Biden administration blocks Trump-era rule affecting gig workers’ employment

From today’s Reuters News Service:

The Biden administration on Wednesday blocked a Trump-era rule that would have made it easier to classify gig workers who work for companies like Uber and Lyft as independent contractors instead of employees, signaling a potential policy shift toward greater worker protections.

Shares of companies that employ gig labor such as Uber, Lyft and DoorDash immediately pared gains. At 2.15 p.m. ET (1815 GMT) Uber shares traded down 3.2%, Lyft was down 5.8% and DoorDash fell 5%.

“By withdrawing the independent contractor rule, we will help preserve essential worker rights and stop the erosion of worker protections that would have occurred had the rule gone into effect,” Labor Secretary Marty Walsh said in a statement.

“Too often, workers lose important wage and related protections when employers misclassify them as independent contractors,” he said.

Walsh told Reuters in an interview last week that a lot of U.S. gig workers should be classified as “employees” who deserve work benefits. His comments hurt stocks of companies that employ gig labor.

Walsh said in the interview that his department would have conversations in coming months with companies that employ gig labor to make sure workers have access to consistent wages, sick time, healthcare and “all of the things that an average employee in America can access.”

An Uber spokesman acknowledged on Wednesday the current employment system is outdated.

“It forces a binary choice upon workers: to either be an employee with more benefits but less flexibility, or an independent contractor with more flexibility but limited protections.”

Read the complete article here.

Labor Secretary Says Gig Workers Should Be Converted to Employees

From today’s Forbes Magazine:

President Joe Biden positioned himself as the champion of the American worker during his campaign, as well as an ardent proponent of unions. On Thursday, Biden’s Labor Secretary, Marty Walsh, told Reuters that gig workers should be treated as employees.

This simple statement could become an existential threat to app-based technology companies, such as Uber, Lyft, Instacart, DoorDash and dozens of others that heavily rely upon gig-economy workers.

The tech companies are basically built on the backs of contract workers. However, these gig workers are not classified as employees. Without the designation, contractors don’t qualify for traditional benefits, rights and privileges that are afforded to full-time permanent employees.

This sector represents a significant part of the economy. About 55 million Americans work in the gig economy, comprising around 36% of the workforce. If the Biden administration decides to take action based upon Walsh’s plan, it could have devastating consequences. 

Walsh seeks to rectify the situation by reclassifying contract workers as “employees.” The labor secretary said, “We are looking at it, but in a lot of cases, gig workers should be classified as employees…in some cases they are treated respectfully and in some cases they are not and I think it has to be consistent across the board.” Based upon this news, shares of Uber fell as much as 8%, while Lyft took a dive by 12%. Doordash fell nearly 9% and Grubhub was down 3.3%.

There are concerns raised by opponents of the gig-economy structure who say, similar to Walsh, it doesn’t seem fair to workers. Venture capitalists, institutions and wealthy individuals have flooded capital into this sector. When the tech companies went public, the investors, CEOs and top executives reaped vast fortunes. Contractors serve as cheap labor. If they acquiesce to critics like Walsh, they risk losing multimillions or billions of dollars. 

While many people earn a livelihood driving cars, delivering food and offering creative services through on-demand companies, there is a dark side. The contractors work long, hard hours for little pay and no real benefits. Near-monopolies have been created that crush or drive out the competition. Look at what happened to the once-ubiquitous yellow taxi cabs when Uber came to New York City. 

Uber, Lyft, DoorDash, Grubhub and other similar gig-based companies are highly dependent upon independent contractors. They have a financial self-interest in classifying drivers or workers as contractors. This model enables corporations to avoid paying payroll taxes, FICA (Social Security and Medicare), disability, federal and state-level unemployment and health insurance benefits. They are not required to comply with minimum-wage laws nor offer vacation days. 

Read the complete article here.

