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Gig workers could end up losers in Covid relief bill

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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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Amazon to pay huge settlement in wage theft case

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.

The Year That Labor Hung On By Its Fingertips

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A lot of things hap­pened for work­ing peo­ple this year, and most of them were bad. But even in a year as deranged as 2020, the broad­er themes that afflict and ener­gize the labor move­ment have car­ried on. If you are read­ing this, con­grat­u­la­tions: There is still time for you to do some­thing about all of these things. Here is a brief look at the Year in Labor, and may we nev­er have to live through some­thing like it again.

The pan­dem­ic

Broad­ly speak­ing, there have been two very large labor sto­ries this year. The first is, ?“I have been forced into unem­ploy­ment due to the pan­dem­ic, and I am scared.” And the sec­ond is, ?“I have been forced to con­tin­ue work­ing dur­ing the pan­dem­ic, and I am scared.” America’s labor reporters spent most of our year writ­ing vari­a­tions of these sto­ries, in each com­pa­ny and in each indus­try and in each city. Those sto­ries con­tin­ue to this day. 

The fed­er­al gov­ern­ment left work­ing peo­ple utter­ly for­sak­en. They did not cre­ate a nation­al wage replace­ment sys­tem to pay peo­ple to stay home, as many Euro­pean nations did. OSHA was asleep on the job, unin­ter­est­ed in work­place safe­ty relat­ed to coro­n­avirus. Repub­li­cans in Con­gress were more intent on get­ting lia­bil­i­ty pro­tec­tions for employ­ers than on doing any­thing, any­thing at all, that might help des­per­ate reg­u­lar peo­ple. And, of course, Trump and his allies unnec­es­sar­i­ly politi­cized pub­lic health, lead­ing direct­ly to hun­dreds of thou­sands of unnec­es­sary deaths and the eco­nom­ic destruc­tion that goes with that. It was a bad year. The larg­er polit­i­cal insti­tu­tions cre­at­ed to pro­tect work­ers did not do their jobs. The labor move­ment was left very much on its own. And its own track record was mixed. 

Front-line work­ers

The year of the hero! We love our heroes! Our front-line work­ers, our deliv­ery peo­ple and san­i­ta­tion work­ers and bus dri­vers, our para­medics and nurs­es, our cooks and clean­ers and gro­cery work­ers: We love you all! Sure, we will bang pots and pans to cel­e­brate reg­u­lar work­ers who had to push through dur­ing the pan­dem­ic, and we will write you nice notes and have school chil­dren draw signs cel­e­brat­ing you. But will you get paid for this?

How well have unions rep­re­sent­ing these front line work­ers done this year? In many cas­es, not well. I think first of the gro­cery work­ers, rep­re­sent­ed by UFCW, who were gen­er­al­ly award­ed with tem­po­rary ?“haz­ard pay” bonus­es rather than actu­al rais­es. Or of the UFCW’s meat­pack­ing work­ers, whose plants were encour­aged to stay open by an exec­u­tive order, and who suf­feredter­ri­bly from the coro­n­avirus and from management’s utter dis­dain for their wel­fare. These are work­ers who, par­tic­u­lar­ly dur­ing the ear­ly phase of the pan­dem­ic, had a ton of lever­age. Had they struck, or walked out, ask­ing for basic safe­ty and fair pay for risk­ing their lives, the pub­lic would have neared pan­ic, and their demands prob­a­bly would have been met. Their employ­ers would have had no choice. Instead, there was a great deal of out­cry from their unions, but no real labor actions at scale. Thus, the meat­pack­ing work­ers con­tin­ued to suf­fer, and the gro­cery work­ers saw their ?“haz­ard pay” bonus­es dis­ap­pear, and here we are. 

