Jobs: cracking down on the independent economy
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The Biden administration wants to rewrite the rules of the gig economy, Noah Rothman tells MSNBC. “Labour activists have long demanded” that the federal government force companies to classify more of their staff as employees rather than independent contractors. Now the Department of Labor is granting them their wish, this month proposing new guidelines that would replace the more lenient policies of the Trump era. Unsurprisingly, shares of Uber and Lyft, two symbols of the gig economy, fell on the news. But the proposed rules have implications that go far beyond ride-sharing services. The administration is following in the footsteps of California, which passed a sweeping freelance law that transformed the jobs of “freelance writers, graphic designers, photographers, journalists and content producers” — most of whom “didn’t seem to like the reform” voted in their favour.
Any proposed changes would “simply bring Department of Labor policy back in line” with what it was before the Trump years, Timothy Noah said in The New Republic. The rules at issue stem from two 1947 Supreme Court cases “which established an ‘economic reality’ test generally based on six questions, including whether the worker’s services are an integral part of the business and what control the maintains on the worker. The Trump administration has significantly vanquished that precedent and made it “much easier to classify a worker as an independent contractor” – allowing companies like Uber and FedEx to continue profiting from their workers.
Well, I’m an Instacart and Uber driver, and I don’t feel taken advantage of, Roman Juela said in Fortune. I am also a construction worker. During the pandemic, I realized I needed the extra income, “but getting a second full-time job was out of the question.” The Labor Department’s proposal “would make self-employment more difficult, undermining the freedom and flexibility I enjoy today.” Changes in how workers are classified will have “unforeseen” impacts, Morgan Meaker said in Wired. Ironically, Uber and Lyft, the original targets of California’s 2019 law, ended up winning an exemption via a statewide ballot initiative. But the legislation has “reshaped a range of other industries, from yoga studios to theater productions and trucking.” Think strippers. While the law guaranteed exotic dancers a minimum wage, club owners restructured their businesses to “take bigger cuts on the money earned from private dances” – which make up the bulk of the dancers’ income.
It’s understandable that unionized unions and liberal lawmakers want to “pack as many workers as possible into the ’employee’ bucket,” Christian Britschgi said in Raison, “to ensure that more people receive overtime pay and the benefits that come with this designation.” But these efforts have often been rebuffed by site workers themselves, “who oppose additional regulation and rigidity”. A broader federal definition of an employee is likely to encourage more restrictions at the state level as well. As gig-saving deals continue to grow across the country, this fight has only just begun.
This article first appeared in the latest issue of The week magazine. If you want to know more, you can try six risk-free issues of the magazine here.