Break down employment barriers with training, education programs

From today’s CalMatters Online:

“You can’t have just one job in America,” says a gig worker in Los Angeles County, and “you could get replaced like this. ‘Say one wrong thing to me? You’re fired …There is a line outside the door who wants your job.’”

That is one of several perspectives from struggling workers in California captured in a new report by the Institute for the Future, which interviewed a cross-section of Californians paid less than $15 an hour last fall. The report, released March 24, explores troubling trends that preceded the pandemic but now are worsening. 

And it comes on the heels of another report by the state’s Future of Work Commission that calls for a new social compact for workers based on some staggering statistics. For example, nearly one-third of all  workers in California make less than $15 per hour, and a majority are over age 30. Women and people of color also are paid, disproportionately, the lowest wages in our state.

Beyond wages, fewer than half of workers in California report having a “quality job,” which the Future of Work Commission describes as “a living wage, stable and predictable pay, control over scheduling, access to benefits, a safe and dignified work environment, and opportunities for training and career advancement.”

The commission also notes how a decrease in worker power and organizing relates to job quality, inequality and violations of workers’ rights. The percentage of Californians in a labor union has dropped from 24% in 1980 to 15% in 2018, and membership in a union reduces the likelihood of low-wage employment more so than a college degree (39% versus 33%).

The futurists at the Institute for the Future outline how COVID-19 has accelerated instability and insecurity for workers. This is now an all-hands on deck moment, requiring consensus and collaboration across sectors – government, business, labor, education, workforce development, philanthropy and community organizations. This is difficult, complicated, and even expensive work, but it is essential if we are to make the California Dream real and attainable for all.

Despite collaborative efforts, we need more employers and labor organizations at the table. Industry has a critical role, and they must be closely involved every step of the way, not as an afterthought.     

The good news is that some promising efforts are underway. If passed, Assembly Bill 628, introduced by Assemblymember Eduardo Garcia, a Democrat from Coachella, will build upon the Breaking Barriers to Employment Initiative by assisting individuals in obtaining the skills necessary to prepare for jobs in high-demand industries. The program would support individuals who face systemic barriers to employment with training and education programs aligned with regional labor market needs.

Read the complete article here.

Unions at The Ringer and Gimlet Media announce their first contracts

From today’s New York Times:

Unions representing employees at two prominent podcasting companies owned by Spotify, the audiostreaming giant, announced Wednesday that they had ratified their first labor contracts.

The larger of the two unions, with 65 employees, is at The Ringer, a sports and pop culture website with a podcasting network. The second union, at the podcast production company Gimlet Media, has just under 50 employees. The two groups were among the first in the podcasting industry to unionize, and both are represented by the Writers Guild of America, East.

Lowell Peterson, the guild’s executive director, said the contracts showed that the companies’ writers, producers and editors “bring enormous value to the major platforms for whom they create content.”

The contracts establish minimum base pay of $57,000 for union members at The Ringer and $73,000 at Gimlet Media, annual pay increases of at least 2 percent, and a minimum of 11 weeks of severance pay.

The agreements include provisions that limit the use of contractors and allow workers to receive titles that reflect their seniority.

The two companies will create diversity committees that include managers and union members, and will require that at least half the candidates seriously considered for union positions open to outsiders come from underrepresented groups, such as racial minorities or people with disabilities.

Read the complete article here.

With a Huge Victory, UK Uber Driver Moves on to Next Gig Worker Battlefront

From today’s Inequality.org:

In recent weeks, courts in multiple countries have delivered huge victories for gig workers by establishing the principle that these workers are, in fact, employed by digital platforms and are thus entitled to basic worker rights and protections.

The most stunning win was the UK Supreme Court’s recent scathing judgement against Uber. While lower courts had ruled again and again that UK-based drivers are in fact workers, the company had refused to comply with this classification until this final ruling.

James Farrar, a former Uber driver and a lead plaintiff in the case, is celebrating this huge victory, which means that gig workers will have the right to wage protections, holiday pay, and other basic benefits. But during six years of litigation against Uber, Farrar and his colleagues realized that gig workers would need to fight on additional fronts. Right now, these employees lack access to the data that their app-based employers gather about them.

