Staff cut up contractor standing, complicating Biden’s strategy

Workers in various industries are at odds over what approach the government should take when it comes to determining who should be an independent contractor or an employee under federal labor law, a loophole complicating the Biden administration’s efforts to eliminate misclassification to be fought by workers.

Democrats, unions, and other labor-oriented groups argue that big tech companies, as well as employers in other industries like healthcare and janitorial services, are misclassifying their workers as independent contractors to avoid minimum wage, overtime pay, and tax liability who come with full employee status.

But some workers — namely translators, freelance journalists, truck drivers and others — say they are concerned the White House will narrow the definition of the independent contractor to the point where they can no longer sustain their current livelihood and feel that they are left out of a discussion largely focused on the gig economy.

The two factions present a tricky dichotomy for the Biden administration: how to maintain relationships with independent contractors for workers who enjoy that freedom, while ensuring workers are not exploited under this model?

The latest available data from the Bureau of Labor Statistics found that independent contractors accounted for 6.9% of employment in 2017. A quarter of independent contractors in the US work in “professional and business services,” according to the BLS survey. Another 19% worked in construction and almost 10% in education and healthcare.

State and federal employment agencies “try to protect exploited workers and they lump everyone together,” said Debbie Abrams Kaplan, a freelance journalist and member of Fight for Freelancers, who opposes sweeping worker placement tests like those used by California and California to be carried out Massachusetts.

Uber drivers and construction workers are in a different situation than “the writers and graphic designers and other professions who are very fortunate to have their own businesses,” she added. “They use this big sledgehammer approach instead of trying to use a scalpel to really define the problem and understand the problem and solve the problem in a much more surgical way.”

But employee representatives have a different opinion.

“This is far bigger than just the app-based gig economy,” said Laura Padin, senior counsel with the National Employment Law Project. She noted cases of misclassification in janitorial work, trucking, home nursing and cleaning, and other industries.

“When workers in these jobs are misclassified as independent contractors, it makes these already low-paying jobs worse,” Padin said. “There’s a huge crowd of people who could see the quality of their work improve dramatically if they were employees.”

regulatory approach

The long-standing debate over how workers should be classified under federal labor law is heating up again after the Biden administration presented a new regulation proposal to outline its approach to the issue.

Last year, the government sought to repeal a Trump-era regulation, backed by big tech companies and industry groups like the American Trucking Association, that allowed most employers to continue to classify their workers as independent contractors under the Fair Labor Standards Act.

The Trump administration test weighs several factors when determining whether a worker is an employee or an independent contractor, but places greater emphasis on the person’s control over the job and the person’s opportunities for gain or loss.

But a Texas court ruled earlier this year that the Biden administration failed to seek public input when it repealed the rule, putting the Trump standard back on the books.

The Biden DOL then announced it would initiate another rulemaking process in June to address independent contractor status, adding that it is “committed to ensuring that employees are properly recognized when they are in fact employees so that they get the protection that the FLSA provides.”

California’s ABC test

Some groups, such as the Freelancers, as well as TechNet and the Owner-Operator Independent Drivers Association, have raised concerns that the Biden administration is taking the broad California “ABC” test approach, which makes it more difficult to classify workers as contractors.

“We can only assume from what President Biden said in his ballot papers that he wanted to use the ABC test in all aspects of the law,” Kaplan said.

However, the DOL said it could not and had no plans to implement the ABC test at the federal level.

The agency’s top attorney, Solicitor Seema Nanda, suggested during a stakeholder meeting on the upcoming contractor rule that adoption of the ABC test was not possible through rulemaking and could only be done by Congress, according to several attendees.

While DOL’s Wage and Hour Division hosted two public stakeholder meetings on the new proposal in June, the agency also planned “invitation-only” forums with working groups and corporate stakeholders that were not open to the public or press.

Fight for Freelancers says the Biden administration ignored its concerns about the ABC test because the group was not invited to the private meetings and some of its members did not have time to speak at the public sessions.

However, a former DOL official argued that enforcement of the FLSA in its written form should not affect current agreements that legally classified contractors have because the DOL only has the authority to interpret the law as written and not the legal test generally change through the setting of rules.

“There were certain jobs that were kind of a gray area, and sometimes you look like independent contractors and sometimes you look like employees,” “which is why we have laws and judges,” said David Weil, head of the Obama administration’s Wage and Hour Division.

“But there are people who have always been independent contractors because they are legitimate independent contractors under the law, and there’s no reason to think they wouldn’t remain so as long as the FLSA is the FLSA,” Weil said. who was nominated to serve again in the payroll department under Biden, but was barred from confirmation in the Senate.

Weil added that the agency could take a more rigorous approach through enforcement, but not through rulemaking. He is not currently advising the government on this political issue.

control

A central factor in the ongoing discussions about the classification of workers is the notion of control.

Fight for Freelancers members say they are legitimately independent contractors, in part because they are able to choose their own work orders and negotiate their wages, an integral part of the various legal tests used to determine how workers are classified.

But app-using employees probably don’t enjoy the same level of control over their work, despite being classified as independent contractors, groups representing app-based drivers claim.

“I’m a misclassified part-time app worker, I have a boss. My boss is an algorithm,” said Nicole Moore, rideshare driver and member of Rideshare Drivers United. “My schedule is set by algorithms through bonuses and raises. I don’t set my salary myself.”

Drivers in San Francisco made the same argument in a recent antitrust lawsuit against Uber Technologies Inc. and Lyft Inc., alleging that if they are truly independent contractors under the law, the model the companies used to set prices for rides , which amounts to illegal price fixing.

Because the fares for trips are set by the app and drivers are incentivized to drive during certain peak hours, they don’t have full control over their working conditions like a true independent contractor should, the lawsuit says.

“Technology has obviously made this easier,” said NELP’s Padin of misclassifying workers in the labor market. “Technology and app-based working have made it easier for companies to hire, control and monitor workers through an app while evading responsibility as an employer.”

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