Regressive Federalism

As we approach January 20th, labor advocates and other progressives are placing their hopes in a handful of states and cities.  The hope, as part of a “progressive federalism,” is that these states and cities will have the capacity to chart a course distinctly different from the one being pursued by the federal government.

Among these promising localities is New York, where both the state legislature and the the City Council and Mayor are already at work on a number of innovative and promising bills. But Josh Eidelson at Bloomberg Businessweek and Cole Stangler at The Village Voice report on a bill under development in New York that should be a concern to progressives and to labor. This bill, being pushed by Handy and by Tech NYC (“a newly formed statewide tech-industry trade association that includes Uber”), would allow companies to categorize their workers as independent contractors if those companies contribute to a “portable benefits” fund.  Although we haven’t been able to track down the official legislative language yet, news reporting on the bill suggests that it will function as follows: Gig-economy firms that wish to take advantage of the new law would contribute 2.5% “of the fee for each job performed by the gig economy worker” to a portable benefits fund. Workers would then be permitted to use the monies in their account to purchase a health or retirement plan, or perhaps other benefits.  In exchange, all those who work for participating firms would be classified as independent contractors under state law as long as they are permitted to choose their schedules and work for other companies.

Put somewhat bluntly, the proposed bill would allow gig firms to buy their way out of New York employment law for a fee equal to 2.5% of each job performed by their workers. Continue reading