To take on this critical battlefront for worker rights in the 21st Century, Farrar has founded Worker Info Exchange. I asked Farrar to explain why he started this new nonprofit organization and what it hopes to achieve.

How did you come to realize the need for a data rights strategy?

When we brought the employment case, Uber challenged me with my own data and they came to the tribunal with sheaves of paper that detailed every hour I worked, every job I did, how much I earned, whether I accepted or rejected jobs. And they tried to use all this against me. And I said we cannot survive and cannot sustain worker rights in a gig economy without some way to control our own data.

So I used Europe’s General Data Protection Regulation (GDPR) to try to extract my data from Uber. And it began by asking questions, what data do you have and what can you give me? And I began to understand that Uber was unwilling or unable or both to give it to me. And I needed an entity behind me to get that to happen.

How will access to their data help workers?

Gig workers need access to data to see how they are being managed and paid. Right now companies are using automated decision making. This means allocation of work, performance management, and dismissals are decided based on data that the app gathers and feeds into algorithms. We need to understand the code behind those because sometimes those decisions are unfair. When decisions are unfair we can’t just let company executives say it wasn’t intentional. We need to expose and challenge the logic fed into the algorithm. Very few people are doing this right now.

GDPR is useful because it doesn’t just give you the right to data, it’s access to logic of processing. I have a right to fairness of processing under GDPR. So data rights are more comprehensive than just simple access to raw information. What we have done so far is challenge Uber to disclosure — what data the app collects, things like GPS trace. But what we really want are inference data. What decisions has it made about me? How has it profiled me? How does that affect my earnings? This is what Uber has not given us.

Read the complete article here.

Amazon to Pay $62 Million Fine for Withholding Tips From Delivery Drivers

From today’s New York Times:

Amazon agreed on Tuesday to pay $62 million to the Federal Trade Commission to settle charges that it withheld tips to delivery drivers over a two-and-a-half year period, in a case that highlights the federal government’s increased interest in gig-economy workers.

The F.T.C. said in an announcement that Amazon had promised its Flex delivery drivers that they would receive 100 percent of all customers’ tips. But starting in 2016, the F.T.C. said, Amazon secretly lowered the hourly delivery wages, which were advertised at $18 to $25, and tried to mask the smaller wages by using customer tips to cover for the smaller hourly pay. The net effect was that the contract workers received smaller overall take-home pay, the agency said.

The practice wasn’t disclosed to drivers but the Flex drivers noticed the compensation reductions and began to complain. Amazon stopped the practice in 2019, after it became aware of the F.T.C.’s investigation, the agency said. The company settled without admitting wrongdoing.

“Rather than passing along 100 percent of customers’ tips to drivers, as it had promised to do, Amazon used the money itself,” said Daniel Kaufman, the acting head of consumer protection at the F.T.C. “Our action today returns to drivers the tens of millions of dollars in tips that Amazon misappropriated, and requires Amazon to get drivers’ permission before changing its treatment of tips in the future.”

Flex workers are classified by Amazon as independent contractors and often use personal vehicles for deliveries of the company’s Prime Now and AmazonFresh items. Customers can give a tip to delivery drivers on the checkout page.

Amazon is facing greater regulatory scrutiny overall. The Seattle company is under investigation for antitrust violations amid growing concerns from lawmakers and regulators about the power of the big tech companies.

Read the complete article here.

Grocery chains nationwide ditching in-house delivery drivers in wake of Prop 22

From today’s Business Insider:

Albertsons and some of its subsidiaries, including Vons and Pavilions, are discontinuing their in-house delivery services in parts of California and other states starting in February. The grocery chains will instead rely more heavily on third-party delivery apps, including DoorDash, to handle grocery deliveries, local news outlet KNOCK reported Monday.

