The gig-economy, app-based tech companies, run by incredibly wealthy stock-rich executives, are ruthlessly persistent. They refuse to concede to critics that their workers are employees.
In what seems to be an effort to save on wages, benefits and taxes, the gig-economy titans assert that the people who drive you around, shop for your groceries at the supermarket and deliver dinner from your favorite local restaurant to your doorstep are contractors. Many workers say they should be classified as employees instead of independent contractors. This designation is crucially important to both sides of the war.
The proliferation of app-based, gig-economy companies has positively changed the way we lead our lives. They have given back time to consumers. No longer do you have to spend an hour at the supermarket. After a hard day at work, there’s no need to cook dinner, when a nice meal could be brought to you quickly. If you want to go somewhere, a ride-hailing app will get you there.
For many Americans who have a hard time finding a job, a gig role is a great solution. During hard times, like a global pandemic that left millions of people unemployed, a gig job would serve to bring in some much-needed extra income. Immigrants, newly arriving to the country, could get work, helping them acclimate to their new home. This new and fast-growing sector of the economy has been a game changer. The challenge is creating a fair balance between the workers and the app-based companies.
Massachusetts is the new battleground state between the super-rich tech moguls and people trying to eke out a subsistent living. Last year, Uber, Lyft, DoorDash and Instacart won a hard-fought victory in California with Proposition 22, exempting app-based workers from AB-5, which would have classified drivers and other gig workers as employees with workplace benefits.
The fight centers on the classification of gig workers. filed legal documents to qualify for a ballot measure that would make their workers independent contractors—and not employees. They would have some limited benefits, such as minimum pay of $18 per hour and healthcare stipends for drivers who work at least 15 hours per week.
The debate boils down to the “ABC” test. A worker could be classified as an independent contractor if the following three factors are met:
- The worker 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 worker performs work that is outside the usual course of the hiring entity’s business.
- The worker is customarily engaged in an independently established trade, occupation or business of the same nature as the work performed.
This could be a long, tough battle. The tech giants have a huge financial warchest. In the California fight, Uber, Lyft, DoorDash and Instacart spent a combined $225 million on Prop. 22 to get public opinion on their side.
If this measure is placed on the ballot, the app companies could have challenging opponents. Maura Healey, Massachusetts attorney general, previously made by Uber and Lyft of their drivers.
Labor secretary Marty Walsh, Boston’s former mayor and an ex-labor union leader, said, “In a lot of cases, gig workers should be classified as employees.” President Joe Biden has also been a vocal advocate for workers, touting the importance of unions.
The Coalition to Protect Workers’ Rights, of workers, advocates, labor unions, civil rights and other public interest groups, by Uber, Lyft and the other big tech companies. The advocacy group claims that, if passed, it would “permanently create a ‘second-class’ status” for the workers, noting the majority of whom are Black, Brown and immigrants.
Proponents of the initiative say that the proposal would offer a base of 120% of the Massachusetts minimum wage for the workers. This amounts to around $18 an hour for drivers, not including tips. The ride-hailing apps’ drivers would be guaranteed at least $0.26 per mile to cover vehicle expenses, healthcare stipends for drivers who work at least 15 hours per week and drivers would still keep all of their tips .
Lyft cofounder John Zimmer said on Tuesday, “While our priority is to find a legislative solution in Massachusetts, this part of our continued efforts to advocate what the vast majority of drivers want—a flexible earning opportunity that our platform provides, plus new benefits.” Zimmer added, “ While we’re pursuing the ballot option, we’re also closely engaged with the Massachusetts State Legislature and are continuing to work with them on a potential legislative solution.”
In a past New York Times op-ed, Uber CEO Dara Khosrowshahi, , but was also adamant that the rideshare company’s “drivers want to work independently.”
Khosrowshahi wrote in the opinion piece, “Our current employment system is outdated and unfair. It forces every worker to choose between being an employee with more benefits but less flexibility, or an independent contractor with more flexibility but almost no safety net. Uber is ready, right now, to pay more to give drivers new benefits and protections. But America needs to change the status quo to protect all workers, not just one type of work.”
It’s reasonable to believe that there are drivers who prefer to operate autonomously without strict enforceable schedules. They appreciate the freedom and entrepreneurship to work whenever and wherever they’d like. Other people might have fallen into the gig due to the brutal effects of the pandemic, as they’re unable to procure another job and need a source of income.
Uber, Lyft and other similar gig-based companies are highly dependent upon independent contractors. They have a financial self-interest in classifying drivers or workers as contractors. This model enables corporations to avoid paying payroll taxes, FICA (Social Security and Medicare), disability, federal and state-level unemployment and health insurance benefits. They are not required to comply with minimum wage laws nor offer vacation days.
To put this into perspective, . The state government claimed that by avoiding classifying its drivers as employees, Uber didn’t have to pay Social Security and payroll taxes, unemployment insurance and state employment taxes, provide workers’ compensation insurance or comply with minimum wage laws.
With the massive amount of money involved, the existential threat to the app companies’ futures, the fates of gig workers, swarms of lawyers, political overtones and possible posturing from Biden and his administration, the fight in Massachusetts will garner considerable attention.
Source: Forbes
