Capitol Alert

Laborers in modern economy drive legal, political battle over the nature of work

Sacramento driver explains why he works for Uber, Lyft

Steve Law has been driving for the services in search of extra income and flexible hours.
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Steve Law has been driving for the services in search of extra income and flexible hours.

Out of work after years with a stable job, Kerry Boozenny turned to a less predictable kind of employment.

On Monday of a recent week, Boozenny, who is 52, helped someone with shipping and mail. On Tuesday, she did some administrative work in an office building. She has written social media posts and moved a car. The jobs came to her through TaskRabbit, an app that allows people to post odd jobs and find helpers to complete them. Boozenny started using the service in 2015, after losing her job with a software firm where she had worked for nine years.

While the work earns Boozenny enough to supplement her husband’s pay, she noted that absent any benefits, “I’m basically forfeiting any 401(k) contributions” while paying a “hefty chunk” of her earnings to purchase health insurance on a state exchange. The work has been a boon to her, but she wonders what TaskRabbit users of another generation are giving up.

“They are maybe younger, maybe wanting to travel and the flexibility of setting their own hours and all that,” Boozenny said, but if they want traditional benefits, “people coming up in this environment are going to have to fork it out themselves or go heavily into debt” to pay for retirement. “They’re not going to have the type of lifestyle I had where I had good jobs all the way up, raised a family, sent kids to college.”

Busy consumers can now summon all kinds of workers via apps. The convenience of tapping on a phone to swiftly hire a ride, call a cleaner or assign a chore has fueled robust demand for what has come to be called the “gig” economy. Many thousands of workers have signed up as a way to make money while dictating their hours and preserving some level of autonomy.

But as the ranks of those workers swell, generating billions of dollars in revenue for their parent companies, legal and political disputes about the nature of gig work have proliferated. Lawsuits have challenged the notion that gig workers aren’t entitled to wage guarantees or benefits. A new California bill allowing gig workers to organize mirrors a national debate about whether and how to allow workers to pursue the types of employment benefits attached to traditional jobs.

“The nature of work is changing,” said Assemblyman David Chiu, D-San Francisco. “We need to make sure while our companies succeed, our workers are receiving the benefits they need and deserve.”

That question has vexed policymakers struggling to apply old labor rules to a new surge of app-enabled businesses. Labor law establishes two basic categories of workers: employees and independent contractors. Tech companies generally categorize gig workers as independent contractors, pointing to their freedom to set their own hours or, in the case of TaskRabbit, their own rates.

But that designation deprives workers of the traditional trappings of 9-to-5 jobs, guarantees that include overtime pay, coverage for expenses, unemployment benefits and workers’ compensation. As more people turn to apps to generate a substantial share of their income, in some cases cobbling multiple apps into full-time work, tech companies face mounting pressure from legal challenges, elected officials and organized labor to reconsider how they describe and treat contractors.

The nature of work is changing.

Assemblyman David Chiu, D-San Francisco

Beyond the push for benefits, some workers want the right to band together and negotiate with employers. Underscoring their desire for better pay, Uber drivers protested rate cuts in cities across the country last week.

Some frustrated gig workers argue that, while they can set their own hours, they exert little control over features of their work, such as the amount they are paid. People who drive for Uber or Lyft complain that the companies have undercut them by slashing rates. The California Labor Commission rattled the tech world in June by ruling that an Uber driver was an employee.

“We’re supposedly independent contractors, but we’re subject to their rules and regulations and price-fixing, so I can’t run my business accordingly,” said Patrick Ely, a full-time Uber driver in San Diego who is suing the company.

A few companies have already pivoted and moved to reclassify at least some workers as employees. The valet service Luxe recently made its workers employees, saying it would improve their customers’ experience, as did the home-care service Honor. The groceries-on-demand service InstaCart has made some of its shoppers part-time employees.

Others argue it would be wrongheaded to characterize as employees people who are free to work as much or as little as they want. Many workers say that ability to control their work is what attracted them in the first place.

“The flexibility is the main thing – the fact that I can drive any day of the week, any time of the day,” said Steve Law of Sacramento, who drives for Uber and Lyft between 20 and 30 hours a week to bolster his work as an insurance agent. “I’m able to pay bills just by working it part-time.”

Uber representatives point to driver surveys saying the majority of drivers have other full-time or part-time work, discounting the notion that people are supporting themselves with gig work. A poll by Intuit of about 4,600 gig workers found that around two-thirds did it to earn supplemental income. Industry players argue the extra money can buoy working parents, students and artists.

“People who are working on these platforms are overwhelmingly part-time,” said Robert Callahan of the Internet Association, an increasingly visible force in Sacramento. “The gig economy and the sharing economy,” he added, “really (are) providing that safety net for a lot of people to make ends meet.”

People working odd jobs is nothing new, labor economists say. But gig work held special appeal during the recession, said UCLA Labor Center research director Saba Waheed. She said many workers continued to seek the extra cash even as the economy mended, speaking to larger economic forces that have driven the gig economy’s growth.