“In early December, Albertsons Companies made the strategic decision to discontinue using our own home delivery fleet of trucks in select locations, including Southern California, beginning February 27, 2021,” Albertsons spokesperson Andrew Whelan told Business Insider.

“We will transition that portion of our eCommerce operations to third-party logistics providers who specialize in that service. Our HR teams are working to place impacted associates in stores, plants, and distribution centers,” Whelan said.

Albertsons didn’t respond to questions about employees losing their jobs. In Texas, the company told the Dallas Morning News that it will also fire nearly 100 employees at Tom Thumb locations.

“With COVID-19 outbreaks spiraling out of control and overwhelming hospitals across California, it is stunning that Albertsons would fire these courageous and hard-working men and women keeping our food supply secure,” Marc Perrone, international president of United Food and Commercial Workers, a major union that represents many Albertsons workers, said in a press release, calling on Albertsons “to immediately halt these plans.”

The move comes weeks after a new California law went into effect that eliminated labor protections for app-based food delivery workers and rideshare drivers, which was authored and bankrolled by gig companies.

As DoorDash, Uber, Lyft, Instacart, and Postmates waged a $200 million battle last year to pass the bill, known as Proposition 22, they pointed to “independent” research claiming it would save as many as 900,000 jobs across the state (it turned out the companies had paid a combined $411,599 to the researchers behind the study).

Albertsons’ plans to cut in-house delivery and route new business to delivery companies like DoorDash, however, shows how Prop 22’s passage potentially pushes adjacent industries to consider cheaper labor options.

Read the complete article here.

Unfair ratings cost some Instacart shoppers hundreds a week

From today’s New York Times:

Bags of groceries don’t just vanish into thin air. But in case the laws of physics ceased to exist, Loreen Zahara does her due diligence. The Instacart shopper keeps receipts for purchases and even photographs them upon delivery — on a customer’s stoop or in front of their garage.

Yet when one customer gave her a one-star rating over a missing bag of pineapples and another awarded her one star and claimed an entire order wasn’t delivered, it was Zahara who suffered the consequences: a loss of hundreds of dollars of potential earnings per week.

Instacart’s order-allocation system takes the “customer is always right” mantra to new extremes, some of its professional shoppers say. The grocery delivery company presents its workforce of independent contractors with orders based in part on their in-app ratings — those with higher scores get first pick, often leaving behind fewer and less lucrative batches for everyone else. Interviews with more than 10 shoppers and receipts reviewed by The Times show a sharp decline in earnings for shoppers whose ratings drop just slightly below 4.95 out of 5 stars. Often, shoppers said, the negative reviews were beyond workers’ control.

Even though Zahara has evidence those two complete orders reached the customers’ homes, it was enough to drop her rating to a 4.94. She went from earning an average of more than $1,270 per week to $690 per week, while working the same total hours, screenshots and weekly earnings reports show.

When Zahara had a rating of 4.95, compensation for batches of deliveries available to her ranged from $15 to $45. At a 4.94, screenshots show orders dipped to $9 to $22, with those at the higher end in a different county than where she lived and typically worked.

“I just had to live with the bad ratings and bad batches and no money,” she said.

Instacart says the system was developed to ensure ratings are “fair and accurate,” and do not unfairly penalize shoppers.

To protect shoppers, Instacart automatically forgives a customer’s single lowest rating, said Instacart spokesperson Natalia Montalvo. And “ratings that are outside of shoppers’ control” are also forgiven — such as when a customer complains that requested item is out of stock at a store, she said.

Read the complete article here.

What Prop. 22’s defeat would mean for Uber and Lyft — and drivers

From today’s Los Angeles Times:

One way or another, the business of summoning a ride from your phone is likely to look different in California after Nov. 3.

The future of gig work could hinge on the success or failure of Proposition 22, called the App-Based Drivers as Contractors and Labor Policies Initiative. Uber, Lyft and other companies bankrolling the initiative say it would improve workers’ quality of life, providing new benefits while preserving their autonomy. If passed, the measure would cement gig workers’ status as independent contractors, dealing a huge blow to a labor movement striving to bolster protections for workers at the margins.

