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VOTERS SUPPORT HOLDING CORPORATIONS ACCOUNTABLE FOR LABOR CONTRACTING ABUSES

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Recent polling confirms that voters who live in battleground districts overwhelmingly want their Congressional representatives to hold corporations accountable to the workers who build their business and their wealth. Voters want legislators to make it harder for companies to call workers “independent contractors”; they want lawmakers to discourage companies from contracting with temp and staffing agencies and shedding responsibility for their workers.

Between January 22 and February 1, 2021, Hart Research Associates polled voters in the nation’s 67 most competitive Congressional districts. Across political parties, regions, race, genders, age groups, education levels, and income levels, there is broad understanding that policymakers should address the rampant contracting out of jobs.

Fully 72% of voters are in favor of passing legislation that would “allow workers to hold lead companies legally responsible if their subcontractor fails to make Social Security, unemployment insurance, or workers’ compensation contributions, or fails to pay workers the wages they are owed according to prevailing minimum wage and overtime laws.” Both white voters (73%) and people of color (70%) support such legislation. Democrats especially favor such legislation (83% support), but both Independents (60%) and Republicans (66%) also endorse legislative action.

Seven in ten voters (70%) believe that eliminating permanent jobs and instead using workers from temporary or staffing agencies is a bad change in the workplace, with a third of voters regarding this as a very bad change.

And by a dramatic 40-point margin, 54% to 14%, voters think that businesses designating more workers as independent contractors, instead of hiring them as employees, is a bad change rather than a good change for the workplace. A strong majority (68%) of battleground voters favors legislation that would make it harder for companies to classify workers as independent contractors, including increasing the fees and penalties for companies that misclassify employees as independent contractors. Seventy-six percent of voters of color supported the new legislation; 66% of white voters also favored it, as did 79% of Biden voters and 58% of Trump voters.

NELP’s prior research shows that Black, Latinx, Asian/Pacific Islander, and Native American workers are overrepresented in misclassification-prone sectors, such as construction, trucking, delivery, home care, agricultural, personal care, ride-hail, and janitorial and building services, by over 36 percent; they constitute just over a third of workers overall, but between 55 and 86 percent of workers in home care, agricultural, personal care, and janitorial sectors.[1]

NELP’s results come on the heels of polling by McKinsey that finds that contract, freelance, and temporary workers would overwhelmingly prefer to have permanent employment. In particular, people of color stated a strong preference for stable jobs. Together, the two polls make clear that excluding certain workers from labor protections—exclusions that are rooted in white supremacy and segregation—has profound implications for racial justice.

The poll results make clear that lawmakers should resist efforts by Uber, Lyft, Doordash, Instacart, and others to gain special exemptions from foundational labor rights, both across the states and in intense lobbying to gain special exemptions from federal legislation known as the Protecting the Right to Organize (PRO) Act—which, if passed, would be the most consequential expansion of the right to organize that workers have seen in decades. These businesses and others that make up the misleadingly named “Coalition for Workforce Innovation” are attempting to convince lawmakers that workers prefer being relegated to second-class status. The polling data shows that these claims are false.

…people across the country are demanding that their elected representatives ensure that foundational labor rights apply to all people who work for a living, and that foundational obligations apply to businesses that contract out.

Instead, people across the country are demanding that their elected representatives ensure that foundational labor rights apply to all people who work for a living, and that foundational obligations apply to businesses that contract out. NELP applauds efforts by the Biden administrationCongressmembers, and policymakers in states and cities who are working towards this goal.

This blog originally appeared at NELP on June 15, 2021. Reprinted with permission.

About the Author: Rebecca Smith is the director of the Work Structures Portfolio at NELP. She joined NELP in 2000, after nearly 20 years advocating for migrant farm workers in Washington State.


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BREAKING: Draft Legislation in New York Would Put Gig Workers into Toothless ‘Unions’

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An effort backed by the New York State AFL-CIO would create a new bargaining scheme for app-based workers without addressing the question of whether or not these workers are legally “employees.”