“If unemployment has gotten better, why do people still need to take on these gigs?” Waheed said. “It’s because they’re still not making enough at their current jobs.”

Many gig workers say they do depend on the work for most or all of their earnings. That same Uber survey found about a third of drivers saying driving was either their sole or their biggest source of personal income. The Intuit poll found on-demand work was the top source of income for a third of workers, and more than half of workers said they struggled to find enough hours.

“There are a lot of drivers who depend on Uber for their livelihood, and they are piecing it together for their job. They are using it to pay their bills and feed their families,” said Shannon Liss-Riordan, an attorney who represents gig workers in multiple lawsuits.

600,000 to 3.2 millionRange of estimates for number of U.S. gig workers who use an online platform

The issue has spawned a bevy of suits. Uber is combating a class-action lawsuit from workers saying they are owed expenses and a plethora of other challenges, including one from a driver who argues he is owed workers’ compensation after being stabbed while driving. Lyft just paid $12.25 million to settle a class-action lawsuit. The home-cleaning service Handy faces a lawsuit from workers who argue that a stringent set of rules dictating what tasks they perform, which supplies they use and how they dress makes them employees entitled to overtime and other benefits.

While those legal disputes smolder, elected officials and unions have begun exploring ways to equip workers with benefits and organizational muscle, regardless of how they are classified.

The issue has vaulted into the highest political echelons, with Democratic presidential candidate Hillary Clinton arguing in a July speech that “this on-demand or so-called ‘gig’ economy is creating exciting opportunities and unleashing innovation, but it’s also raising hard questions about workplace protections and what a good job will look like in the future.”

In a recent blog post, U.S. Secretary of Labor Thomas Perez wrote that “the on-demand economy raises important questions about how to continue upholding time-honored labor standards and how to promote economic security for American workers in a changing labor market.”

In Sacramento, where tech companies have augmented their lobbying presence as lawmakers push bills to impose new regulations, Assemblywoman Lorena Gonzalez, D-San Diego, has unveiled legislation allowing gig workers to organize and bargain for benefits. Gonzalez said her bill would aid a “bunch of unprotected workers” who “don’t have access to health care, don’t have access to unemployment insurance, workers’ compensation if you get hurt on the job.”

“I live in this century. I have kids. I have Uber on my phone,” Gonzalez said. “I don’t think it’s a bad thing. I think it’s a bad thing when we don’t adjust. ... Companies can be profitable and treat their workers well.”

We’re essentially creating a class of serfs.

Leonard Smith, director of organizing for Teamsters Local 117 in Seattle

The California bill follows a vote by the Seattle City Council in December to allow app-based drivers to unionize. Leonard Smith, director of organizing for Teamsters Local 117, which spearheaded the effort, called it a matter of basic job security. He said he heard from numerous drivers who made less than the minimum wage.

“We’re essentially creating a class of serfs: ‘Let me get your burrito for lunch and pick up your dirty laundry, and in the meantime I’ll give you a ride,’” Smith said. “They come out of the woodwork like they’re some new thing, these companies, but all they are is labor brokers. They’re just not doing it out in the parking lot to (get people to) go to the tomato fields.”

While tech companies opposed the Seattle effort, some have signaled they’re receptive to finding a way to accord worker benefits without designating them as full employees. Lyft has endorsed “portable benefits” that follow workers from job to job, rather than being anchored to work for a single employer.

“Everyone, regardless of employment classification, should have access to the option of an affordable safety net that supports them when they’re injured, sick, in need of professional growth, or when it’s time to retire,” argued a November letter whose signatories included Lyft co-founders Logan Green and John Zimmer.

Also signing that letter was SEIU California president Laphonza Butler – a recognition that, while organized labor and tech companies have at times played the role of antagonists, the gig-based economy will likely endure as an option that more workers pursue.

“We have seen some of the largest investments and growth in this sector over the last three years, and there’s no sign of it slowing down,” Butler said. “We could choose to ignore it as a labor movement, or we can choose to use our organizations to build quality, stable lives for this group of workers who also seem to want to be doing this work.”

Figuring out how that might happen remains elusive. One policy paper argued for a third “independent worker” category that has access to certain benefits like pooled insurance and payroll tax withholding. If not, the paper warned, gig workers risk exclusion from the “social compact” that binds employers to workers.

“The employment relationship has changed and has changed dramatically,” said Seth Harris, a Cornell professor and former U.S. Department of Labor official who co-authored the paper. “How can we ensure that the values and principles and protections and benefits that are embodied in American labor employment law are extended to workers in these new kinds of work relationships?”

Not everyone is enamored of the prospect of a new worker classification. Barry Broad, a lobbyist for the California Teamsters, warned of a future in which “workers are more and more insecure and make less and less money.”

“We are opposed to the notion of creating some sort of third class,” Broad said, “which is people who really aren’t in business for themselves but have none of the rights of employees.”

Jeremy B. White: 916-326-5543, @CapitolAlert

Steve Law has been driving for the services in search of extra income and flexible hours.