What's Next For the Gig Economy?

Brian Lehrer: It's The Brian Lehrer Show on WNYC. Good morning, again, everyone. What's next for gig workers? Did you hear this about the Biden administration? They announced a new labor proposal that could change the face of the gig economy pretty drastically. This proposed rule could make it easier for gig workers to be classified as employees as opposed to independent contractors, opening the door to federal labor protections and other employee benefits. It's a move labor activists have been waiting for and advocating. My next guest, Rachel Cohen from Vox, writes, "The Labor Department's new classification rules could give workers for companies like Uber and DoorDash more rights if they ever take effect." Keywords, if they ever take effect.

We'll talk with Rachel now about the implications of the Biden administration's proposal and the hurdles standing before any sweeping change to the worker classification rule, including potential legal challenges. In the past, federal courts have struck down similar changes. Rachel Cohen, senior policy reporter at Vox joins us now. Hi, Rachel. Glad to have you back with us. Welcome back to WNYC.

Rachel Cohen: Hi. Thank you so much for having me. Good morning.

Brian Lehrer: Gig workers, this is a call-in for you as well. Truckers, Lyft and Uber drivers, food delivery workers, freelancers of any kind, anyone who's an independent contractor, help us report this story. What would employee status mean for you as opposed to independent contractor status? Do you want it? Are there pros and cons of this in the first place, and what would it mean? 212-433-WNYC. Any questions you have about the Biden administration's proposal, 212-433-9692 or tweet @BrianLehrer. Rachel, as it stands now, who counts as an employee and who counts as a gig worker? How does the Labor Department distinguish between those two categories?

Rachel Cohen: Part of the reason that we've had basically decades of people fighting over this question is because Congress intentionally carved out independent contractors from the National Labor Relations Act definition of employee in 1947. Then in 1968, the Supreme Court said, "All right, because Congress did that, people should be using this essentially multi-factor test to answer the question." It's basically a series of questions.

Basically, the past few decades it has been a debate over, well, should some of those factors weigh more heavily than others. I would say union advocates say we should be looking at the totality of these questions and weighting them equally, and people who want a much more expansive definition of independent contractors weight certain factors more heavily. That's been this big fight in courts and political administrations for, now, decades.

Brian Lehrer: What has the Biden administration actually proposed here? What exactly would change?

Rachel Cohen: The Biden administration has proposed, essentially, a new interpretation. I think it's important to clarify that it's not a new law. It wouldn't be binding for the courts. It would have influence. I think employers would take notice, but the Biden administration definitely can't do what Congress can do or what the courts can do. They're taking the step they can make, but it's limited because of the Supreme Court and because of the National Labor Relations Act.

Basically, the Biden administration's proposed interpretation of the Fair Labor Standards Act would definitely make it easier for workers to be classified as employees because one of the key determinations is whether the work that a worker does is an integral part of the employer's business and skill and initiative. If you are, say, a driver for Uber and Uber's entire business is driving people, it's a lot harder under that framework to say you're not an employee for Uber.

Brian Lehrer: Guess what? Here's an Uber driver calling in. Let's see what he has to say. William on Long Island, you're on WNYC. Hi, William.

William: Hey, guys. Thank you for having me on. One of the things that I do want to speak about is I think it's very important that people understand that independent contractors from these major companies are just absolutely abused. I think providing more regulation and providing more insight on gig workers, whether you're Uber, Lyft, independent contractors to trucking companies-- drivers take losses that these companies don't make up.

To be labeled as an employee, you will have benefits that you wouldn't have as an independent contractor such as equipment. You utilize your vehicle. For example, Uber has nothing other than an app. Drivers are taking up losses, drivers are dying on the road from violent behaviors. Those things are not publicized, so the fact that we will have more benefits [unintelligible 00:05:43] I think it would be extremely benefit for our society.

Brian Lehrer: Are there any downsides? If you were an Uber employee, would you lose any flexibility? Would you be concerned about anything like that?

William: No, because the flexibility that we have is basically a made-up word because you have to work 12 to 14 hours to make up the difference of what you would make in an eight-hour job. The fact that you will be an employee in that sense, that will be calibrated. You'll be able to quantify the information that's not available to the public. I would love to be an employee of Uber because then my rights will be more ample and they would read my quality of life.

The flexibility, it's a joke. It's just a word that's used to cover up a massive abuse that these major companies are putting out on the most vulnerable people in our society and that includes myself. I find it very disturbing that we have all these, I guess, companies that are just taking advantage of this loophole and that gray area. They've exploited it.

