Gig Workers Lack Protections in Age of Coronavirus
By Brian S. Kabateck
The coronavirus has upended the way Americans are going to work and sadly It took a public health crisis for gig workers to recognize how much power and protections they lack. A growing number of white-collar companies are telling employees to work from home. However, it appears very few of the gig economy companies are doing much to protect independent contractors in the wake of coronavirus. Moreover, this current crisis has exposed the unseemly underbelly of the gig economy.
With more Americans isolating at home, the demand for gig delivery services has surged as the virus spreads. According to online retailer Instacart, sales of household items have jumped 10-fold and as high as 20 times in California and Washington. According to CNN, Instacart continues to encourage workers to take on more jobs by luring them with bonus offers. For gig workers without healthcare or are worried about how to pay the bills, there’s a strong incentive to work even if they’re sick.
California passed a new law, AB5 which went into effect January 1st. It makes it more difficult for employers to classify workers as independent contractors by requiring business owners to turn these “permalancers” into employees which entitles them to benefits such as overtime pay, paid lunch breaks and sick leave. The goal is to offer more job stability, financial security and labor protections to the millions of workers who are part of the exploding gig economy.
The law codifies a landmark California Supreme Court ruling in the Dynamex case which set an “ABC test” to determine whether an employer is correctly classifying its workers. Under the test, an independent contractor must control the work, do work outside the company’s usually business and conduct work that’s an independently established trade.
Employers that don’t pass the test include the high-tech titans, Uber, Lyft and Postmates. The app-based companies took advantage of drivers who wanted a “side hustle” and the flexibility to set their work schedules. In reality, most drivers worked fulltime for these corporations without any of the employment benefits. If a person gets up in the morning, goes to work and that work involves turning on an app, and that work is dictated by that app and it tells the worker where to go, who to pick up, what to do and how much she gets paid, and she’s putting in 50, 60, 70, 80 hours a week, that’s called a job.
The courts agree with this argument and have ruled against recent attempts by Uber and Postmates to halt enforcement of the law. A federal judge affirmed the state’s need to regulate misclassification outweighs any harm to the companies. It’s also in the state’s interest to collect taxes from employers and ensure that low-wage workers are paid appropriately.
Households in California have a median annual income of $75,000, meaning half of the people are above this number and half are below. Business owners would love the opportunity to classify someone as an independent contractor because it means they don’t have to pay their share of employer taxes, it means they don’t have to pay benefits and ultimately it becomes a critical issue of being fair to the employee.
Many high paying professions are exempt from AB5 including doctors, lawyers, architects, and engineers but there are still many workers with specialized skills that don’t fall into those fields and are fearful of the fallout. A backlash to AB5 triggered a surge of activism by freelance professionals who argued they’ve lost clients, gigs or their entire livelihood because of this legislation. Lawmakers and the courts are now discussing some of the unintended consequences.
Gig workers are now more in demand than ever before but it’s still the businesses, not the independent contractors who benefit. Even in the best of times, gig workers encountered exploitation and wage theft as tradeoffs for a flexible schedule. Now that these workers are on the frontlines in this public health emergency, they need more protection than ever. As we embark on a more dangerous work environment employers must prioritize the safety of workers while still keeping up with consumer demand.