Do politicians know best how you should earn a living? The state of California seems to think so. But a new rule from the Department of Labor proposes a different vision — one driven by workers’ choices, not the government’s.
This proposed rule is good news for more than 70% of independent contractors who prefer their work arrangement over a traditional job, according to a recent Global Strategy Group survey.
Unlike California’s AB 5 law, the department’s rule doesn’t assume that full-time employee status is what’s best for most workers. Instead, it considers a number of more-relevant factors, including whether workers are economically dependent on their employer or mainly in business for themselves. It also takes into account how much control a worker has over his or her own profit and job responsibilities. In the words of Labor Secretary Eugene Scalia, the rule respects “the decision other workers make to pursue the freedom and entrepreneurialism associated with being an independent contractor.”
Who suffers when states fail to get this balance right? In a recent legal filing from ride-sharing company Uber regarding California’s AB5 law, numerous drivers explain why choice and flexibility work for their life circumstances.
One described how she “quit her job as an employee for the City of Los Angeles when she ‘woke up one morning’ and decided to drive using Uber and Lyft because this allows her to make more money on her own terms.” Yet another said that “she would no longer be able to use the apps to help support her two children, one of whom has special needs” if she was forced to become a full-time employee.
It’s exactly this deference to worker choice that has labor unions up in arms. Already contending with their own bad reputations and dwindling membership numbers, unions will see the rule as yet another roadblock. After all, classifying more freelancers as employees would make organizing the fast-growing gig economy much easier. But workers may not be better off for it.
Consider the United Food and Commercial Workers, one of several unions interested in sucking in workers currently associated with the gig economy. This may be UFCW’s best bet to recover the over 25,000 members that it has lost since 2016. It’s no wonder why — the UFCW’s spending habits suggest that membership isn’t a great investment.
Over the last five years, the UFCW spent over $200 million paying its own officers and staff. That included a six-figure salary for the union’s president, Marc Perrone, and a number of other officials. There were also millions spent on travel, including $11 million on airline flights and another $19 million on hotels and events — all paid for with members’ dues money.
According to the union’s 2019 financial filings with the Labor Department, the UFCW spent less than a quarter of the “per capita tax” it collected on representational activity. Not a single dime ($0.00) was spent on behalf of individual members.
Most freelancers won’t want to trade away their flexibility and independence to become a source of funding for labor unions’ selfish tactics. A campaign called FreelancersFightBack.com is now broadcasting such testimonials in a TV commercial. While the Labor Department’s rule is more of a guideline and it can’t overturn California’s foolish AB5, it still represents another way forward for workers who want to keep their say in how they’re able to earn a living.
Charlyce Bozzello is the communications director at the Center for Union Facts.