Labor Notes obtained a draft version of the legislation that is being negotiated by unions and app employers.

Workers for apps like Uber, Lyft, and DoorDash are currently considered independent contractors; most in the labor movement consider them misclassified, a tactic the companies use to avoid paying the full cost of benefits. These workers are blocked from unionizing by antitrust laws, and don’t have the protection of the National Labor Relations Board (or many other protections).

To sidestep this, the draft legislation would enact a new process to recognize unions and bargain agreements—relying on the state government to enact the negotiated “recommendations” as regulations.

But the draft bill includes much to give labor activists pause, and marks a departure from the national push against misclassification.

“It’s about creating a distraction and a real carve-out from the PRO Act,” said Bhairavi Desai, director of the New York Taxi Workers Alliance.

The federal PRO Act, which much of the labor movement is pushing for, would sidestep the question of misclassification but allow independent contractors to unionize under certain conditions using the National Labor Relations Act.

New York State Senator Jessica Ramos, chair of the Labor Committee, has just released a statement that she will not be backing the draft bill because “We will not legitimize any company union. We will not undermine the PRO Act.”

THE BIG UGLIES

We don’t know what would end up in the final legislation. But the biggest immediate concerns fall into two major categories: departures from existing labor law, and lessening local regulatory power over gig companies.

This legislation says that workers would be put into a union that they likely never voted for, and which would not be funded by workers, and barred from putting up any serious fight for an agreement—no strikes, no boycotts, no picketing. It would create a new type of legally recognized union which is not financially accountable to its members. This should be deeply concerning to those who care about building powerful, democratic unions.

This draft legislation would also take away local governments’ power to rein in gig employers—New York localities could no longer create specific minimum wages for app workers or rules about their working conditions. What’s more, cities would lose the ability to legislate about these companies at all. Local governments couldn’t create taxes or surcharges on the services, or rules for how they must operate. NYC already has a cap on the number of rideshare drivers; this would be thrown out. If a local government wanted to put a surcharge on rides or deliveries to fund infrastructure, or green jobs, or schools—it couldn’t. This power would rest solely with the state.

This type of legislation is not entirely new, but this may be the furthest it’s gotten. Two years ago, as California legislators were preparing Assembly Bill 5 to rein in misclassification, Uber and Lyft were approaching major unions, including SEIU and the Teamsters, in an attempt to preempt the legislation with a compromise. When that didn’t work, the companies spent hundreds of millions of dollars on last fall’s ballot measure, Proposition 22, to carve themselves out. They won, and they’ve made no secret of their intention to get the same deal in other states.

Now, up against the might of these incredibly powerful companies, some labor leaders are looking for compromise legislation of their own. What’s in it for the apps? Legislation like this could help siphon off labor organizing energy and undermine campaigns for tougher legislation.

TWO MASSIVE UNITS, ONE UNION EACH

The legislation covers app-based workers in two groups: rideshare drivers, who perform on-call taxi service for companies like Uber and Lyft; and delivery workers, who deliver packages, groceries, and restaurant orders for companies like Instacart, Amazon, DoorDash, and Seamless. Each of these two groups would become a massive, statewide unit. The draft bill sets up a process (detailed below) for one union to cover each group.

Rideshare companies employ around 80,000 drivers in New York City alone, a figure that is currently capped by local legislation. The number of delivery workers is less clear, but would include between 50,000 and 80,000 food delivery workers as well as Amazon “Flex” drivers and probably others.

The likely unions—based on who’s been pushing this legislation—would be the Machinists’ Independent Drivers Guild for the rideshare drivers, and the Transport Workers Union for delivery workers. The IDG already claims to represent the 80,000 app-based drivers in New York City, but this would formalize its role. The Machinists’ project has come under scrutiny for receiving money from Uber.

