January 29, 2021
A coalition of more than 70 unions and advocacy groups described the gig economy as “the deliberate destruction of our most basic labor standards” and called for expanding federal employment protections to gig workers in a letter to congressional leadership. Letter signatories include the AFL-CIO, AFSCME, the Teamsters union, and the National Employment Law Project.
The letter targets app-based companies and California’s Proposition 22. Passed in 2020 by California voters, Proposition 22 allowed “app-based drivers” to retain independent contractor status under a new law, AB 5, that codified the broad “ABC” test for determining independent contractor status. The initiative also required that app-based gig companies provide drivers with health care subsidies, limit working time, and abide by pay requirements, among other benefits. Executives from Uber and Lyft have stated they are hopeful to expand the Proposition 22 model to other states.
The use of independent contractors by large companies also came under fire: “Already, we have seen some employers in health care, retail, and hospitality shift to managing their workers through a digital app, or outsourcing them through temp and staffing firms, to escape basic employer obligations.”
State of play: Legislators in several states, including Massachusetts, Minnesota, New York, New Jersey, Pennsylvania, Rhode Island, and Washington, are looking to pass legislation similar to California’s AB 5. It remains to be seen whether these efforts will learn from Proposition 22 and take a more surgical approach.
At the federal level, President Biden promised in his campaign to “work with Congress to establish a federal standard modeled on the ABC test for all labor, employment, and tax laws.” A late rule by the Trump administration clarifying worker classification under the Fair Labor Standards Act is nearly certain to be reversed. In Congress, meanwhile, the PRO Act, which would implement the ABC test into federal law under the National Labor Relations Act, would face a tough challenge in the near-evenly split Senate.
Outlook: With the Senate likely blocking federal efforts to codify the ABC test, look for increased actions by the executive branch and developments in the states.