Brian Lehrer: William, thank you so much for chiming in. Rachel from Vox, is that typical of what you've been hearing from a lot of drivers who you've been interviewing for this coverage?

Rachel Cohen: Yes. I think one of the big flash points of this debate right now among independent contractors is there's definitely a pretty well-organized and vocal contingent of independent contractors who say, "Hey, don't lump all of the problems with Uber and Lyft drivers in with us, the gig workers, the rideshare, the DoorDash, the Instacart. Don't throw the baby out with the bathwater. We don't want to be employees. We like running our small businesses. Just because Uber has these exploitative practices doesn't mean me, the freelance designer, or whatever wants that situation."

That's become this flashpoint. I think it definitely is true. Even in my article, there's the gig economy, and that's often used as a shorthand for, I would say, rideshare, these tech companies that definitely-- the tech companies are very open in saying-- their management says, "If we were to classify these workers as employees, our business model would collapse." They're fighting really hard against it. I think the caller who just called in, there's a lot of evidence of people saying, "You depend on us, your whole thing. We want these protections."

I would say not every driver for Uber or Lyft wants to be an employee, but a lot of them do. It's just hard because we're talking about a pretty broad set of workers. There are some differences between the different industries in the independent contractor world, but we tend to collapse those sometimes in these discussions.

Brian Lehrer: Yes, that's really interesting. Our next caller is somebody who I think is going to cite one kind of business that is worried that its business model would collapse if this rule is implemented. It's Martin in West Windsor in Jersey. Martin, you're on WNYC. Hi, there.

Martin: Hi. I'm actually a retired journalist, and I still get the Trenton Times delivered so I can support my former employer. Actually, they're owned by the same people I used to work for. They've run the same editorial three times, including once on their front page, talking about newspaper delivery people. If they were included and became employees of newspapers, which are just barely making it by, small papers, it would put them out of business. They feel like if delivery people were considered employees, they cannot afford it and they'd go out of business.

Brian Lehrer: Why do you think that is, Martin? Do you have enough of a perspective on what it is that they're claiming would change so much that would be such a financial burden?

Martin: Well, I'm not sure how these people get paid. I've never been a delivery person, but it sounds like they think most of the people who deliver their newspapers are retired people who just do this for a little extra cash and only spend maybe one or two hours a day.

Brian Lehrer: Martin, thank you very much. Have you heard that before? Local newspapers of course under pressure all over the country as we know because of the changing media landscape. There's an example where Martin says the newspaper in Trenton has placed editorials in the paper three times saying this could ruin their ability to turn what meager profit they're still turning.

Rachel Cohen: I think this gets at what we were talking about earlier. I think there are definitely some businesses that would really struggle to keep all of their workers under a new more narrow interpretation. At the same time, I am very aware that any time we see this with minimum wage increases, we see this with-- Really, any time a state is planning to make some labor regulation, there's always the fear and warning of job loss or business closures or disruption. I think a problem and I think labor advocates are rightfully skeptical is that opposition.

There's a lot of people who are reasonably worried because it's very fair to be worried about your business or your livelihood, but a lot of times when some of these changes do come to pass, there could be a painful transition period but things then usually do settle and people figure out how to make it work or businesses do make changes to accommodate the delivery services that they need. I think it's a hard question because right now it's hard to discern what is actually going to cripple jobs or businesses and what are just-- You're always going to get opposition to these changes, and people don't like to make a change.

Brian Lehrer: Still thinking about that example. I don't know if you would know the answer to this, but if the newspaper delivery person in the way that Martin described in the way we probably think of an old-fashioned newspaper delivery person, not the teenage delivery boy "[unintelligible 00:12:25] decades past", I think what tends to happen now, adults in their cars going out maybe be between 4:00 AM and 6:00 AM with the garbage trucks and dropping newspapers off in front of people's doors to the extent that still happens. If that's just a couple of hour a day kind of job, what's the difference for the company if that person is paid as a freelance independent contractor or a very part-time employee putting in maybe 2 hours a day, 10 hours a week?

Rachel Cohen: That's a good question. I do want to just quickly say before we explain the difference is that in California, a couple of years ago, they did pass a state law that was ultimately overturned a couple of years later, but it would've done a similar thing which is make the threshold of who qualifies as an employee much broader. That was going to basically do a similar thing to what this Biden administration rule is intending to do. I think it is important to know that when that passed, they did include a number of exceptions for a number of different industries.