RECOGNITION

The recognition process relies in part on labor peace agreements—familiar in places like construction and the burgeoning cannabis industry. Here, the agreement requires companies to sign a peace deal with a union that meets certain requirements; the union is then restricted from encouraging any “picketing, strikes, slow downs, or boycotts” until a finalized deal has been ratified by the state.

The unions only have to show signed cards of support from 10 percent of the workers in the unit—there’s no election. (What if more than one union shows interest? It reads as an afterthought; the labor commissioner is supposed to come up with a process in that case.) Contrast that with the union authorization process run by the National Labor Relations Board, where 30 percent of workers must sign union cards to trigger an election, which can even include competing unions on the same ballot.

Under the draft law, the state ultimately gets to decide if the union should be recognized—because, in addition to the 10 percent show of support, the union must have “demonstrated experience in representing network workers or other related workers in reaching agreements with companies for at least five years.” (“Network” is being used here as a synonym for “app.”)

This puts significant power in the hands of the commissioner of the state’s Department of Labor, appointed by the governor, to determine whether or not a union is eligible to represent workers. This could lead to competing worker organizations being disqualified. The Taxi Workers Alliance, for example, is not a formal union in the legal sense, though it has members and strikes; it’s unclear whether it would meet the standard of “reaching agreements.”

“We read that as they want to make sure TWA is locked out,” Desai said. “It’s meant to favor—that’s not even strong enough—IDG and it’s meant to get rid of us.”

Service Employees Local 32BJ has been supporting the Worker’s Justice Project, a worker center, in its campaign to organize app-based delivery drivers—but will the state say that WJP or even SEIU has the requisite experience representing “network” workers?

Getting rid of or changing the union would require a much more significant lift, and an election. Thirty percent of workers would have to say they wanted a decertification election, and a majority of all workers (not just those voting) would have to vote to decertify. If they wanted a different union, workers would have to go through the process of showing 10 percent support again (after decertifying the existing union), and have the state “certify” their organization.

WHAT’S THE DEAL?

Once a union was certified, the rideshare companies would bargain together for one agreement, and the delivery companies would bargain a separate one, each across the table from the chosen union. The draft legislation demands that the negotiators bring state representatives a deal covering a handful of topics, including union access to workers and a minimum five-year agreement.

The two most remarkable topics they would negotiate are a “portable benefits fund” and the minimum wage for drivers. Portable benefits is a vague term that can mean a lot of different things that aren’t tied to a specific job—anything from Social Security to privatized unemployment insurance for misclassified workers. Here, the union and the employers are told to set up a nonprofit and negotiate how much money to send its way, though the legislation doesn’t say anything about what benefits this should cover. Unemployment? Workers compensation? Family leave? It would be up to them to figure that out. Many of these things are mandated for W-2 employees by laws that don’t cover independent contractors.

The wage negotiations are supposed to have a “floor,” consisting of a local minimum wage plus a mileage rate. The kicker, though, is that these only cover active time—that is, time the workers spend performing the job. App workers have long complained about unpaid idle time while they’re waiting for dispatch—this was a big push for California’s Assembly Bill 5, and NYC passed a driver minimum wage that covered inactive time (more on this later).

NO DUES, BUT LOTS OF CASH

The draft legislation provides a direct line of funding for the unions involved, in the form of surcharges. Each ride in an Uber or food delivery by an Instacart worker would have a 10-cent surcharge, paid by the customer, which companies would collect and then hand over to the unions.

This doesn’t necessarily preclude unions from setting up dues and membership structures, but it does provide them a huge pot of money without having to do that. Right before the pandemic, rideshare companies were hitting 750,000 rides a day in New York City. So the rideshare union would get $75,000 per day—almost $27.5 million per year—just from NYC, even before you figure in all the drivers in the rest of the state.

PROGNOSIS

The New York legislature is only in session for a little less than two weeks, leaving a small window for this to pass this year. The IDG has tried to pass similar legislation over the past several years, but this time it is opening the door to the support of another union by including a separate unit of delivery workers.