The point of this is not to be harsh. Faced with an unex­pect­ed dis­as­ter, most unions have spent this year scram­bling des­per­ate­ly to keep them­selves and their work­ers afloat, and have been flood­ed with the task of deal­ing with the cat­a­stro­phe that has cost mil­lions their jobs. But when this is all over, there should be a seri­ous post­mortem about what could and should have been done bet­ter. And that will include, right up top, the fail­ure of front line work­ers to turn their new­found hero sta­tus?—?and the tem­po­rary, absolute neces­si­ty that they con­tin­ue work­ing through life-threat­en­ing con­di­tions?—?into any last­ing gains. It is easy to sur­ren­der to the feel­ing of just being thank­ful to be employed while oth­ers sink into pover­ty. But we need to be ready with a bet­ter plan for next time. Bil­lions of dol­lars and a good deal of poten­tial pow­er that work­ing peo­ple could have had has evap­o­rat­ed because unions were not pre­pared to act to take it. 

Pub­lic workers

Teach­ers unions con­clu­sive­ly demon­strat­ed their val­ue this year. In gen­er­al, in cities with strong teach­ers unions, pub­lic schools did not reopen unless the teach­ers were sat­is­fied that ade­quate work­place safe­ty pro­ce­dures were in place. (In prac­tice this meant that many school dis­tricts sim­ply kept instruc­tion online.) While this earned the ire of some par­ents, they should think it through: Work­place safe­ty in Amer­i­ca only exist­ed where unions were strong enough to see to it that it hap­pened. Schools were the most promi­nent exam­ple of that. 

Else­where, the news for fed­er­al gov­ern­ment employ­ees was gloomy. The Trump admin­is­tra­tion waged a years-long war against the labor rights of fed­er­al work­ers, and it is fair to say that the unions lost that war. Fed­er­al employ­ee unions in par­tic­u­lar, and state employ­ee unions in Repub­li­can states, have become pathet­i­cal­ly weak. Much of their bar­gain­ing pow­er has been out­lawed by Repub­li­can politi­cians. The unions have been reduced to writ­ing polite­ly angry let­ters as their work­ers are abused while wait­ing for a new Demo­c­ra­t­ic admin­is­tra­tion that they can beg to restore their rights. It is not a work­able mod­el for a union. These unions must decide at some point that they are will­ing to break the law in order to assert the fun­da­men­tal rights of their mem­bers, or they will grow increas­ing­ly less able to demon­strate to mem­bers why they have any value. 

That may not be fair, but it’s the truth. 

Orga­niz­ing

The biggest issue for unions in Amer­i­ca?—?big­ger than any pan­dem­ic or pres­i­den­tial elec­tion cycle?—?is that there are sim­ply not enough union mem­bers. Only one in 10 work­ers is a union mem­ber. In the pri­vate sec­tor, that fig­ure is just over 6%. The decades-long decline of union den­si­ty is the under­ly­ing thing rob­bing the once-mighty labor move­ment (and by exten­sion, the work­ing class itself) of pow­er. If unions in Amer­i­ca are not grow­ing every year, they are dying. 

Dis­as­trous years like 2020 tend to put struc­tur­al issues on the back burn­er, but they can also serve as inspi­ra­tions for peo­ple to join unions to pro­tect them. The annu­al fig­ures for the year are not out yet, but anec­do­tal­ly, union lead­ers and orga­niz­ers are opti­mistic that the pandemic’s hav­oc will serve as fuel for future orga­niz­ing. Most unions man­aged to at least con­tin­ue major orga­niz­ing efforts that were already under­way this year, like SEIU’s suc­cess­ful con­clu­sion of a 17-year bat­tle to union­ize 45,000 child care providers in Cal­i­for­nia. Indus­tries that were already hotbeds of orga­niz­ing tend­ed to remain so. The safe­ty net of a union con­tract clear­ly demon­strat­ed its val­ue far and wide this year, at least in the abil­i­ty of union mem­bers to nego­ti­ate terms for fur­loughs and sev­er­ance and recall rights and all the oth­er things that mat­ter dur­ing dis­as­ters, as non-union work­ers were sim­ply cast out on their own. 

