Faced with lawsuits that could threaten their business models, tech companies are pushing for a new classification of worker that would combine the flexibility afforded to contractors with the protections afforded to employees. How that new worker is defined could impact American labor for years to come.
The tech industry prides itself on innovation: Startup founders and Silicon Valley entrepreneurs are praised for their capacity to create entirely new things we never knew we needed. Tech's latest creation, however, is more social policy than sci-fi: an entirely new type of worker, the first of its kind in America in decades.
Over the last few years, the on-demand, Uber-for-x economy has created an enormous need for cheap, flexible labor — a demand that heretofore has been satisfied by a growing number of contract workers. But increasingly, some of those contract workers have become dissatisfied, putting legal pressure on the founders of companies like Lyft, Handy, Homejoy, and Instacart to take better care of them. Just this week, the California Labor Commission found that Uber driver Barbara Ann Berwick should legally have been classified as an employee all along, with all the protections (minimum wage, overtime) and benefits (unemployment, workers' compensation) that an employee is legally guaranteed.
Cases like Berwick's could portend very bad news for the on-demand industry: Employees cost a business roughly 30% more than contractors do. The finding in her case could create precedent for class-action lawsuits across the country and seriously threaten the sustainability of these companies. Faced with this possibility, the tech industry has set about doing what it does best: disrupting the status quo.
Throughout the on-demand industry, chatter about creating a new legal designation — one that blends the protections afforded employees with the flexibility afforded contractors — has grown increasingly noisy. At a recent on-demand economy event, Simon Rothman, a venture capitalist and advisor to companies like Lyft and Taskrabbit, said, "I think it's not 1099 versus W-2. I think the right answer is a third class of worker."
The rise of companies like Uber have created thousands of new on-demand jobs around the world that, so far, have failed to offer a single person the protections that employment is supposed to guarantee. As questions about whether or not those workers are being treated fairly grow louder, the possibility of creating a new worker — sometimes called a "dependent contractor," based on an existing designation in some European countries — is beginning to garner national attention. If the proliferation of on-demand labor is actually revolutionizing work in America, defining this new classification — which could allow multiple employers to pool funds to cover a worker's benefits, or extend basic wage protections to contractors — is an opportunity to ensure fair treatment for future generations of laborers. But as the debate is unfolding now, it's more likely to benefit the businesses, who are lobbying aggressively in Washington, than the workers, whose voices, outside of the courtroom, are going unheard in regulatory conversations.
The idea of introducing a dependent contractor in the U.S. has been rapidly gaining momentum. When the news of the finding in the Berwick case broke, U.S. Senator Mark Warner immediately released a statement calling for new legislation around classification, rather than allowing the issue to be "litigated on a case-by-case and state-by-state basis." Just a few weeks prior, Warner gave a speech at the New America Foundation in Washington, D.C., calling for a new worker classification. Meanwhile, the Department of Labor recently announced that it will issue new guidelines for determining who is and isn't an independent contractor, and the Federal Trade Commission held a workshop on the law and the so-called "sharing economy" that touched on misclassification.
But as the drumbeat grows louder in Washington, there's a risk that workers' voices will be drowned out. It's easy to assume, given the lawsuits, that Uber drivers and Instacart delivery people don't want to be contractors. But just because they're suing for some of the benefits and protections of employment doesn't necessarily mean they want to be employees. In fact, according to a recent survey, 63% of on-demand workers consider themselves independent contractors. By and large, they want what all workers want — money and a degree of stability without having to sacrifice their independence and flexibility.
Michelle Rial / BuzzFeed
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