The Trump administration and Congress will be tackling the issue of the “gig economy” this year, looking into exactly how workers for companies such as Uber and Lyft should be treated under federal workplace law.
The big issue: When do workers for those companies stop being contractors and become employees? Business groups are eager to limit those circumstances, which the Obama administration and court rulings have chipped away at. The Trump will offer its take when the Bureau of Labor Statistics publishes its Contingent Worker Survey in the spring that will offer new data on workers doing short-term, nonsalaried "gig" jobs.
"It’s a report that hasn’t been compiled since 2005. There’s been a lot of requests by senators for it to be updated,” said Sen. Mike Enzi, R-Wyo., chairman of the Senate Health, Education, Labor and Pensions Committee's subcommittee on health and retirement security.
A source in the Labor Department who requested anonymity said the study probably will be published in April. It will become a springboard for legislation to clarify a host of issues, including potentially the most controversial one: the contractor-or-employee issue.
“I’m sure the debate will fall on familiar philosophical lines,” Enzi said.
An estimated 40 million independent workers – consultants, freelancers, and contractors — are in the gig economy.
In most cases, the workers are classified as independent contractors, a designation that means employers often don’t have to abide by many of the rules under federal workplace law, such as providing overtime or health coverage.
The growth of online-centered, ride-sharing companies Lyft and Uber has put a spotlight on the issue, as the companies have severely disrupted the traditional taxi industry in major cities by giving customers an easy-to-use, low-cost alternative. They have been embroiled in several class-action cases over whether their drivers are actually employees. Uber settled a case in Illinois in October for an estimated $20 million.
Employers argue the arrangement benefits workers and management alike because it gives them flexibility in determining work hours and other logistics. Labor unions charge that the workers are often misclassified as independent contractors when they are regular employees.
The Trump administration has been tight-lipped on its plans, saying only that it wants to modernize the rules. “Government has an obligation to keep pace and to re-examine the rules that regulate the employer-employee relationships that have an impact on the ability of individuals to work in a modern system,” Labor Secretary Alexander Acosta said in October.
However, the department already has pulled back on Obama-era efforts to limit the “gig economy.” In June, it withdrew a pair of nonbinding guidance documents issued in 2015 and 2016 that cautioned employers against “misclassification” of workers as contractors.
The Chamber of Commerce has pushed Congress and the White House to allow employers to provide retirement benefits to gig employees without the move being used as evidence that they are workers. That would address one of the main concerns of critics while allowing the flexible work arrangements the gig economy allows, the business lobby argues. Employers currently cannot do that because a string of Supreme Court decisions have said providing such benefits is a strong indicator that a business is the recipient's employer.
“Many state, federal and local laws regulating the status of worker relationships effectively prevent those companies that treat workers as independents from providing those workers with access to even non-ERISA employees benefits without undermining the legal status of their business models,” Camille Olson, a partner with the management-side firm of Seyfarth Shaw told a Senate Health, Education, Labor and Pensions subcommittee at a Feb. 6 hearing.
Critics counter that the legal status of those business models shouldn't be allowed to go unchallenged. “It is important not to fall into the trap of accepting these arrangements as inevitable and innovative when the situation might better be described as a race to the bottom,” said Monique Morrissey, economist with the union-affiliated Economic Policy Institute at the same hearing.
Interestingly, one area where both sides can agree is potentially expanding multiemployer pension plans, which allow workers to save for retirement while switching jobs by allowing them to pay into plans jointly managed by several employers.
Many traditional multiemployer plans, however, are financially troubled, weighed down by the bankruptcy or withdrawal of employers paying into the plans, which requires the remaining employers to pick up the slack. The Chamber and other business groups have called instead for the creation of nonprofit-managed multiemployer plans backed by the government to create an option for gig employees.
Such efforts are likely to be a hard sell with many Democrats, who view gig economy employers as already skirting the law and not in need of further assistance to do that.
“The hype of the gig economy has put a new face on the damaging trend of the erosion in worker protections and benefits,” said Sen. Patty Murray, D-Wash., adding. “The lingo may have changed but the challenge remains the same.”