Still, it is up to unions them­selves to have a con­cert­ed plan to take advan­tage of the wide­spread nation­al suf­fer­ing and chan­nel it into new orga­niz­ing. Since unions have spent the year trans­fixed by the elec­tion and by try­ing to respond to the eco­nom­ic col­lapse, it is safe to say that such a con­cert­ed plan does not real­ly exist yet. That needs to be done, soon, or this moment will have been wasted. 

Strikes

Dur­ing the ear­ly months of the pan­dem­ic, a frag­ile sort of labor peace reigned. The grip of the cri­sis was such that most work­ers were sim­ply try­ing to hang on. As time went by, and the fail­ures of employ­ers became more clear, that peace began to evap­o­rate. Teach­ers unions around the coun­try used cred­i­ble strike threats to head off unsafe school open­ing plans. And in the health­care indus­try, unions have had mul­ti­ple strikes, as nurs­es and hos­pi­tal work­ers have passed their break­ing points.

Lever­age for work­ers varies wide­ly by indus­try right now, as cer­tain indus­tries are besieged with unem­ployed work­ers look­ing for any job they can get (restau­rants), and oth­ers are des­per­ate for skilled work­ers, who are extreme­ly vital (nurs­es). At min­i­mum, every union should look at its lever­age in the spe­cif­ic con­text of the pan­dem­ic and ask if they should act now, lest an oppor­tu­ni­ty be lost forever.

Gig work­ers

You can think of many enor­mous com­pa­nies as huge algo­rithms that are mak­ing their way through the Amer­i­can labor force, turn­ing employ­ees into inde­pen­dent con­trac­tors or free­lancers or part-timers. There is mon­ey to be made in free­ing busi­ness­es from the respon­si­bil­i­ty and cost of pro­vid­ing for employ­ees (a sta­tus that comes with ben­e­fits and a host of work­place rights, includ­ing the right to union­ize). The ?“gig econ­o­my” is not just Uber and Lyft and Instacart and oth­er com­pa­nies that exclu­sive­ly work in that space?—?it is an eco­nom­ic force of nature push­ing every com­pa­ny, includ­ing yours, to get your job off its books, and to turn you into some­thing less than a full employee. 

Coun­ter­ing this force is prob­a­bly the sin­gle most impor­tant legal and leg­isla­tive issue for labor as a whole, because this process inher­ent­ly acts to dis­solve labor pow­er. Unfor­tu­nate­ly, the most impor­tant thing that hap­pened on the issue this year was the pas­sage of Prop 22 in Cal­i­for­nia, leg­is­la­tion specif­i­cal­ly designed to empow­er the gig econ­o­my com­pa­nies to the detri­ment of work­ers. Scari­er yet is the fact that the suc­cess­ful leg­is­la­tion in Cal­i­for­nia will now be used as a blue­print for state leg­is­la­tion around the coun­try. Com­pa­nies are pre­pared to spend hun­dreds of mil­lions or bil­lions of dol­lars on this issue, because they save far more mon­ey on the back end and pre­serve their busi­ness mod­el, which depends in large part in extract­ing wealth that once went to work­ers and redi­rect­ing it towards investors. Either Amer­i­ca will have a nation­al reck­on­ing with what the gig econ­o­my is doing to us, or we will con­tin­ue bar­rel­ing towards a dystopi­an future of the Uber-iza­tion of every last indus­try. Includ­ing yours. If ever there were a good time to launch a work­er coop, it is now. 

The elec­tion and Washington

After an ear­ly peri­od of hope for a Bernie-led insur­gency of the left, unions coa­lesced around Biden. They spent a ton of mon­ey on him, and indeed, his rhetoric and his plat­form are both more defin­i­tive­ly pro-union than any pres­i­dent in decades. Unions expect a lot of things from Biden, and expe­ri­ence tells us that they will not get many of them. 