Similar legislation was floated recently in Connecticut, before it was allegedly shut down by the national AFL-CIO—in part because of its contradictions with the federal PRO Act, which would provide many misclassified “independent contractors” the right to organize and bargain under the National Labor Relations Act.

As app-based employers continue to grow in size and power, they will keep looking for creative new ways to undermine labor law. Unfortunately, it’s all too easy for them to find allies in labor who are willing to gamble away workers’ rights for the promise of quick, massive membership increases.

This blog originally appeared at Labor Notes on May 21, 2021. Reprinted with permission.

About the author: Joe DeManuelle-Hall is a staff writer and organizer at Labor Notes.


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McGraw Hill Rejects Calls to Stop Charging Its Freelancers a Fee in Order to Get Paid

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The revelation that McGraw Hill (MH), a multibillion-dollar educational publishing company, has begun charging its freelancers and independent contractors a fee in order to get paid has prompted a wave of public outrage, along with a letter from advocacy groups demanding that the company end the practice. The company’s response: No. 

Two weeks ago, In These Times reported on the existence of the 2.2% fee that the company began charging last October. The fee applies to freelancers and independent contractors who submit invoices through the company’s invoicing system, called Fieldglass?—?but because that is the only way to invoice the company, it amounts to a mandatory fee that workers must pay in order to get what the company owes. The company calls it an ?“administrative fee” levied in order to ?“cover the cost of third-party vendors that help us ensure that each contractor meets the requirements needed to be classified as an Independent Contractor under various state laws and IRS regulations.” But it is, in effect, an across-the-board mandatory pay cut for all of the workers, a brazen and unusual move by the company to shift its normal administrative costs onto the backs of its freelancers. 

The story caused an uproar among the wider community of people who do freelance editorial work for a living. On social media, the fee was referred to as ?“incredible,” ?“utter crap,” and ?“bullshit.” The existence of the fee, which was not widely known, even caused mortification inside McGraw Hill itself. ?“The fee is an embarrassment. We’ve always been good to our freelancers so I was very surprised to learn we’d be charging a fee to process their invoices. Taking a cut from their pay is petty and makes us look bad,” said one MH employee, who asked to remain anonymous out of fear over professional repercussions. ?“I really hope the company reconsiders and rolls back this policy. The invoicing system is already a pain to use.”

On March 30, representatives of more than a dozen groups representing editorial and freelance workers, including the National Writers Union, Freelancers Union and the Authors Guild, sent a letter to the company demanding ?“that you immediately cease this inequitable practice that amounts to a wage cut at an unprecedented time… and reimburse all freelancers who have already been charged this outrageous fee.” The letter called the practice ?“shocking,” and noted that MH’s digital revenue has been growing even as the company shifted costs onto its freelance work force. 

The company was unmoved. David Stafford, the SVP and general counsel of MH, sent a reply letter on April 1 saying that ?“The 2.2% fee offsets the incremental costs we now incur to ensure proper labor force classification. We communicated the fee in advance to our independent contractors and they agreed to pay it.” 

The letter also includes a common rationalization used by ?“gig economy” companies that seek to lower labor costs by using more freelancers and fewer full time employees: ?“Many of the independent contractors we engage already have full-time jobs and the work they do for us provides them with additional income. The rate of independent contractors returning to do work with us is very high and during the pandemic, the percentage of independent contractors who had more than one project with us increased. The high return rate implies satisfaction among the independent contractors who work with us.” This is an example of the gig economy’s underlying sleight of hand?—?to force workers to take up more and more freelance work out of economic necessity, and then use the fact that they are doing that work as proof that they’re satisfied with the arrangement. 

The groups that sent the complaint letter are unsatisfied. Mary Rasenberger, the CEO of the Authors Guild, said that the fee itself is ?“exploitative, and an outrage,” and that it sets a ?“dangerous precedent.” Rafael Espinal, the head of the Freelancers Union, called the company’s response ?“tone-deaf.”

