Clas­si­fy­ing away work­ers’ rights

The dif­fer­ence be­tween con­trac­tor and em­ployee puts U.S. la­bor law at risk.

Los Angeles Times - - OP-ED - By Caro­line Fredrick­son Caro­line Fredrick­son is pres­i­dent of the Amer­i­can Con­sti­tu­tion So­ci­ety for Law and Pol­icy and the au­thor of “Un­der the Bus: How Work­ing Women Are Be­ing Run Over.”

Do Uber and Lyft merely pro­vide an app, or a driver? For con­sumers, order­ing car ser­vice — or lately, house clean­ing, lunch de­liv­ery or dry-clean­ing pickup — can be as sim­ple as touch­ing an icon on a smart­phone. But when the peo­ple who ac­tu­ally do the work show up, are they merely in­de­pen­dent con­trac­tors matched to con­sumers by a soft­ware com­pany, or are they em­ploy­ees?

How we an­swer that ques­tion has con­se­quences in terms of wages, benefits and on-the-job pro­tec­tions against safety haz­ards, as well as dis­crim­i­na­tion and ha­rass­ment. The “shar­ing econ­omy” is ac­cel­er­at­ing em­ploy­ers’ drive to clas­sify more and more work­ers as in­de­pen­dent con­trac­tors. At hair sa­lons and man­i­cure es­tab­lish­ments, at jan­i­to­rial ser­vices and home care agen­cies, this old trick is pos­ing real risks to our sys­tem of la­bor and em­ploy­ment laws.

In the shar­ing econ­omy, the rules of em­ployee clas­si­fi­ca­tion are now in the hands of the courts. Uber and Lyft are fac­ing law­suits in fed­eral court in North­ern Cal­i­for­nia that chal­lenge their des­ig­na­tion of driv­ers as con­trac­tors — and their prac­tice of off load­ing the costs of gas, in­sur­ance and ve­hi­cle up­keep, and of pro­vid­ing no benefits. The com­pa­nies claim to be only the cy­ber mid­dle­man be­tween driv­ers and cus­tomers, but they also set strin­gent work rules and can fire driv­ers; their large work­force may be en­ti­tled to be treated as em­ploy­ees.

A de­ci­sion on the un­der­ly­ing legal is­sue of who is an em­ployee and who isn’t may set a prece­dent for the app econ­omy — and for the fu­ture of our protective la­bor laws.

There are a lot of ways to avoid la­bor laws: work­ing staff be­yond 40 hours a week, for ex­am­ple, or short­en­ing sched­ules (and pay) with­out warn­ing, sim­ply ig­nor­ing over­time or vi­o­lat­ing health and safety laws in the face of lax en­force­ment.

But per­haps the most in­ge­nious ap­proach is say­ing that a com­pany’s work­ers aren’t ac­tu­ally its work­ers at all, and thereby shrug­ging off any re­spon­si­bil­ity to them, and any li­a­bil­ity. By call­ing cer­tain staff mem­bers in­de­pen­dent con­trac­tors or hir­ing through tem­po­rary agen­cies or as part­time work­ers, the boss is sud­denly free from many of the fi­nan­cial bur­dens — but not the benefits — of hav­ing em­ploy­ees.

The so­ci­etal con­se­quences are sig­nif­i­cant, al­low­ing the cir­cum­ven­tion of pro­tec­tions that guar­an­tee work­ers a de­cent wage, ma­ter­nity leave, pro­tec­tions from ha­rass­ment and dis­crim­i­na­tion — the kinds of things Pres­i­dent Obama has char­ac­ter­ized as “ba­sic needs,” not bonuses: “They should be part of our bot­tom line as a so­ci­ety.”

In ad­di­tion, giv­ing em­ploy­ers the lat­i­tude to use temps and in­de­pen­dent con­trac­tors has seg­mented the work­force, even with- in a sin­gle em­ployer, be­tween “real” em­ploy­ees, more of­ten white and pro­fes­sional, who get benefits, and the non-em­ploy­ees, more likely to be fe­male and mi­nor­ity, who get noth­ing. In a 1995 law re­view ar­ti­cle, Jon Hiatt, a se­nior of­fi­cial at the Ser­vice Em­ploy­ees In­ter­na­tional Union, now at the AFL-CIO, per­cep­tively de­scribed this weak­ness in our legal sys­tem as one that al­lows com­pa­nies to “dis­tance them­selves from the ex­ploita­tion of the low-wage work­ers while ben­e­fit­ing from their ex­ploita­tion.”

Ac­cord­ing to the Bureau of La­bor Statis­tics, in 2005, more than 8% of the work­force, or more than 10 mil­lion work­ers, were counted as in­de­pen­dent con­trac­tors. In 2000, the Depart­ment of La­bor com­mis­sioned a study that es­ti­mated that nearly a third of all em­ploy­ers mis­clas­si­fied some em­ploy­ees as con­trac­tors; a 2005 study found that more than 10% of work­ers in the pri­vate sec­tor had been wrongly des­ig­nated as con­trac­tors. In 1993, 7% of work­ers were in­de­pen­dent con­trac­tors or temps; econ­o­mists es­ti­mate this num­ber will grow to 20% by 2020.

It’s true that there are many in­de­pen­dent con­trac­tors — fi­nan­cial plan­ners for ex­am­ple, or a wide va­ri­ety of con­sul­tants — who choose to work client by client, who make good wages, set their own sched­ules, pay for their own health in­sur­ance and truly choose to be self-em­ployed. But at least 3 mil­lion peo­ple, or a third of the more than 10 mil­lion con­sid­ered in­de­pen­dent con­trac­tors, are em­ployed in low-wage jobs, and they would most likely pre­fer to be regular em­ploy­ees.

Some in­dus­tries are in­fa­mous for try­ing to char­ac­ter­ize what is es­sen­tially their regular work­force as in­de­pen­dent con­trac­tors, par­tic­u­larly the jan­i­to­rial, home care and sec­re­tar­ial ser­vices, which are dom­i­nated by women and im­mi­grant work­ers. Those work­ers lose their right to union­ize, to min­i­mum wage and over­time; their bosses don’t pay into un­em­ploy­ment or work­ers’ com­pen­sa­tion pro­grams and take no re­spon­si­bil­ity for safety and health vi­o­la­tions on the job.

As far back as 1993, Sec­re­tary of La­bor Robert Re­ich and Sec­re­tary of Com­merce Ron­ald H. Brown com­mis­sioned a study to ex­am­ine the evolv­ing work­place at the end of the 20th cen­tury. It took par­tic­u­lar note of the dan­gers of the frag­men­ta­tion of legal pro­tec­tions for cer­tain work­ers: “The grow­ing num­ber of ‘con­tin­gent’ and other non­stan­dard work­ers poses the prob­lem of how to bal­ance em­ploy­ers’ needs for f lex­i­bil­ity with work­ers’ needs for ad­e­quate in­come pro­tec­tions, job se­cu­rity and the ap­pli­ca­tion of public laws that th­ese ar­range­ments of­ten pre­clude, in­clud­ing la­bor pro­tec­tion and la­bor-re­la­tions statutes.”

Pol­i­cy­mak­ers did not lis­ten then, but with app-sum­moned work­ers and those in the ev­er­grow­ing ser­vice econ­omy fac­ing the ero­sion of job pro­tec­tions that have been hard won and long prac­ticed, it’s past time to force them to pay at­ten­tion.

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