What they will prob­a­bly get: a much bet­ter NLRB, a func­tion­ing OSHA, a pro-labor Labor Depart­ment rather than the oppo­site, and, par­tic­u­lar­ly for unions with long­stand­ing ties to Biden, rel­a­tive­ly good access to the White House. What they prob­a­bly won’t get: pas­sage of the PRO Act, a very good bill that would fix many of the worst prob­lems with U.S. labor law, but which has no hope in a divid­ed Con­gress. (And, I sus­pect, even with full Demo­c­ra­t­ic con­trol of Con­gress, many of the more cen­trist Democ­rats would sud­den­ly find a rea­son to oppose the act if the Cham­ber of Com­merce ever thought it might actu­al­ly pass). It is true that the cen­ter of the Demo­c­ra­t­ic Par­ty is slow­ly mov­ing left, but Biden is a man who nat­u­ral­ly stays in the mid­dle of every­one, and he will be con­ser­v­a­tive in his will­ing­ness to burn polit­i­cal cap­i­tal by push­ing pro-labor poli­cies that don’t enjoy some amount of pub­lic bipar­ti­san sup­port. The polit­i­cal cli­mate for unions will be sim­i­lar to what it was under Oba­ma. The words will be nicer, but any action will have to be pro­pelled by peo­ple in the streets. 

The nine-month odyssey between the pas­sage of the CARES Act and the next relief bill that Con­gress actu­al­ly passed is a use­ful demon­stra­tion of the lim­its of labor’s lob­by­ing pow­er. While par­tic­u­lar unions, espe­cial­ly those in trans­porta­tion and the USPS, showed skill at get­ting con­crete mate­r­i­al gains for their mem­bers into bills, the inabil­i­ty to force any sort of time­ly action from Con­gress in the face of mas­sive human suf­fer­ing shows that labor as a spe­cial inter­est will nev­er have the polit­i­cal pow­er it craves. Until many, many more Amer­i­cans are union mem­bers, it will be impos­si­ble to break out of this trap.

The labor move­ment at its high­est lev­el must break itself of the addic­tion to the false belief that sal­va­tion will be found if only our Demo­c­rat can win the next elec­tion. It won’t. Orga­nize mil­lions of new work­ers and teach them to always be ready to strike. The Demo­c­ra­t­ic Par­ty must be dragged towards progress by an army, and our army is weak. The AFL-CIO got burned in the protests this year. It remains to be seen if it learned any­thing from that. 

End­ing on a pos­i­tive note

It may be the per­pet­u­al nature of unions that the lead­er­ship is often dis­ap­point­ing, but the grass­roots are always inspir­ing. The big pic­ture for orga­nized labor in 2020 has been… close to okay, in some aspects, but cer­tain­ly not great. But when you pull out a mag­ni­fy­ing glass and look at what indi­vid­ual work­ers and work­places and units are doing, you will find thou­sands and thou­sands of inspir­ing things. And not even a pan­dem­ic has changed the basic fact that orga­niz­ing is the most pow­er­ful tool that reg­u­lar peo­ple have at their dis­pos­al in a sys­tem that val­ues cap­i­tal over humanity.

If you are an employ­ee, you can union­ize your work­place. If you are a gig or tem­po­rary work­er, you can orga­nize with your cowork­ers. If you are unem­ployed, you can march in the streets now, and union­ize your next job. All the labor move­ment is is all of us.

This blog originally appeared at In These Times on December 23, 2020. Reprinted with permission.

About the Author: Hamilton Nolan is a labor reporter for In These Times. He has spent the past decade writ­ing about labor and pol­i­tics for Gawk­er, Splin­ter, The Guardian, and else­where. 


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Building Its Own Delivery Network, Amazon Puts the Squeeze On Drivers

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While millions have lost their jobs and thousands of small businesses have shut their doors, at least one company has thrived during the pandemic: Amazon. The e-commerce behemoth controls 40 percent of online sales and has amassed record profits. The net worth of founder Jeff Bezos, the world’s richest man, has jumped to $186 billion, up more than $70 billion since March. 

Amazon’s continued growth and dominance in online retailing are due to its mastery of logistics—including its investment in building the world’s largest contingent (that is, not made up of permanent employees) last-mile delivery network, with over 500,000 contracted drivers globally. 