It is possible to have a rule while also making carve-outs for-- You could imagine a world where we believe local news is really important, we see that this is an exception. You do get into fights around lobbying and special interests and certainly, there's chaos with creating carve-outs. I think it's important to note that there can be some nuance to this idea with certain industries. To your point, employees are entitled to certain things under federal labor law that independent contractors aren't, even if they don't work full-time. Just on the union front, only employees can be in a union.

That's one example. Employers pay for a portion of their employee's Social Security tax whereas they don't for their contractors, you're eligible for unemployment insurance. There are some differences between part-time and full-time workers which is why sometimes you see-- Especially when there's health insurance involved, sometimes employers like to say, "You can only work 29 hours this month so you don't make the 30-hour threshold to get this extra benefit."

Brian Lehrer: Oh, yes, I see a lot of heads nodding out there on that one.

Rachel Cohen: [laughs] In general, the idea is that it probably will cost some bit more for an employer, for a business, to have more employees than contractors. Businesses like contractors because it's cheaper for them and they can have more flexibility to fire if they want and so on.

Brian Lehrer: You know what's interesting, our caller board is filled with people who are opposing this idea from the perspective mostly of independent contractors who don't want it. Of course, this is a tiny, unrepresented, thoroughly unscientific sample, but it's interesting that that's what's coming to the fore here from the people who had whatever passion to call in real quickly on this. Let me take one of those calls. It's another Uber driver. Craig in Queens, you're on WNYC. Hi, Craig.

Craig: Hey, Brian, and your guest. I'd just like to say because of the option that I have to work when I want, the time of day, I don't work nights anymore. I always drove for a living. I used to drive a non-emergency ambulance, ambulette, and I worked for a company I would have to put two weeks' notice in order to get a day off if I had an activity at my son's school. Now, if something's going on, I just go to work before, then go to the activity, and then go back to work. I feel like the TLC can handle their responsibility better and manage Uber like they should any other taxi company.

If the federal wants to do anything for independent contractors, maybe they could create some kind of co-op where we could buy into insurance, where we could buy into retirement. I pay ADP through a pass-through company that I pay my taxes in so I don't have a big [unintelligible 00:17:26] at the end of the year. If they could set up something like that for independent contractors, that would be nice. I wouldn't want to be an employee of Uber or Lyft for somebody to tell me what shift I've got to take, when I've got to come in, and stuff like that.

Brian Lehrer: Craig, thank you for that input. Are you hearing a lot of that, Rachel, from drivers, and would those impositions from the company that Craig was just describing be part of that scenario if they were employees?

Rachel Cohen: Yes, I think the breakdown of drivers is that most of the drivers on these gig platforms work less than 20 hours a week and they really like the flexibility. They really highly value that freedom to figure out when are those hours going to be. I really like that. There's about 10%-20% who drive 20 hours or more per week, and they're really heavily relied upon by the companies to maintain consistent service levels. There's this one question of, could there be some middle ground where you have those drivers, the ones that are much more important to the company's bottom line and providing that city service?

Could they be employees while the more casual drivers be independent contractors? That's a question a lot of people are asking, but there hasn't been that much political space to push that further. I think there's no question that for some people the ability to set their own hours and not have a boss is really important to them, but there are these gaping questions about, what should workers be entitled to? What kinds of protections and benefits and wages? Is there some way to get as much of what everyone wants which is security and maybe autonomy but also good protection?

Brian Lehrer: Predictably, as you report, a robust lobbying effort from the big corporate players in the gig economy has already started to form in reaction to these Biden administration proposals for employee status with all that comes with that for more gig workers. Talk to me about the legal side because you also write in your Vox article that, in the past, federal courts have blocked attempts to make rules for independent contractors more worker-friendly. When and how have they done that?

Rachel Cohen: I think it's important to recognize that this has gone through the courts a couple of times. For example, in 2006, FedEx drivers in Massachusetts sought to form a union with the Teamsters Union, but after they won their union, FedEx refused to bargain with them. They said, "You guys are independent contractors therefore we don't have to." The Federal National Labor Relations Board sided with the drivers but then FedEx took them to court.

They challenged the NLRB's decision and the US Court of Appeals for the DC Circuit overturned the NLRB's decision, and they said, "No. Because the drivers have this thing called entrepreneurial potential, meaning they arguably could shape their working conditions for FedEx and other clients, we see them as independent contractors." Now, what's important to know is that the NLRB did not then appeal this decision to the US Supreme Court, and so because they didn't, they basically proceeded as if the DC Circuit decision never happened or is not binding for them.