“The simple fact that freelancers have agreed to these terms is not evidence that they are happy with the system, it’s proof that they feel they have no recourse when presented with usurious terms such as this,” Espinal said. ?“It is a matter of course that corporations bear the administrative and payroll costs associated with their employees. There is absolutely no reason they should not bear the same responsibility when hiring freelancers.”

Advocates are unanimous in rejecting the company’s assertion that charging a fee in order to get paid is either standard or defensible. ?“In no way is this a common or justified business practice,” said Larry Bleiberg, the president of the Society of American Travel Writers and a signatory of the letter. ?“It’s a scheme dreamed up by his company to squeeze out extra revenue. I’m just disappointed that a publisher that claims to support writers, photographers and graphic artists?—?and profits from their work?—?would so shamelessly try to take advantage of them.”

The company appears to have made the calculation that the revenue it takes in by charging freelancers in order to get paid is worth the bad publicity it has received thus far. There is serious money at stake for both sides. Were it to become common, the practice of shifting administrative costs away from employers and onto freelancers would constitute a permanent decline in wages for independent contractors?—?another incremental step downward for workers in an era when full-time employment is becoming harder and harder to find. The National Writers Union, which represents freelance writers, is actively seeking MH freelancers who have been charged the fee, in order to organize them to fight the practice. 

“I understand being hesitant to reach out,” said NWU president Larry Goldbetter, ?“but they can make all the difference here.”

This blog originally appeared atIn These Times on April 5, 2021. 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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Why Many Uber Drivers Couldn’t Afford To Stay Home During Australia’s Fires

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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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New Jersey hits Uber with $650 million bill for back taxes, this week in the war on workers

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New Jersey says Uber owes $650 million in back taxes and interest for misclassifying workers as independent contractors. This isn’t coming out of nowhere—in 2015, the state notified Uber it owed $54 million in unemployment and disability taxes. Four years later, the number has grown to $523 million in past-due taxes and $119 million in interest and penalties.

No surprise, Uber says it will fight to avoid paying its tab. And the decision that Uber drivers are employees could have major ramifications beyond taxes—refusing to treat its workers as employees is at the heart of Uber’s business model. New Jersey is dealing other blows against that misclassification, including determining former rideshare drivers to have been employees for the purposes of collecting unemployment (one of the taxes Uber hasn’t been paying), and the state Senate is considering legislation cracking down on misclassification. California recently passed such a law, which Uber and other affected companies have said they will spend tens of millions of dollars fighting. A class-action lawsuit against Uber in New Jersey also seeks to escape Uber’s forced arbitration requirement because the drivers in question are involved in interstate commerce.

Uber’s business model is reliant on violating labor law to exploit workers, and, as the New Jersey case shows, it also cheats states of massive amounts of revenue. Increasingly, that model is under challenge in the states. Following the New Jersey demand for back taxes, the New York Taxi Workers Alliance’s Bhairavi Desai said in a statement, “New Jersey is sending a message that the state’s labor laws aren’t dictated by corporations. It’s time for New York to follow.” It is time, and that would be another major challenge for Uber. At some point, you have to wonder how many big states even a rich company like Uber can afford to keep battling for the right to violate labor laws.

This article was originally published at Daily Kos on November 16, 2019. Reprinted with permission.

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

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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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California moves one step closer to reining in the gig economy and expanding worker protections

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A million California workers are denied key workplace protections—including the minimum wage—because their employers falsely label them as independent contractors. But that came one step closer to changing on Friday when the state Senate’s appropriations committee passed Assembly Bill 5, a plan to crack down on that misclassification of workers.

AB5 is based on a 2018 decision by the California Supreme Court that imposed a stricter test for whether a worker could be considered an independent contractor. Companies can’t call workers independent contractors if the work they do is central to the company’s mission or if the company substantially directs their work, the court ruled. The legislation will make enforcement significantly easier, but it also includes a lot of exemptions for professions such as doctors, lawyers, architects, engineers, accountants, insurance agents, hairstylists, and more.