Last-mile logistics workers complete the final steps of delivery to a consumer’s home (or a neighborhood Amazon locker). While most packages in the U.S. are still delivered by the big four—UPS, FedEx, DHL, and the Postal Service (USPS)—Amazon is increasingly building out its own delivery network, posing a major threat to these firms and to working conditions in the industry. 

THE LAST-MILE PROBLEM

In contrast to big-box retailers that rely heavily on warehouse workers hired through temp agencies, Amazon directly employs hundreds of thousands of warehouse workers around the world (though it still regularly hires temps during peak periods). 

However, in the last-mile delivery sector, Amazon has taken a different approach: expanding its network of contingent and subcontracted drivers.

The last mile is one of most labor-intensive components of the e-commerce supply chain. Nearly one-third of the total cost of shipping goods occurs here. Logistics experts have described the challenges facing e-commerce firms as “the last-mile problem,” since the final leg of delivery usually involves multiple stops with small packages.

To decrease its dependence on the big four (including the unionized UPS and USPS), Amazon has invested in parcel delivery. By 2019, around half of Amazon Prime packages in the U.S. were delivered by subcontractors or contingent workers.

AN UBER FOR PACKAGES

Amazon Flex drivers are gig workers treated as independent contractors, similar to Uber drivers. They are paid per completion of a delivery route, not by the hour. Flex drivers must provide their own vehicles or rent delivery vans.

Independent contractors lack the legal rights of employees to unionize and enforce minimum wage protections. In 2019, a group of Amazon Flex Drivers based in California sued Amazon, claiming that the company had intentionally misclassified Flex drivers as independent contractors to avoid paying overtime and employee benefits.

In addition to Flex, the company is increasingly relying on its Delivery Service Partners program, rolled out in 2018. DSPs are small subcontracted parcel delivery firms with 20–40 delivery vans apiece—considered “independent” of Amazon, though they exclusively deliver packages for Amazon Prime customers.

SUBCONTRACTED DRIVERS

DSP fleets are limited to 40 vans to complicate unionization efforts and to increase Amazon’s flexibility and power over the price paid per delivery. Limiting their size makes it difficult for these small firms to gain leverage against Amazon. Each DSP manages between 40 and 100 employees.

I live in Southern California, one of Amazon’s largest markets in the world. For years, it was most common here to see white unmarked delivery vans with workers wearing reflective vests hustling Amazon Prime packages through the streets. Today, however, most DSPs lease grey-blue Amazon-branded delivery vans and Amazon uniforms for their drivers. And yet, despite their appearance, these subcontracted delivery drivers do not formally work for Amazon.

The majority of these drivers in Southern California work eight- to 10-hour shifts and earn about $15 per hour. Many do not receive health insurance benefits. 

These workers face extreme pressure to meet the demands of Amazon’s tight delivery terms. During peak holiday periods, the number of deliveries can reach as high as 400 per shift. Drivers complain of unpaid overtime, poor working conditions, and unrealistic expectations and pressures set by Amazon.

Between Flex and the DSPs, Amazon’s expanding market power has introduced new levels of exploitation for thousands of delivery drivers, many of them workers of color and immigrants. 

SPEED-UP AND SURVEILLANCE

Walmart became the world’s largest corporation by developing a sophisticated logistics management program, which reduced inefficiencies in the movement of consumer goods across thousands of miles.

However, the supply-chain management approach that Walmart perfected in the big-box era has not adapted well to the rapid changes brought on by the growth of e-commerce.

Big-box retailers have struggled to compete because their infrastructure was built to accommodate long-distance shipping. E-commerce depends upon a more localized and fragmented distribution and delivery system. 

Consumers demand increasingly fast delivery to their homes; the Amazon Prime program has driven further consumer demand for expedited free shipping. All this creates pressure on workers in both warehousing and last-mile delivery to speed up.