Abstract illustration of an app-based driver in a car

Gig companies’ business models rely on hiring large numbers of workers cheaply as independent contractors to provide rides, deliver meals and groceries and perform other services. Assembly Bill 5, a state law passed in 2019, aimed to expand protections to these workers, requiring gig companies to reclassify them as employees.

Proposition 22 represents the companies’ efforts to battle that law and the obligations that come with it.

Uber, Lyft, DoorDash, Instacart and Postmates (which was recently acquired by Uber) have jointly poured close to $200 million into the “yes” campaign, flooding the airwaves and their own apps with ads and making the measure the costliest in U.S. history.

At the heart of it all is a vicious fight to shape the prospects of hundreds of thousands of drivers and delivery workers across the state.

Here’s what you need to know.

What would happen if Proposition 22 passes?

For the companies sponsoring it, the short answer is: business as usual. For workers, it would bring some clarity, at a price.

The text of Proposition 22 assures drivers they would maintain flexibility as independent contractors. The measure offers some benefits similar to those conferred under AB 5, but significantly weaker.

Gig companies thus far have resisted compliance with AB 5, which went into effect Jan. 1. In early August, a judge ordered Uber and Lyft to convert their drivers to employees. At the 11th hour, the companies won a temporary stay of the order from a state appeals court, effectively pushing off the deadline until after voters have their say.https://datawrapper.dwcdn.net/Krp2r/6/

Uber and Lyft presented oral arguments before California’s 1st District Court of Appeal on Tuesday. The court has 90 days to decide whether it will uphold the lower-court ruling. But Proposition 22, if passed, would override protections granted by AB 5.

The measure instead would grant 120% of the minimum wage (state or local, depending on where the driver is). However, this minimum narrowly applies to “engaged time,” meaning the time a driver is on a trip with a passenger or en route to pick up a passenger. One study found drivers spend one-third of their time waiting between passengers or returning from trips, time that would not count toward the minimum wage.

Read the complete article here.

Will rideshare drivers get paid less than minimum wage under Proposition 22

From today’s Sacramento Bee:

Proposition 22 proposes that gig drivers for companies such as Uber, Lyft and Doordash will get paid 120% of the area’s minimum wage for the time they spend picking up and driving goods or passengers, plus 30 cents a mile.

Proponents of the proposition argue under its calculation, the drivers will get paid closer to $25 an hour after expenses, much more than the state’s minimum wage. But the initiative’s opponents cite a much-published study from the UC Berkeley Labor Center, whose researchers said Proposition 22 will guarantee only $5.64 an hour.

Amid an onslaught of advertisements, Proposition 22 still has a fundamental question to answer: How much will the gig drivers get under the initiative. A Sacramento Bee review found that the answer depends on how expenses and time at work are defined. But it is possible that workers would earn less than minimum wage under the measure.

In 2019, Ken Jacobs and Michael Reich at the UC Berkeley Labor Center published a report saying the gig drivers using Uber or Lyft will only be guaranteed a pay of $5.64 an hour under Proposition 22. They still stand by the number.

Under Proposition 22, drivers could get a pay cut from what they are paid now, Jacobs said. “The guarantee they claim to have,” he said of the gig companies. “is a false guarantee.”

Under Proposition 22, drivers will not be paid for the time they are waiting to give a ride, nor the time they spend preparing and cleaning their cars. That time accounts for some 33% of the drivers’ working time, Jacobs said, citing a 2019 study that looked at Lyft and Uber rides in six metropolitan areas across the country, including Los Angeles and San Francisco. “It’s impossible to do the work without having the time waiting for work,” Jacobs said.

Another report, “Rigging the Gig,” by the National Employment Law Project and the Partnership for Working Families found that drivers working 50 hours a week will be paid $175 to $210 less a week under Proposition 22 compared to the current minimum wage.

Read the complete article here.