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Independent Contractor Status Focus of Lobbying Push

Gig economy companies have been courting unions and lawmakers in an effort to preserve the independent contractor status of their workforce.

Independent Contractor Status Targeted in Several States

A report by Reuters found that gig economy companies are looking for novel approaches to maintain the independent contractor status of their workers, which they argue is essential to their business model. These attempts include ending battles with organized labor and lobbying state lawmakers to get ahead of potential federal regulation.

For example, companies in New York have started working with the Machinists and Transport Workers Union and other groups to develop a compromise that would allow food delivery workers and drivers to organize in a union and negotiate for benefits while still maintaining independent contractor status.

With the support of these unions, gig economy companies are pushing state lawmakers to pass legislation that would allow their workforce to negotiate caps on company commission fees, wages, and even unemployment insurance in certain cases.

In addition to their New York efforts, Uber, Lyft, Instacart, and Doordash have led gig economy companies across the country in initiatives seeking to cement the independent contractor status of their workers.

These companies have set up lobbying groups in Illinois, Massachusetts, New Jersey, Colorado, and Washington to push for laws declaring app-based rideshare and food delivery drivers as independent contractors in exchange for some benefits. They are trying to build on their earlier success in California, where voters approved an industry-backed ballot measure exempting the above workers from rules that require other types of contractors to be classified as employees.

Labor Divided Over Efforts

While the companies are seeking buy-in from labor groups in some states, not all unions have signed on to these efforts. Key among them is the Service Employees International Union’s (SEIU) northeastern Local 32BJ. According to 32BJ President Kyle Bragg, the proposed compromise in New York would enshrine the misclassification of gig workers while creating a company-sanctioned union that would erode workers’ rights even further by setting no floor for negotiations.

“This legislation moves workers backwards,” said Bragg. “There’s too much company manipulation.”

Efforts to have the bill introduced before the end of New York’s legislative session failed amid the controversy.

The companies’ initiatives have also exposed divisions within organized labor over whether to bargain with gig economy companies or to continue insisting that gig workers be reclassified as employees.

Sometimes, these divisions may be found within the same union. While 32BJ has rejected the New York bill, for example, SEIU President Mary Kay Henry has said in the past that she would back gig workers’ demands in reaching a deal with companies. Similarly, the AFL-CIO’s New York chapter backs the proposal, but members of its Colorado chapter are formally opposed to such bargaining agreements.

Industry Trying to Get Ahead of Federal Regulations

The gig companies driving these efforts say that they are pursuing policies tailored for each state to combine flexibility for gig workers with protections and benefits. Nevertheless, they have not yet offered concrete proposals in most cases.

Some gig economy executives hope that state-based laws preserving independent contractor status can also forestall federal action by the Biden administration, which has vowed to end the misclassification of workers as independent contractors. While federal regulations would take precedent over state law, these companies believe that the Department of Labor will be less likely to take action after facts on the ground have been established.

“The models that are developed at the state level can be given a framework at the federal level,” said Lyft President John Zimmer.

In particular, the industry’s race for state backing stands in staunch opposition to the labor movement’s biggest legislative priority, Congress’s passage of the PRO Act. That bill would make worker unionization easier and reclassify most independent contractors as employees for the purposes of collective bargaining. The PRO Act is considered unlikely to pass in the Senate, though even if it did, the rights of gig workers would probably remain unchanged for years because of expected regulatory and court wrangling.

Some Union Leaders Pursuing “Pragmatic Approach”

For this reason, some union leaders have pursued a more pragmatic approach. For example, former SEIU President Andy Stern has spent the past six years trying to strike deals between gig employers and unions, including a failed attempt to prevent the California referendum. While the ballot measure was a costly victory for the gig economy, it was also a significant setback for both unions and drivers, who now have no means to organize or object to terms stipulated by the companies.

According to Stern, internal union surveys have repeatedly shown that a majority of New York drivers do not want to be employees. For this reason, debates focused only on reclassification may be unrealistic, so he has been advocating for drivers’ rights to organize and negotiate their own contracts.

“Give a worker a union and collective bargaining and they’ll decide themselves what kind of status, wages, and benefits they want,” said Stern. “People who believe litigation and legislation are the solution have failed these workers.”

For their part, Uber and Lyft have historically opposed unionization efforts. In 2015, they enlisted the U.S. Chamber of Commerce for a court battle against a Seattle law promoted by the Teamsters that would have allowed rideshare drivers to bargain collectively.

While Uber has appeared to have softened on such agreements more recently, with the company recognizing the GMB union as the collective bargaining unit of its British drivers, many union officials remain skeptical about the goodwill of gig economy companies with regards to their workforce.

Advocating for Workers in Uncertain Times

Regardless of the success of efforts to preserve independent contractor status for the gig workforce, it is clear that the American economy is changing rapidly. In these uncertain times, workers need strong legal counsel now more than ever, particularly if they sustain a workplace injury. If this has happened to you, consider doing what so many others have done before you and retain the workers’ compensation attorneys at GWC Injury Lawyers LLC.

With over $2 billion recovered in verdicts and settlements, GWC is one of the premier Workers’ Compensation and Personal Injury law firms in Illinois. For more than four decades, we have been advocating for injured workers in virtually every profession. Our Chicago workers’ compensation lawyers have the experience, the determination, the resources, and the reputation of success you need to help get you and your family the justice you deserve.

To schedule a free, no-obligation consultation with one of our dedicated attorneys, contact GWC today. You may call our office at (312) 464-1234 or click here to chat with a representative at any time.