Connected to this speed-up are technologies that track workers’ movements and speed in real time. Amazon is the industry leader in worker surveillance across the global supply chain.

Amazon’s logistics infrastructure relies upon this exploitation and hyper-surveillance of both warehouse workers and contracted delivery drivers. In global labor organizing, joining these two groups together will be critical to worker power.

SQUEEZING THE COMPETITION

To compete with Amazon, FedEx has begun to tap into the e-commerce market by working with hybrid retailers (big-box stores that combine offline and online sales) that offer in-store pickup.

According to FedEx, approximately half of all online purchases occur after 4 p.m. This prompted the company to roll out a new late-night shipping option, giving retailers the opportunity to offer next-day shipping on orders placed as late as midnight. 

FedEx Express drivers pick up the packages from retailers as late as 2 a.m. and take them to sorting hubs. Deliveries can occur as soon as the next day within the local market, and two days for destinations farther away.

The late-night shipping program began in 2017 as a pilot in Los Angeles. Since then it has entered 100 local markets. Using the physical infrastructure of big-box retail outlets as a point of competitive advantage, FedEx has increased the speed from fulfillment centers to delivery to less than 24 hours. 

Competition between Amazon and hybrid retail firms has fueled a race to capture the last-mile market in other ways, too. Amazon’s acquisition of Whole Foods, at a price of $13.7 billion, had less to do with groceries and more to do with increasing its last-mile market share.

By acquiring Whole Foods, Amazon instantly added to its delivery network 440 refrigerated warehouses within 10 miles of 80 percent of the population. Since the acquisition, Amazon Flex drivers routinely use Whole Foods stores to drop off and pick up packages at Amazon lockers. The acquisition also improved Amazon’s last-mile market position in relation to its hybrid retail competitors Walmart and Target.

This blog originally appeared at Labor Notes on December 17, 2020. 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. Read a review here.


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

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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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5 Steps To Ensure Your Work-From-Home Employees Maximize Corporate Performance

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Use These Guidelines to Ensure That Your Remote Workplace Is A Corporate Asset

The advent of employees working from the home continues to rise, a trend that will surely continue in the future. 

Corporations recognize that an increasing number of employees – particularly millennials and contract workers in the “gig” economy – value this option and that it is a tool to better attract/retain employees. 

Benefits to reducing brick-&-mortar expenses, such as utility bills, are also an attraction to many employers.  Still others are faced with mandated work-from-home provisions due to unforeseen events such as the coronavirus pandemic.  All of these factors will ensure that remote workplace activity will only increase going forward.

Having said this, many corporate managers fear employee misuse of such freedom. 

Here are 5 some steps to ensure that creating a remote workplace environment for employees is a positive, beneficial step for the company.

  1. Identify clear expectations from remote employees.  Key elements of this communication include the hours to be worked, amount of work to be completed each day, task prioritization, guidelines for the amount/timing of communications with management, etc.
  2. Ensure remote employees have the proper tools.  Not only does this include corporate laptops and the like, but also ensuring they can log in and input data via corporate portals that will assist management in tracking employee progress, performance, needs, etc. Doing so will reduce the need for managers to utilize valuable time in personally tracking and evaluating such data.
  3. Regularly monitor employee progress (and needs).  Employers must regularly follow up on employee progress to ensure that corporate objectives and expectations are met, and also to ensure the company is there to offer assistance to any employee who, for whatever reason, is struggling with the “remote” proposition.
  4. Interact regularly with remote employees.  All employees need some degree of support and morale enhancement from their management and key associates.  This in turn bolsters productivity and acknowledges that remote employees have not been forgotten, or their contributions overlooked for performance evaluation or promotion consideration.
  5. Place trust and faith in remote employees.  Virtually every employee wants recognition as being an important asset to the company.  While some may intentionally or inadvertently misuse remote working privileges, most will not – especially if given the proper guidance recommended above.  Managers need to avoid the extremes of micromanagement and inadvertently placing too little emphasis on mutual communication with their employees.

