A Missed Opportunity: Worker Voice in Portable Benefits

Last week, Senator Mark Warner and Rep. Suzan DelBene introduced the Portable Benefits for Independent Workers Pilot Program Act.  The Act would authorize $20 million for competitive grants to states, local governments and nonprofits to fund pilot projects around portable benefits. The program aims to provide wide latitude for grantees to experiment with innovative new models of providing benefits for workers outside of “traditional full-time employment.”  The only requirements seem to be that the pilot programs: (1) provide benefits that are usually available to “traditional full-time employees,” but are not retirement benefits; (2) allow accumulated benefits to be portable from one job to another; (3) accept contributions from more than one job; and (4) be scalable to a national program. With this legislation, Senator Warner demonstrates again why he is considered a Congressional leader in thinking seriously about the policy implications of the gig economy.

The proposal is a serious attempt to address the needs of the growing number of American workers who lack even the most basic employment benefits — workers comp, unemployment insurance and paid leave. Too many workers are rendered economically vulnerable, not only because of the precarious nature of their paychecks, but because of lack of access to the safety net to catch them when those paychecks diminish or stop coming. New ways of accessing traditional safety net benefits would be a step up for these workers.

Senator Warner’s proposal leaves open many important questions about the optimal features of a portable benefits program – who pays, how much should contributions be, and how can we prevent such programs from encouraging the misclassification of employees as independent contractors.  Before we move a major national program, we will have to answer these important questions.  I can see the value in Senator Warner’s proposal as a vehicle for moving those debates forward.

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Today’s News & Commentary — May 30, 2017

Uber and Lyft returned to Austin, TX on Monday after Texas Governor Greg Abbott signed HB 100 into law, eliminating Austin’s fingerprint requirements for drivers.  As the LA Times describes, the bill designates the state, not local, government as the regulator of the “ride-hailing industry.”  Uber and Lyft left Austin in May of 2016 after losing Proposition 1—Austin voters decided (56% to 44%) not to allow Uber and Lyft to continue using their existing background check systems.  Governor Abbott called HB 100’s passage a “celebration of freedom and free enterprise.”  Austin Mayor Steve Adler, in contrast, was “disappointed” and expressed his “hope that [Uber and Lyft] return ready to compete in a way that reflects Austin’s values.”

Last Thursday, the Court of Appeals for the Second Circuit agreed to hear en banc Zarda v. Altitude Express, 855 F.3d 76 (2d Cir. 2017), a case which held that Title VII’s ban on sex discrimination does not protect against sexual orientation discrimination.  As we have covered in a previous post, this issue has been addressed, and decided to the contrary, by the Seventh Circuit.  Notably, the Seventh Circuit’s ruling produced a split with the Eleventh Circuit (Evans v. Georgia Regional Hospital, 850 F.3d 1248 (11th Cir. 2017)).  Zarda’s case was originally dismissed on summary motion pursuant to Simonton v. Runyon, 232 F.3d 33 (2d Cir. 2000), another Second Circuit case holding that Title VII does not proscribe sexual orientation discrimination.  On appeal, the Second Circuit panel refused Zarda’s argument that it overrule Simonton, citing Christiansen v. Omnicon Group, 852 F.3d 195 (2d Cir. 2017) (court permitted an openly gay employee to pursue a Title VII claim, but on a sex-stereotyping, not sexual orientation discrimination, theory) for the proposition that only the en banc panel of the Court or SCOTUS could reverse circuit precedent.  Oral argument in the case will take place this September.

On Friday, a New Jersey judge denied the Jersey City teachers union’s motion to dismiss a lawsuit, brought by two NJ residents working with the Goldwater Institute (a conservative think tank), challenging the district’s “release time” policy as violative of the New Jersey Constitution.  The policy allows two top union officials to work exclusively on union activities while being paid by the district.  The suit alleges that “release time” is prohibited by the state Constitution’s ban on local governments giving gifts to individuals or entities.

Last Thursday, Rep. Phil Roe (R-Tenn.) reintroduced the Employee Rights Act (ERA).  The bill, if passed, would amend the NLRA to, among other things, require secret ballot elections in employee unionization decisions; require unionized workers to hold periodic secret ballot elections to verify a continued desire to be represented by the union; empower the NLRB to de-certify unions for intimidating members; criminalize union threats; and require unions to receive affirmative permission from members to use payments toward political spending.  Rep. Roe described the ERA as neither “pro- or anti-union,” but rather, “a commonsense measure to ensure a transparent and fair workplace.”

Gig News: NLJ Update on Gig Economy Legislation and Lawsuits

Last week, The National Law Journal published an update on state legislation and lawsuits regarding the classification of gig economy workers as independent contractors.

First, the article noted that the Florida Legislature has passed a bill, expected to be signed into law by Governor Rick Scott, “that classifies drivers for companies such as Uber and Lyft as independent contractors rather than employees, marking the latest state to attempt to regulate the rapidly growing and litigious ride-hailing workforce.”  Other states that have passed similar legislation include Arkansas, West Virginia and Colorado.

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Are Lyft and Pepsi Playing the Same Game?

Recently, following swift and widespread backlash, Pepsi pulled an advertisement that was accused of co-opting imagery from Black Lives Matter protests and other social movements. The advertisement’s storyline centered on model Kendall Jenner abandoning a photo shoot to join a parade of ethnically diverse models carrying ambiguous posters painted with peace signs, love written backward in Arabic, and vague invitations to “join the conversation.” At the end of the commercial Jenner, a white woman, pushes past the protesters-of-color who invited her to the demonstration, and offers a police officer a Pepsi. The officer opens the can and the crowd erupts in triumphant hugging. Responses to the ad included a tweet from Martin Luther King’s daughter that read “If only Daddy would have known about the power of #Pepsi.” After initially defending the commercial, Pepsi issued a statement saying, “Clearly, we missed the mark, and we apologize. We did not intend to make light of any serious issue.”

