrowshahi and Lyft co-founders Logan Green and John Zimmer, co-wrote an op-ed piece for the San Francisco Chronical in which they stated, “…, most drivers prefer freedom and flexibility to the forced schedules and rigid hourly shifts of traditional employment; and second, many drivers are supplementing income from other work.”  The new law, they have argued will require them to undertake a fundamental change in their business model and they warn of adverse effects on their operations and profits.

I am not certain who will be proved right over time.  This is only day one, but I am leaning heavily in favor of any law that provides additional benefits to workers and helps to level the economic playing field.  What is certain is that AB 5 is now one of the most complicated labor laws on California’s books.  The core of the new law, Labor code § 2750.3, is nearly 4,000 words long, has a total of 109 separate paragraphs and makes reference to a host of other California codes and regulations.  AB 5 also defines two distinct employment tests by reference to two California Supreme Court decisions separated in time by 30 years.  Borello has a lengthy citation history as appellate courts have wrestled with its meaning and application.  Already, Dynamex has been cited in nearly a hundred court decisions.  Of course, no matter how clearly written, no appellate decision is immune from different interpretations by parties advocating from different positions over different interests.

The way these two pivotal cases and Assemble Bill 5 are applied to the thousands of employee misclassification claims that will be made in the coming years will define the nature and scope of the employment relationship in California with every-increasing clarity—at least many of us hope for that.

 

 

About the Author: Patrick R. Kitchin is the founder of Kitchin Legal APC, a San Francisco, California employment law firm. He has represented tens of thousands of employees in both individual and class action cases involving violations of California and federal labor laws since founding his firm in 1999. According to retail experts and the media, his wage and hour class actions against Polo Ralph Lauren, Gap, Banana Republic, and Chico’s led to substantial changes in the retail industry’s labor practices in California. Patrick is a graduate of The University of Michigan Law School and is personally and professionally committed to the protection of workers’ rights everywhere.

 


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Trump labor board’s drive to hurt temp and fast food workers hits another conflict-of-interest snag

Posted on by Laura Clawson
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Donald Trump’s National Labor Relations Board and its counsel have made it their mission to roll back every advance for workers from the Obama years. The joint-employer rule—which makes companies responsible, under certain circumstances, for workers employed through franchises and staffing agencies—is a major piece of that. In the rush to roll back the joint-employer rule, ProPublica’s Ian MacDougall reports, the NLRB hired a staffing agency with a major conflict of interest to help make it happen.

This is actually the second time the Trump-era NLRB has run into a conflict-of-interest problem on this exact issue, the first being in 2018 when a board member voted on a case despite his prior work for a law firm that had represented a company involved. So what did the NLRB do when taking another run at making it easier for major corporations to evade responsibility for abuses happening on their premises, involving workers whose conditions the corporations largely control? It … hired a legal staffing agency to provide temporary lawyers and paralegals to review public comments on overturning a rule that applies to staffing agencies. “In essence,” MacDougall writes, “the NLRB hired temps whose bosses have a stake in the outcome to review and potentially summarize the public comments.”

Not only that, but NLRB chair John Ring told Congress that the contractor hired wouldn’t do “any substantive, deliberative review of the comments but will be limited to sorting comments into categories in preparation for their substantive review,” even though internal documents show that the plan all along was for the temporary staff to do substantive review. House Committee on Education and Labor Chair Bobby Scott and Rep. Frederica Wilson, chair of its labor subcommittee, have some questions about this.

That’s the Trump administration, and the Republican Party more generally: so in bed with big business that it’s a conflict of interest every time they try to do something. But their determination to screw workers keeps driving them forward.

This article was originally published at Daily Kos on September 17, 2019. Reprinted with permission.

About the Author: Laura Clawson is a Daily Kos contributor editor since December 2006. Full-time staff since 2011, currently assistant managing editor.. Laura at Daily Kos

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