Properly managed, the remote workplace can benefit employers and employees alike.  Follow the abovementioned steps to ensure it is an asset on your organization’s behalf.

Reprinted with permission.

About the Author: Heidi Allison currently serves as a board member for Workplace Fairness, lending her expertise in communications, public relations and media relations. One of her passions is assisting job seekers with ground-breaking advice and discussions about career advancement.


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

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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?

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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 TestIt 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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Hey, Uber and Lyft: Gig Work Is Work. California Just Said So.

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The rideshare industry seems to have been on an unstoppable tear, running roughshod over regulations, filling the streets with cars, and making astronomical sums of Wall Street capital. But California just tripped up Uber and Lyft’s business model with pioneering legislation to rein in the freewheeling “gig economy.”

The law, Assembly Bill 5 (AB5), passed overwhelmingly in the California Senate this week and is expected to be signed by Governor Gavin Newsom soon. It lays out a clear standard, the so-called “ABC test,” to ensure employers are properly categorizing workers as independent contractors, taking into account how much control the company exerts over their working conditions. Under the law, an independent contractor is defined as a worker with real autonomy: a person who (a) is not directly controlled by the company, (b) does work in the same trade or field independent of that company, and (c) is “independently established” as a proprietor of a separate business in the same sector. Under AB5, if you’re a rideshare driver whose entire livelihood depends on the rides your app funnels into our smartphone every hour, you’re likely an employee under California law.

The ABC test will codify the decision made in a landmark California Supreme Court case last year, Dynamex Operations West, Inc. v. Superior Court of Los Angeles. The Court ruled in favor of delivery service workers who argued they deserved to be classified as employees because they were forced to wear the company’s uniform and display its logo despite being legally deemed “independent.” A major goal of the AB5 legislation is to stop employers’ widespread abusive misclassification of workers as independent contractors, in order to deny them regular employment rights and protections, often by insisting that their workers are merely app users.

Once classified as employees under state law, gig workers—not just platform-based workers, but also nail technicians, home-repair workers and dog walkers—would have access to California’s minimum wage, overtime pay, paid rest break, parental leave and workers’ compensation.

Yet Uber and Lyft both continue to resist AB5, and Uber has even indicated that it does not plan to follow the law once it goes into effect at the start of 2020. The company argues that neither the companies, nor many of their drivers, want to be bound by state labor laws and prefer to drive Uber as a casual side hustle.

But thousands of drivers are already organizing in California for more power over their working conditions. According to Brian Dolber, an organizer with the California-based Rideshare Drivers United, a fledgling union of 5,000 drivers, AB5 paves the way to formal unionization. But Rideshare Drivers United has not yet decided on what form the union will take. For now, he said, “We’re really putting drivers’ voices first.” Dolber added, “We want to continue organizing drivers and have drivers decide how they want their union to be structured.’

Critics of AB5 point to the potential loss of “flexibility” once gig workers are regarded as  employees. However, labor advocates dismiss the flexibility question as concern trolling by the bill’s corporate foes. Nayantara Mehta of the National Employment Law Project argues that current labor laws do not automatically exclude jobs with irregular hours, such as union nurses and construction workers, from being employees. Besides, AB5 deals with the degree of control a company exerts over a worker, not how the schedule is set. “Courts have found that just because a worker has a flexible schedule doesn’t mean she is somehow transformed into the operator of her own business—the true benchmark of independent contractor status,” writes Mehta.

Moreover, the fixation on flexibility elides the reality of many gig jobs. Workers’ schedules may be unstable, but not by choice: Often workers are glued to their phones so they can scramble for whatever rides pop up on their phone, or get paid for each manicure they do or each burger they deliver. Their pay could be so dismal that workers “flex” themselves into exhaustion.

“We drive and we drive and we drive,” said Nicole Moore of Rideshare Drivers United, who helped coordinate a rideshare strike in May. “We don’t have dinner with our kids, we don’t do all the things that we’re supposed to be doing in life. Yet we’re expected to pay the rent, we’re expected to put food on the table, and try to make a better life for our kids.”

