Approximately 57 million people in the US do some sort of work in the gig economy. Some of them drive cars for Uber and Lyft, deliver groceries for Instacart and Doordash, walk dogs for Wag and Rover, clean houses through Task Rabbit and Handy, and manage apartment properties on Airbnb.
The market has grown quickly over the past few years, bringing in as much as $864 billion annually, according to some estimates. And with it, there’s been a lot of talk about the rights of these workers. They’ve been fighting for fair treatment for a while now; since they’re considered contractors, they don’t get benefits like insurance, worker’s comp, or paid vacation. Sociologists, labor experts, and economists have all weighed in on the issue, largely agreeing that gig workers deserve the same fair treatment as regular employees.
On April 29, the United States Labor Department offered its own interpretation on the matter. After a lawyer working for an unnamed cleaning company reached out to clarify how gig workers should be classified, the department responded in a letter that’s since been posted online. In the letter, the Labor Department said it classifies gig workers as contractors, not employees:
“Based on the facts you provide in your letter, it appears that the service providers who use your client’s virtual marketplace are independent contractors. Your client provides a referral service. As such, it does not receive services from service providers, but empowers service providers to provide services to end-market consumers.”
The letter could have huge implications for the future of the gig economy. It essentially renders gig workers exempt from the Fair Labor Standards Act, a law written in 1938 that guarantees overtime pay and a minimum wage to many who work more than 40 hours.
It’s caused plenty of disagreement. On Monday, the National Employment Law Project tweeted that the letter essentially allows gig economy companies to “underpay and overwork” this class of workers.
DOL opinion letter attempts to allow an unnamed #GigEconomy company to underpay and overwork its workers by misclassifying them as independent contractors. But if workers have all the restrictions of employees, they should get the protections. https://t.co/b6m5NFlFaF
— NELP (@NelpNews) April 29, 2019
So what’s the department’s logic? It reasoned that, because the unnamed cleaning company doesn’t pay for professional certification, licensing, or let workers expense products, they should clearly be seen as contractors. It also points out that since workers don’t have set hours or shifts, they should be free to “pursue any and all external opportunities at their leisure,” which means that the company should not be seen as the main party responsible for them.
This type of reasoning is pretty different from how the Labor Department under Barack Obama’s administration viewed the gig economy. In 2015, for example, it issued a new interpretation of the word “employ,” writing that the administration believes “most workers” should be included in the FSLA. Obama’s Labor Department called on Uber and Lyft to reconsider how they classify their workers, pointing out that one crucial detail in the debate of contractor versus employee was whether the workers are “integral,” and that drivers were, indeed, integral to Uber and Lyft.
This opinion, though, has all but been abandoned by the Trump administration, as the New York Times points out. Trump’s Labor Department largely tossed Obama’s favorable interpretations of gig workers in favor of Silicon Valley.
The Labor Department’s letter does not necessarily represent the law; the opinion currently only applies to the unnamed cleaning company that had written to the agency. But as Reuters notes, though, it “can be presented in court to boost claims by plaintiffs or defendants in cases involving similar issues.”
Public opinion can work in favor of these workers’ rights, however. Back in February, for example, grocery delivery app users were outraged to learn about allegations of tipping theft at Instacart and DoorDash, and vowed to stop using these services. This response led Instacart to revamp its tipping policy. Uber and Lyft, too, have responded to public pressure, and agreed in December 2018 to pay drivers in New York City a minimum wage of $17.22 an hour. So even if the current administration isn’t on the side of gig workers, outside pressure could still result in change.
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