Labor Laws for the Gig Economy

27 May 2016 12:29 PM | Mike Lillich (Administrator)

By Thomas A. Kochan

Editor's note: First published on May 23, 2016, online by WBUR's Cognoscenti.

Last week, Sen. Elizabeth Warren unveiled a comprehensive set of proposals to provide basic employment policy protections and income security benefits to those working in the so-called “gig” economy and others in subcontracted or franchised arrangements. Whether one agrees with her specific ideas or not, the nation owes her a debt of gratitude for putting these issues front and square on the table for a discussion that is long overdue.

The gig economy, best embodied by Uber, Lyft and Task Rabbit, may account for less than 1 percent of the workforce, but it has sparked a debate over what to do about all those who make their living outside of standard employment relationships.

Standard employment relationships are ones in which there is a clearly defined and identifiable employer that is responsible for complying with the range of employment laws put on the books since the New Deal: unemployment insurance, Social Security, minimum wage and overtime rules, and the right to unionize and gain access to collective bargaining. To be clear, the vast majority of American workers, about 85 percent to be exact, still work in this type of employment relationship.

No worker should fall through the cracks.

– Sen. Elizabeth Warren

But the last decade has witnessed increased erosion of this model, with the growth of subcontracting, outsourcing, franchising, on-call, temporary and, more recently, gig economy workers. Between 2005 and 2015, the number in these nonstandard work relationships increased from 10 to 15 percent.

So we know these types of work are growing at a substantial rate. If we also count those working part-time jobs, the number of people who are partially or fully excluded from the safety net and standard employment rights might exceed 25 percent.

Warren posed a fundamental question: Why should these workers be excluded from the protections and benefits and minimum standards afforded traditional employees?

Her answer:

“I believe we start with one simple principle: all workers–no matter when they work, where they work, who they work for, whether they pick tomatoes or build rocket ships–all workers should have some basic protections and be able to build some economic security for themselves and their families. No worker should fall through the cracks.”

Sen. Warren proposes three strategies for filling in these cracks.

1. Provide portable basic benefits — Social Security, insurance against catastrophic loss, and sick and family leave — for all workers.

2. Extend the right to organize a union or other form of collective voice and protect everyone from retaliation or discrimination for exercising those rights.

3. Ease the paperwork burden and responsibility for administering these benefits from employers by allowing unions or other groups to provide retirement savings plans and other benefits to workers at a fair price.

She noted that other important steps also need to be taken, starting with enforcing the laws already on the books. Recent studies have shown, for example, that as many as 25 percent of low wage workers in retail and food services are paid less than the minimum wages promised by federal or state law, and three-fourths were not paid overtime due them.

Labor laws are supposed to provide workers fair access to collective bargaining, yet when management resists, workers have only about a 10 percent chance of gaining a union and a collective bargaining agreement.

Other laws need to be streamlined and made easier for employers to enforce. The best (or worst) example is that employers face as many definitions of who is an employee as there are laws governing worker rights. Each agency responsible for enforcing its law has its own definition. No wonder misclassification cases abound and are extremely hard to both defend and prosecute.

Labor laws are supposed to provide workers fair access to collective bargaining…

Sen. Warren rejected another idea being floated recently, namely to create a middle category between employees and independent contractors that would allow employers to offer some benefits to contractors without affording them employment status. That approach offers employers incentives to move more regular employees into this “middle” category; it is a full employment act only for lawyers eager to advise and litigate where this new middle line should be drawn.

Sen. Warren’s approach simply says that all who work should be protected by our basic worker rights and covered by the benefits society deems essential for workers and their families to thrive.

This may not be the only way to achieve the sensible and fair goal of providing everybody who works, regardless of who controls their pay and working conditions, these basic protections. If there are better ways to do so, let’s hear them. But the good news is a concrete set of ideas is now open for debate.

Employment Policy Research Network (A member-driven project of the Labor and Employment Relations Association)

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