This is not the first time Uber’s independent contractor system has been challenged. Various lawsuits in recent months have sought to establish workers’ formal employment rights, with mixed results. Uber managed to wriggle out of two lawsuits in March, which together settled for $20 million with 13,600 drivers—but did not address their status as non-employees. Meanwhile, growing efforts to organize rideshare drivers, particularly the New York Taxi Workers Alliance, have helped win increased labor protections at the state and local level, including a minimum wage for drivers in New York City.

Facing the prospect of their payrolls becoming saddled with thousands of brand new workers, gig-company executives are panicking. Uber and Lyft spent a total of about $750,000 lobbying the California legislature, alongside other professional and industry associations that sought exemptions from the law. In the end, Uber and Lyft were not granted the carve-out they were hoping for in the bill, but other trades—including real estate and insurance agents, doctors, engineers, architects and lawyers—were exempted.

Now Uber, Lyft and DoorDash are reportedly joining forces to fight AB5 using a time-honored California political strategy: investing $90 million on a ballot initiative asking voters to overturn the law and erect a different legal regime for gig workers, which might include some weaker benefits and pay standards.

So the gig economy’s leading lights are bent on fighting the law until the bitter end. But in this next round of legal battles, California’s new law, which is based on a Supreme Court ruling and reflects growing public disillusionment with the gig economy titans, might finally put the brakes on the platform economy’s regulatory rollbacks.

Moore is hopeful that the law can help narrow the gulf between Uber executives and drivers. “There’s no difference between my humanity and their humanity, sha says, adding: “The basic American agreement is that yes, be innovative, become a millionaire, build your own business, but the American compromise is that you will need to share some of those millions with the people who do the work in your company, so that they can also afford to take a Lyft.”

This article was originally published at In These Times on September 13, 2019. Reprinted with permission.

About the Author: Michelle Chen is a contributing writer at In These Times and The Nation, a contributing editor at Dissent and a co-producer of the “Belabored” podcast. She studies history at the CUNY Graduate Center. She tweets at @meeshellchen.


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Uber claims California gig economy law won’t apply because drivers aren’t central to Uber’s business

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The California Senate passed a bill reining in gig economy abuses on Tuesday night, and by Wednesday afternoon, before Gov. Gavin Newsom had a chance to sign it, Uber had already come out to say that it was confident the new law wouldn’t apply to Uber drivers, and also Uber had already allocated tens of millions of dollars for a ballot initiative overturning it.

Uber chief legal officer Tony West insisted that the company would pass the test for counting its drivers as independent contractors rather than employees because “drivers’ work is outside the usual course of Uber’s business, which is serving as a technology platform for several different types of digital marketplaces.” As Jamison Foser tweeted in response to this insult to our collective intelligence, “Just last week as my wife and I were leaving a bar, I turned to her and asked ‘are you getting a technology platform for several different types of digital marketplaces or should I?’”

Uber’s position boils down to “we will pour all our resources into fighting this and we bet we can buy a win by some means or other.” But the company is on the record that its drivers are a key part of its business model. Like, really on the record about that. And AB5 won’t leave the court battles to drivers—San Francisco’s city attorney has said that his office may take action to enforce the law.

For its part, Lyft sent drivers a threatening letter saying that drivers “may soon be required to drive specific shifts, stick to specific areas, and drive for only a single platform (such as Lyft, Uber, Doordash, or others).” While Lyft and other app-based services might decide that their best move was to limit the number of drivers at one time and the number of hours they could work, that’s not required by the law, and Assemblywoman Lorena Gonzalez, the author of AB5, questioned the legality of the threat that people might be required to “drive for only a single platform.”

In short, AB5 is a big step forward—but companies that got rich and powerful by exploiting workers and sidestepping labor laws are going to use their money and power to continue exploiting workers and sidestepping labor laws for as long as they can get away with it.

This article was originally published at Daily Kos on September 12, 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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