Pandemic Intensifies Fight Over Ridesharing Worker Benefits
A California judge recently struck down Proposition 22, a measure passed last year in the Golden State which would have exempted “gig” companies like Uber and Lyft from having to classify their drivers as employees. In 2020, Uber and Lyft spent more than $200 million in support of Prop. 22 in an effort to keep their right to classify drivers as “independent contractors.”
Today, an estimated 59 million of the nation’s 157 million workers are in the gig economy, according to survey data from Statista. Gig workers are typically in the service sector, classified as independent contractors, and do not receive workplace benefits.
The gig-worker business model is well known for not providing a safety net for workers. Gig companies like Uber, Lyft, DoorDash and Instacart prefer to classify their drivers as independent contractors because it exempts them from offering traditional unemployment benefits, providing health insurance or contributing to their employees’ Social Security or retirement plans.
Since the onset of the pandemic, some companies that use gig workers have tried to strike a middle ground by offering token benefits like discounts on car maintenance, healthcare subsidies, accident insurance and minimum pay while passengers are in their car. But many argue that these benefits simply don’t go far enough, and still leave gig workers exploited and maltreated.
“Millions of gig workers are being denied basic workplace benefits that have formed the foundation of our country’s labor laws for more than 100 years,” said John H. Chuang, CEO of the workforce solutions and global staffing firm Aquent (www.aquent.com). “Now, with the rise of the gig economy, there is a corresponding rise in corporate greed as gig companies continue to defy the law by misclassifying their workers as independent contractors to avoid paying benefits. Gig workers should not have to choose between benefits and flexibility, and companies need to stop treating America’s extended workforce as second-class citizens.”
Many of these workers will face a new dilemma next week. According to a report from the Century Foundation, an estimated 4.2 million gig workers will lose federal benefits when the government ends Pandemic Unemployment Assistance (PUA) on Labor Day.
But plenty of gig workers already lost PUA (Pandemic Unemployment Assistance) after 19 states cut off benefits early, arguing that it disincentivized job seeking. The Century Foundation report, however, has found “no evidence” of increased hiring in those states. With the expiration of PUA across the country, gig workers have next to nothing left to fall back on.
Congress has extended pandemic unemployment benefits twice already, but there are currently no official plans from congressional leadership to extend the programs or introduce new legislation in time to avoid an interruption in relief.
In May, President Biden canceled a Trump-era rule supported by the gig companies that would have made it easier for them to classify workers as contractors. Biden’s move was an attempt to apply a more open interpretation of what it means to be an employee.
But interpretations like Biden’s will continue to be debated and challenged in the years to come. Stanford Law Professor and former chairman of the National Labor Relations Board, William Gould, said in a recent interview that “given the difficulties involved in reaching any kind of compromise, it's likely that they'll [gig companies] start over again and we'll have more of these ballots, more of these initiatives, more campaigns, more expenditures, more litigation.”
As the debate over worker classification continues, it appears that a satisfying resolution to this issue is a long way off.