The trucking industry and app-based companies like Uber and Lyft have been screaming for exemptions but so far, their efforts are in vain. “Trucking has some of the worst violators,” said Assemblywoman Lorena Gonzalez, the bill’s author. “We are not going to strip out employee protections.” Uber, Lyft, and others are threatening to pour $90 million into a campaign for a ballot measure exempting them, which could become a massive fight in 2020.

Other workers who will be covered by AB5 include janitors, construction workers, manicurists, strippers, and some in the tech industry. Being an employee means protections including the minimum wage, overtime, workers comp, sick leave, family leave, and more, in addition to employer payments for Social Security and Medicare. Companies also don’t pay payroll taxes on independent contractors, shorting the state of California by an estimated $7 billion a year on misclassified workers.

The bill, which passed the state Assembly, heads to the full Senate for a vote that’s expected to succeed. According to a spokesman for Gov. Gavin Newsom, “The governor is supportive of addressing the misclassification of workers, which for decades has been a driver of income inequality.”

This blog was originally published at Daily Kos on September 3, 2019. Reprinted with permission.

About the Author: Laura Clawson is labor editor at Daily Kos.

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California Assembly votes to rein in gig economy abuses, this week in the war on workers

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The so-called gig economy often rests on exploiting workers by misclassifying them as independent contractors, which means they don’t get minimum wage, unemployment insurance, workers compensation, overtime pay, or other protections that regular employees are guaranteed (at least in theory). That may be about to change in California, where the state Supreme Court ruled to clarify how workers are classified last year, and the Assembly passed a bill this week tackling the issue.

If the bill becomes law, employers could only classify workers as independent contractors if they could prove that the workers truly controlled their own schedules and working conditions, weren’t doing work central to the company’s business model, and had their own “independently established” business or role. That would have huge ramifications for huge companies like Uber, Lyft, and Amazon, but would also apply to workers at many small businesses. The bill does exclude many jobs, though, such as doctors, real estate agents, lawyers, and some hairdressers.

AB 5 passed 53 to 11 in the Assembly and now heads to the state Senate. “Big businesses shouldn’t be able to pass their costs onto taxpayers while depriving workers of the labor law protections they are rightfully entitled to,” tweeted Assembly member Lorena Gonzalez, one of the bill’s authors, in celebration of its passage.

This blog was originally published at Daily Kos on June 1, 2019. Reprinted with permission.

About the Author: Laura Clawson is labor editor at Daily Kos.

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Delivery Drivers Sue Amazon Over Misclassification, Failure to Pay Overtime and the Minimum Wage

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With wage and hour lawsuits becoming increasingly common across the country, there was little reason for the lawyers at Amazon.com’s Seattle headquarters to be surprised when one landed on their doorstep recently. But they may have been concerned to learn that their newest legal adversary is “Sledgehammer Shannon” Liss-Riordan, a Boston attorney who gained legal fame by beating corporate giants like FedEx and Starbucks in just these kinds of contests.

The new lawsuit against Amazon is similar to one of Liss-Riordan’s best known cases—a suit against FedEx that charged the company was misclassifying delivery drivers as independent contractors when the workers were, as a matter of law, regular employees. Liss-Riordan won that fight and, this year, FedEx announced that it would give up on a series of related legal fights and pay $240 million to some 12,000 drivers in 20 states.

Liss-Riordan took the fight to Amazon in a suit filed October 4 in the U.S. District Court for the Western District of Washington. It charges Amazon and Amazon Logistics Inc. with violating the minimum wage law in Seattle, state labor law in Washington and the federal Fair Labor Standards Act (FLSA).

Liss-Riordan explains that Amazon is experimenting with a delivery system where the company contracts with individuals to use their own cars to pick up parcels at Amazon warehouses and deliver them to local customers. The drivers typically sign up for a specific work shift and are paid an hourly wage. They are not compensated, however, for expenses like gasoline, car maintenance, telephone calls, or other incidentals. When subtracting these expenses, drivers often end up earning less than the minimum wage and are denied overtime pay, she says.