Pepsi’s advertisement is just the most recent in a series of corporate attempts to capitalize on the current political moment. While Pepsi did “miss the mark,” other companies have better managed to brand themselves members of the #Resistance.

Lyft has arguably done this most successfully. After years of competing with Uber, and lagging significantly behind in both valuation ($5.5 billion to Uber’s $60 billion), and market share (20% to Uber’s 80%), Lyft has profited off of recent political events, and Uber’s missteps. Lyft’s first move came in response to the #deleteUber campaign which was sparked by Uber’s actions during the airport protests against President Trump’s first executive order on immigration. About 200,000 people deleted Uber following the protests. Sensing an opportunity to distinguish themselves, Lyft made a $1 million donation to the ACLU, the very organization who had come to symbolize opposition to Trump’s executive order. In the wake of #deleteUber, Lyft downloads increased by 40% and they gained around 5% of Uber’s market share.

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Gig News: Court Enjoins Enforcement of Seattle Gig Unionization Ordinance

Judge Robert S. Lasnik of the U.S. District Court for the Western District of Washington has enjoined enforcement of Seattle’s first-in-the-nation ordinance giving gig economy independent contractors the right to unionize (the “Ordinance”.)  Judge Lasnik’s full decision granting the U.S. Chamber of Commerce’s motion for preliminary injunctive relief in Chamber of Commerce of the United States of America v. City of Seattle can be found here.  Uber, Lyft and a third ride hailing company had been due to submit driver information this week to a union recognized as a “qualified driver representative” pursuant to the Ordinance, but the requirements “are hereby enjoined until this matter is finally resolved.”

Notably, Judge Lasnik found that the Chamber may succeed on the merits of its antitrust claim, pending analysis of the City’s claim for antitrust immunity, but that the Chamber and drivers challenging the Ordinance in a consolidated lawsuit are unlikely to succeed on their National Labor Relations Act preemption claims at the moment.  Judge Lasnik stressed “that this Order should not be read as a harbinger of what the ultimate decision in this case will be when all dispositive motions are fully briefed and considered.  The plaintiffs have raised serious questions that deserve careful, rigorous judicial attention, not a fast-tracked rush to judgment based on a date that has no extrinsic importance.”

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Guest Post: A Third Category Is Not The Right Path for Gig Workers – A View From The UK

Hannah Reed works on employment and labour law policy for the UK Trades Union Congress (TUC).  She is currently attending the Harvard Trade Union Program

The recent Uber case in the UK was hailed by unions as a monumental victory, securing basic ‘worker’ rights to rest breaks, paid vacation time and the national minimum wage for 30,000 Uber drivers in the UK.

The decision is certainly welcome and may have useful implications in the US.  But no one should presume that the issue of rights for gig workers is now settled or that legislators are off the hook. The case will be appealed.  Uber continues to argue its drivers are self-employed and that the tribunal decision would require it to adjust its business model.  The current ruling is also not binding for other groups of gig workers.

The intense media interest in the case has, however, helped to reignite policy debates on who should qualify for which statutory employment rights and whether protections should be extended to those working on the edge of the labour market.

Following pressure from unions, think tanks and civil society groups, the UK government has commissioned a review into modern employment practices.  The House of Commons Business Committee has similarly launched an inquiry into the Future World of Work and Rights of Workers.

The central question for both reviews is the whether the law needs to be modernised to respond to the new ‘gig economy.  Despite the rapid expansion in temporary, insecure employment and complex supply chains, UK employment law remains wedded to the notion that permanent, stable employment is the norm.  Those that do not meet this norm are simply not protected.

But whilst some US commentators are advocating the creation of third category of worker in response to the growth of the gig economy, the opposite debate is starting to take place in the UK.

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Guest Post: Uber Retirement

Paul M. Secunda is Professor of Law and Director, Labor and Employment Law Program at Marquette Law School.

Although by no means a new question regarding retirement, the noteworthy growth of gig companies in the sharing economy has renewed concerns that even more American workers will lack access to employment-based retirement plans.  Although some argue that the gig economy offers workers advantages including more independence and flexibility, company-sponsored retirement saving is not one of them.  This is a dangerous state of affairs, as employment-based retirement plans make up a critical part of an individual’s strategy for retirement security.

Such retirement plans, like the nearly-ubiquitous 401(k) plans, provide a necessary bulwark against destitution in old age, especially given that Social Security provides only partial income replacement and few Americans have put away much in private savings.  Yet, independent contractors, which is how most gig companies classify their workers, are approximately two-thirds less likely than standard employees to have access to an employer-provided retirement plan.

Much academic and judicial ink has already been spilt over whether Uber drivers and other members of the sharing economy are members of the so-called “contingent” workforce or “precariat” (part-time, leased, temporary, and per diem workers), not entitled to receive retirement benefits as part of their employment.  Whether these employees are statutory employees is of utmost importance because it largely determines whether gig workers are covered by employment laws, as most such laws center on the employer-employment relationship.

What all these jobs have in common is that the work activity is happening outside of the traditional safety net of employment and are highly unstable.  Whereas statutory employees are covered in the United States by numerous labor and employment law statues that provide security and protection in the workplace, workers in these alternative work arrangements are not.  Once stable employment relationships have given way to relationships that are much more arms-length, regardless of whether it is a contractor situation, temporary employment, or a one-time encounter.

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