TOMLINSON
who rely on websites, the commissioners help companies avoid fundamental labor laws.
Federal law, sadly, is open to interpretation.
“The general rule is that an individual is an independent contractor if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done,” the IRS states. “You are not an independent contractor if you perform services that can be controlled by an employer.”
The traditional test is whether the company tells the contractor when to work, how to perform the task, decides how much to pay and whether the work falls outside the company’s normal business activities. The contractor should also operate their own business.
An example is when a company contracts a janitorial service to clean an office during nonbusiness hours for a set price. But if a company hires an individual janitor to work from 10 p.m. to 6 a.m., provides all of the supplies and supervises the work, then the janitor is not an independent contractor.
The rule is supposed to protect individual workers by guaranteeing a minimum wage and overtime as well as health and safety protections.
Digital marketplace networks, as these companies like to call themselves, insist their business is connecting a customer with an independent contractor for a fee. They consider themselves a modern-day Yellow Pages, not employers.
In practice, though, these companies set rules for when, how and where workers perform their tasks, and most importantly, determine how much they get paid and then take a cut off the top. These companies also bar workers who do not meet the tech company’s expectations.
For example, ride-hailing firms determine prices and how much the driver will take home.
The firms also set expectations for when and where the driver will work, what kind of car they drive and the expected response time. Drivers who do not conform are kicked off the network, AKA fired.
Workers claiming that they should be considered employees, not independent contractors, have made significant strides in court. Regulators in California, Oregon, New York, Alaska, the United Kingdom and the European Union have ruled in favor of workers claiming employee status.
Hence the industry’s need for regulatory relief, which the Texas Workforce Commission snuck into a new definition included in unemployment insurance regulations.
“The employment status analysis is generally predicated on determining whether direction and control could exist,” the commission said in the Texas Register. “Because marketplace platforms’ business models are becoming increasingly prevalent in our economy, clarification, through rule, of how direction and control apply in these instances is needed.”
I asked the Texas Workforce Commission where the proposed
rule originated and why it was necessary, but a spokeswoman did not respond within two business days. The commission’s proposed rule, though, allows multibillion-dollar companies to escape any responsibility to workers.
“Political appointees shouldn’t get to declare the gig economy a separate world in which workers take on all the risk, and a business’s obligations to workers vanish,” Texas AFLCIO President Rick Levy said. “When it comes to the needs of working families, it does not matter whether customers enter via the front door, the mailbox or a computer.”
This is a decision for the state legislature, not political appointees on the Texas Workforce Commission. Let the bureaucrats know what you think: TWC Policy Comments, Workforce 38 Program Policy, Attn: Workforce Editing, 101 East 15th Street, Room 459T, Austin, Texas, 78778; or e-mail to TWCPolicyComments@twc.state.tx.us.