That description of delivery methods was echoed by Stacy Mitchell, co-director of the advocacy group Institute for Local Self-Reliance. Along with co-author Olivia LaVecchia, Mitchell has just completed a major study of Amazon’s business practices that warns that the giant corporation is killing good jobs in local economies as it seeks to monopolize different sectors of the retail business.

“Amazon has substantially expanded its warehouses in recent years and is experimenting with the so-called ‘last mile’ of the delivery system. They are increasingly using on-demand drivers, and also regional couriers, to move goods,” Mitchell says. “In the past, this sort of ‘last mile’ delivery was typically done by the U.S. Postal Service or United Parcel Service. USPS and UPS jobs are good-paying union jobs, and Amazon is undermining these with its gig economy model.”

In These Times reached out to Amazon to comment on the lawsuit. Spokesman Jim Billimoria provided the following response:

“The small and medium sized businesses that partner with Amazon Logistics have their own employees and are required to abide by applicable laws and Amazon’s Supplier Code of Conduct, which focuses on compensation, benefits, and appropriate working hours. We investigate any claim that a provider isn’t complying with these obligations.”

Liss-Riordan says this sort of a defense is typical of large corporations, many of which have lost wage and hour lawsuits in court.

“It’s not what you say that counts, it’s what you do,” she said. “We’ve been able to demonstrate, time and time again, that a lot of these corporations just don’t live up to their stated policies when it comes to real-life employment practices on the ground. That’s why you see more and more of these suits.”

Indeed, a 2015 report from the law firm of Seyfarth Shaw LLP described an “onslaught” of litigation resulting in a record high number of federally-filed wage and hour cases in 2015. According to the firm, there were 8,781 such cases in 2015, compared to only 1,935 in 2000.

Asked about her nickname “Sledgehammer Shannon,” Liss-Riordan laughed out loud.

“It’s sort of silly. Mother Jones magazine did an article last year about a case I have against Uber, and I get a lot of jokes. I don’t care. The fact is, we will take on cases like this and fight them for 10 years if we have to.”

This blog originally appeared at Inthesetimes.com on December 12, 2016. Reprinted with permission.

Bruce Vail is a Baltimore-based freelance writer with decades of experience covering labor and business stories for newspapers, magazines and new media. He was a reporter for Bloomberg BNA’s Daily Labor Report, covering collective bargaining issues in a wide range of industries, and a maritime industry reporter and editor for the Journal of Commerce, serving both in the newspaper’s New York City headquarters and in the Washington, D.C. bureau.


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Uber And Lyft Drivers Organize To Fight Exploitation

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“Gig economy” corporations depend on a low-wage economy in which lots of people are looking for ways to get by. Their business model requires disposable people willing to take low-wage jobs with long hours and no benefits so they can pay the rent, doing things for people who need to save as much as they can, so they can pay the rent.

For example, if you’re driving for “ride share” companies like Uber or Lyft, those companies are making serious money. Meanwhile you’re probably working a lot of hours just to make rent. You drive for them, you obviously are an employee, but they say are a “contractor.” Contractors are basically employees who don’t get benefits, have to pay much more into Social Security, have to withhold their own taxes and pay them quarterly, can’t claim unemployment, don’t get Workers Compensation if injured on the job and many other disadvantages. There isn’t even a limit on the hours they work and they can’t get overtime.

The drivers (and other “contractors” around the country) say they are employees and deserve the rights and benefits of employees. Uber and other big corporations that exploit their workers as a business model claim their employees are “contractors” with no rights. Various courts, agencies, departments, etc are working to determine if they will be classified as employees or contractors.

