The gig economy-based tech companies, run by incredibly wealthy, stock-rich executives, are ruthlessly persistent. They refuse to admit to critics that their workers are employees.
In what appears to be an effort to save on wages, benefits, and taxes, the titans of the gig economy claim that the people who drive you, shop at the supermarket, and deliver dinner at your favorite local restaurant at your doorstep are entrepreneurs. . Many workers say they should be classified as employees rather than independent contractors. This designation is of crucial importance for both sides of the war.
The proliferation of application-based businesses and a free market economy has positively changed the way we conduct our lives. They gave consumers time again. No need to spend an hour at the supermarket anymore. After a hard day’s work, there is no need to prepare dinner, when a good meal can be delivered to you quickly. If you want to go somewhere, a rideshare app will take you there.
For many Americans who are struggling to find a job, a concert role is a great option. During difficult times, such as a global pandemic that has left millions of people unemployed, one job together would be used to generate much-needed extra income. Immigrants, new to the country, could find work, helping them acclimatize to their new home. This new sector of the fast growing economy has changed that. The challenge is to create the right balance between workers and application-based businesses.
Massachusetts is the new state of the battle between the super-rich tech moguls and the people trying to survive. Last year Uber, Lyft, DoorDash, and Instacart scored a hard-fought victory in California with Proposition 22, exempting app-based workers from AB-5, which would have classified drivers and other gig workers as benefiting employees. benefits.
The struggle centers on the classification of workers in concert. A coalition of app-based companies have filed legal documents to qualify for a voting measure that would make their workers independent contractors, not employees. They would have limited benefits, such as a minimum wage of $ 18 an hour and health allowances for drivers who work at least 15 hours a week.
The debate boils down to the “ABC” test. A worker can be classified as an independent contractor if the following three factors are met:
- The worker is free from the control and direction of the hiring entity, within the framework of the execution of the works, both by virtue of the contract for the execution of the works and in fact.
- The worker performs work that is outside the ordinary course of business of the hiring entity.
- The worker is usually engaged in an independently established trade, occupation or business of the same nature as the work performed.
It could be a long and difficult battle. The tech giants have a huge financial reserve. In the California fight, Uber, Lyft, DoorDash, and Instacart spent a total of $ 225 million on the prop. 22 to get public opinion on their side.
If this measure is put on the ballot, app companies could have tough opponents. Maura Healey, Attorney General of Massachusetts, had previously sued the designations made by Uber and Lyft of their drivers.
Labor Secretary Marty Walsh, former mayor of Boston and former union leader, said: “In many cases, concert workers should be classified as employees. President Joe Biden has also been a strong advocate for workers, touting the importance of unions.
The Coalition for the Protection of Workers’ Rights, a grassroots organization of workers, lawyers, unions, civil rights and other public interest groups, opposes the campaign of Uber, Lyft and others large tech companies. The advocacy group says that, if passed, it “will permanently create a ‘second class’ status” for workers, noting that the majority of them are black, brown and immigrant.
Supporters of the initiative say the proposal would offer a base of 120% of the Massachusetts minimum wage for workers. This works out to around $ 18 an hour for drivers, not including tips. Drivers of ridesharing apps would be guaranteed at least $ 0.26 per mile to cover vehicle expenses, health benefits for drivers who work at least 15 hours a week, and drivers would still keep all of their tips.
Lyft co-founder John Zimmer said on Tuesday, “While our priority is to find a legislative solution in Massachusetts, this part of our ongoing efforts to defend what the vast majority of drivers want: a flexible income opportunity offered. by our platform, as well as new benefits. Zimmer added, “As we pursue the ballot option, we are also closely connected with the Massachusetts State Legislature and continue to work with them on a potential legislative solution.”
In a past New York Times In an effort to find an acceptable middle ground, Uber CEO Dara Khosrowshahi called for workers in the concert economy to receive benefits, but also insisted that the “drivers” of the ridesharing company want to work independently.
Khosrowshahi wrote in the opinion piece, “Our current employment system is outdated and unfair. This forces each worker to choose between being an employee with more benefits but less flexibility, or an independent contractor with more flexibility but almost no safety net. Uber is ready to pay more now to offer drivers new benefits and protections. But America must change the status quo to protect all workers, not just one type of job. ”
It is reasonable to believe that there are drivers who prefer to operate independently without strict and enforceable schedules. They appreciate the freedom and entrepreneurial spirit to work when and where they want. Other people may have fallen into the gig due to the brutal effects of the pandemic as they are unable to find other employment and need a source of income.
Uber, Lyft, and other similar concert-based companies rely heavily on independent contractors. They have a financial interest in classifying drivers or workers as contractors. This model allows companies to avoid paying taxes on wages, FICA (Social Security and Health Insurance), disability benefits, unemployment and health insurance at the federal and state level. They are not required to comply with minimum wage laws or offer vacation days.
To put that in perspective, New Jersey sued Uber to recover roughly $ 600 million. The state government claimed that by avoiding classifying its drivers as employees, Uber did not have to pay payroll taxes and payroll taxes, unemployment insurance and employment taxes. , provide workers’ compensation insurance or comply with minimum wage laws.
With the massive amount of money involved, the existential threat to the future of app companies, the plight of gig workers, swarms of lawyers, political overtones, and a possible posture of Biden and his administration, wrestling in Massachusetts will receive considerable attention.