They say they're only going to treat US Supreme Court decisions as binding, but they're not going to take this to the court. They're just going to continue doing what they do. As a result, it got overturned. Then, basically, advocates tried again in 2017, and then it got overturned by the courts again. Then Trump came into office and he went the other direction, and then Biden came in and Biden overturned Trump's rule and now they're making their own rule which is pending. It's this ongoing ping-pong in the courts, but they're avoiding going to the Supreme Court where maybe they don't expect to get the decision that they want for now. Maybe they're hoping if we can prolong this and politically maybe it'll work itself out and so on.

Brian Lehrer: If we just had one counterintuitive caller, a gig worker who doesn't want employee protection status. I think we have another one, an employer who likes the idea. Richard in Park Slope, you're on WNYC. Hi, Richard.

Richard: Hi. I was a former business owner. I was audited by the Department of Labor in New York State, and I had to put my employees, my independent workers on salary. I just want to say that my business survived that increase in labor costs, and as a small business, I get so angry when I hear businesses say, "Well, our business model doesn't allow us to pay people a living wage or to pay full benefits." My employees did better as employees because they got workman's comp. In coverage, they got unemployment coverage. The employer has to pay half of their Social Security and Medicare. That's what I want to pipe in is that my business survived that audit and my business did not hurt a bit. That's what I wanted to say.

Brian Lehrer: So interesting. Richard, thank you very much. Let's take one more Uber driver, and I don't know which side of the other two Uber drivers who are on different sides of this question he's going to come down on. [unintelligible 00:23:35] in Manhattan, you're on WNYC. Thank you for calling in.

Caller 4: Good morning, Brian. Thank you, Brian, for having this subject in the air. A long-time listener, a first-time caller. I would like to say that I'm agreeing with the caller from Queens, Craig. I think as Uber driver, we would like to keep our independence, of course. Most of us because of that independence, that flexibility to schedule ourself and estimate how many hours you work on the day-- Most of us are doing this job because of that, but also, we would like to have the benefit that every other worker would like to have in their work. Myself, I'm putting about sometimes 12 hours a day.

Anyway, to make a long story short, I work about 50 hours a week, and therefore, I definitely would like to have benefits that other workers have. Like Craig said, I will not have also Uber to tell me that you're going to have to come to work at seven o'clock or at night or in the morning, whatever. I want to work whenever I feel to go to work, and whenever I feel I have something else to do, I would like to have the freedom to do so without asking anybody's permission. I think this problem could be fixed by the TLC if they want to. They really have the power to [unintelligible 00:24:56] Uber as they [unintelligible 00:24:57] yellow taxi industry and other industry. This is my opinion.

Brian Lehrer: Craig also referenced the TLC, that's the Taxi and Limousine Commission, that's at the city level that's a New York City government function that doesn't do anything for gig workers around the country. It would really have to be a city-by-city or locality-by-locality negotiation to get the benefits that you want along with the flexibility that you want. Right, [unintelligible 00:25:27]?

Caller 4: Yes, something like that. I think you can say that.

Brian Lehrer: Thank you for your call. Rachel, there's another piece of the tension I guess, a national standard versus thousands of local debates for Local Taxi and Limousine Commissions or whatever the equivalents are called all around the country.

Rachel Cohen: Yes, absolutely. I've really appreciated all the callers today. I think the caller, the business owner from just now, that was a good example of someone who-- Every business is different, but there is this murkiness right now where there's a lot of fear, a lot of anxiety people have about whether or not they would be able to make it work. There are lots of people that do make it work, and it's important to look at those examples and also think about, why was it possible here. Is this more broadly [unintelligible 00:26:23] than we thought? That kind of thing.

Brian Lehrer: What happens next to wrap this up before this rule can be finalized? That's coming from the Biden administration to allow more gig workers to have the benefits of employees. I guess as we're hearing from some of the callers, the obligations of employees, when could it be issued and finalized and how would that fight go?

Rachel Cohen: The rule is open for public comment right now through November 28th, so anyone, any of these listeners could go on and share their thoughts and opinions. They can read the proposed rule. It's a bit long but you can skim it, or you can read the full thing and you can share your thoughts on what you think, and then the Biden administration will likely take a couple of months to review, do internal work. I expect we'll probably see a finalized rule sometime maybe in the second quarter of next year. Then, I think, we definitely could expect court challenges after that. That's the general timeline I'm looking at.

Brian Lehrer: Rachel Cohen, senior policy reporter at Vox on the Biden administration's proposed change to the worker classification rule and its implications in the gig economy. Thanks so much for telling us about it in detail.

Rachel Cohen: Thank you so much.

 

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