Uber and Lyft Drivers Fighting To Unionize

Uber and Lyft drivers are fighting to do something about this and the best way to do something when you are being exploited on the job is to join a union so you are not fighting alone. In New York, for example, 14,000 Uber and Lyft drivers have signed up to say they want to join the local Amalgamated Transit Union (ATU) branch.

ATU’s website says,

“Founded in 1892, the ATU today is comprised of over 190,000 members, including: metropolitan, interstate, and school bus drivers; paratransit, light rail, subway, streetcar, and ferry boat operators; mechanics and other maintenance workers; clerks, baggage handlers, municipal employees, and others.”

Buzzfeed has the Uber/Lyft/ATU story, in Nearly 14,000 Uber And Lyft Drivers Sign Union Cards In New York

Nearly 14,000 Uber and Lyft drivers in New York have signed up to join the local branch of the Amalgamated Transit Union, according to a union spokesperson. The group plans to rally at the NYC Taxi and Limousine Commission (TLC) headquarters next week to demand a formal vote on unionizing.

The 14,000 sign-ups exceed the 30 percent threshold that federal regulators say must trigger an official vote, the union says. The cards signed by drivers indicate that they seek ATU membership and authorize the union to act as their collective bargaining agent.

The ATU’s Local 1181 is asking the Taxi and Limousine Commission (TCL) to force Uber and Lyft to allow a union vote. Crain’s New York Business explains why, in Union seeks to organize rideshare drivers in NYC,

In a letter to the commissioner that was delivered on Tuesday, Local 1181 President Michael Cordiello asked the TLC to “schedule and conduct a free and fair election for the drivers of these corporations to determine whether they choose to be represented” by the union.

“We make this demand in conformance with the stated mission of the TLC,” he wrote, citing its status as “the agency responsible for licensing and regulating” the city’s taxis and car services.

In an interview, Cordiello added that Tuesday’s rally was only the first step in the union’s strategy.

“There are a lot of other ways we can accomplish this, such as legislation,” he said in a reference to the ordinance passed in December in Seattle that entitled Uber and Lyft drivers to union representation. “We are unfolding what we believe will be a new direction for labor and for the technology work force.”

Drivers and the ATU Local held a rally Tuesday at the TLC office in Long Island City. Vice News covered that, in NYC Uber and Lyft drivers are protesting for union rights,

Drivers for the ride-hailing service Uber turned out in the streets of Queens on Tuesday morning, demanding their right to unionize outside the New York City Taxi and Limousine Commission in Long Island City.

“We demand living wage fares, no pool fares, protection from exploitation, union representation,” read one big green sign held up by one Uber driver, a middle-aged black man with a tan jacket and blue pork pie hat.

The ride-share workers — categorized as “independent contractors” rather than employees by tech companies like Uber and Lyft — had joined up with the Amalgamated Transit Union Local 1181, which represents city bus drivers. Copies of over 14,000 signed union cards sat in a fat bundle on the table in the center of the demonstration, 10,000 cards thicker since May.

The rally had the flavor of a protest,

It was an old-fashioned rally. The ride-share workers, joined by bus drivers, marched in front of the Taxi Commission barking out chants from a bullhorn. Cop cars flanked either side of the street as people who worked inside the Commission building slowed down to check out the protest.

A few passing Uber and Lyft drivers liked what they heard and waded into the demonstration to sign union cards.

“I support this,” said Jaydip Ray, 36, a skinny guy with a blue hoodie, moments after walking away from joining up, as another young man took his place. “We need benefits. Without benefits, we don’t have any future.”

The “gig economy” means that big corporations make billionaires, while their workers are called “contractors” who have no rights and don’t make squat. It’s one more way the system has been rigged.

This post originally appeared on ourfuture.org on September 30, 2016. Reprinted with Permission.

Dave Johnson has more than 20 years of technology industry experience. His earlier career included technical positions, including video game design at Atari and Imagic. He was a pioneer in design and development of productivity and educational applications of personal computers. More recently he helped co-found a company developing desktop systems to validate carbon trading in the US.


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