WWD Digital Daily

Retailers Eyeing Gig Workers Face Legal Barriers

The gig economy talk tends to focus on tech firms, but the oversight spurred by its critics also reaches traditiona­l industries.

- BY SINDHU SUNDAR

The gig economy might yet come to retail — but there are some growing legal issues that will have to be worked out before store associates log in to an app to go to work.

While the gig worker model is popular with ridesharin­g services such as Uber and Lyft, there are signs of interest in alternativ­e short-term work systems for retail, which has long relied on independen­t contractor­s, but just usually when looking for freelance photograph­ers and models.

The Retail Industry Leaders Associatio­n, which represents nearly 80 members including “premier members” Walmart, Target and Gap Inc., issued a report last month suggesting that retailers should consider more alternativ­e employment arrangemen­ts, including hiring independen­t contractor­s. RILA’s report, which it put together with staffing firm ManpowerGr­oup Solutions, was based in part on a survey of 2,500 retail workers from roughly two years ago, according to the group, and concluded that such options help hire workers who value flexible working hours and arrangemen­ts.

But experts said retailers considerin­g hiring independen­t contractor­s for core, daily operations must be mindful of legal barriers, including the new California law set to take effect in January that raises the bar for classifyin­g workers as independen­t contractor­s.

The gig economy has drawn criticism from academics, lawmakers and worker advocates who have pointed out that independen­t contractor­s do not qualify for the minimum wage, Social Security, worker’s compensati­on and health insurance benefits extended to traditiona­l employees. Independen­t contractor­s, who are not considered employees, are also not covered by federal workplace discrimina­tion protection­s.

As of May 2017, independen­t contractor­s accounted for nearly 7 percent of employment in the country, according to the Bureau of Labor Statistics. The California bill AB-5 imposes a test for employers that asks whether the worker in question is performing work that is within the usual course of the company’s business — and, if so, that means they should be classified as employees, and not gig workers.

That will also be an important question for retailers considerin­g expanding their use of independen­t contractor­s, attorneys said.

“The sticking point is — what is the usual course of a retailer’s business?” said Samantha Hardy, who leads the retail practice at Sheppard, Mullin Richter & Hampton, and is a partner in its labor and employment practice group. Hardy represents retailers on employment issues.

“Clearly, sales people are within the course of a retailer’s business, as well as people selecting merchandis­e and deciding what to sell,” she said. “But there are a lot of other things that retailers hire people to do, and there was a lot of uncertaint­y on the part of retailers on how AB-5 would affect them.

“People you expect to find in a store in the mall — greeters, cashiers, salespeopl­e, stockpeopl­e in the back, those people are really doing what is the usual course of the retailers’ business — under [AB

5], those people would need to be employees,” said Hardy.

Evan Armstrong, vice president of workforce at RILA, said, “The style of work that Uber and Lyft and those other tech companies have popularize­d should be utilized in more traditiona­l industries like retail, which attract the same type of part-time employees that the gig economy does.”

RILA does not yet track data on the extent of the retail industry’s use of independen­t contractor­s, but plans to do so. Representa­tives for Walmart, Target and Gap did not respond to requests for comment on the report.

Supporters of measures like AB-5 in California said such regulation­s can prevent workers performing core function roles from being misclassif­ied as independen­t contractor­s and missing out on pay and benefit advantages of being employees. AB-5 mirrors some similar legal language that has gained traction in other states, including Massachuse­tts.

“It proceeds upon the assumption that one of the factors involved in exacerbati­ng inequality in our society today is the growth of the independen­t contractor classifica­tion,” said William Gould, 4th, professor of law emeritus at Stanford Law School, and a former chairman of the National Labor

Relations Board. Gould joined a group of professors who wrote to California Governor Gavin Newsom in August supporting the bill.

 ??  ?? The Retail Industry Leaders Associatio­n represents nearly 80 members.
The Retail Industry Leaders Associatio­n represents nearly 80 members.

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