NELP Report Exposes Gig Companies’ Campaign to Strip Workers of Employee Rights 

Uber & Handy have teamed up with the far right to rewrite laws across the country, denying workers minimum wage and other employee protections

New York, NY—Uber and aspiring “Uber of home services” Handy, along with other tech-companies-cum-service-providers, have been conspiring with powerful corporate allies and lobbyists to radically rewrite federal and state employment laws for their own benefit—and to workers’ detriment. Their goal: to pass policies that lock “gig” workers who find work via their tech platforms into independent contractor status, stripping them of basic labor rights and protections and allowing the companies to evade payroll taxes and worker lawsuits, according to a new report by the National Employment Law Project.

The report, titled, Rights at Risk: Gig Companies’ Campaign to Upend Employment as We Know It, was first covered by The New York Times. It reveals how powerful corporations and far-right players have come together to push policies that “carve out” or exempt workers from basic employee protections. The Goliath group of proponents includes anti-worker corporate super-lobby American Legislative Exchange Council (ALEC), e-commerce and cloud computing behemoth Amazon, hotel giants Marriott and Hilton, and political consulting firm Tusk Strategies. And Tusk enlisted Definers Public Affairs, the same group infamously employed by Facebook to conduct opposition research on and deploy anti-Semitic and racist smear tactics against its critics, promoting conspiracy theories about George Soros and attacking Color Of Change, the nation’s largest online racial justice organization. Tech giants FacebookApple, and Microsoft have lent support to the carve-out effort via the TechNet coalition, which has lobbied in favor of these anti-worker policies.

“Our report spotlights how gig platform companies are using their money and influence to rig the rules of employment against the workers who make their business success possible,” said Maya Pinto, senior researcher and policy analyst with the National Employment Law Project and author of the report. “This is also a wake-up call to the public. The changes being pushed by these gig lobbyists are bad for workers. And there’s a real risk that this erosion of labor rights could bleed into other sectors of the economy. If companies can legally get away with paying you less and eliminating your benefits simply by calling you an independent contractor, you can be certain they’re going to take advantage of that.”

In 2018 alone, the lobbying campaign managed to get gig-company carve-out bills introduced in 11 states, with six states—Florida, Indiana, Iowa, Kentucky, Tennessee, and Utah—ultimately adopting laws that exempt gig companies from payroll tax obligations and labor standards like minimum wage and hour laws and unemployment insurance benefits. In total, seven states (the six listed above plus Arizona) currently have gig-company carve-outs on the books. These efforts follow an earlier campaign by ridesharing companies, led by Uber and Lyft, that stripped away basic labor rights from platform drivers in more than two dozen states.

So far in 2019, lawmakers in West Virginia and Missouri have introduced even broader carve-out bills, using model language from ALEC, the right-wing business lobby group and “bill mill.” In these latest bills, carve-outs are no longer limited to app-dispatched workers but explicitly apply to all workers in all sectors, so long as a lax set of conditions are met.

In Texas, carve-out proponents are currently pushing an administrative rule change that would exempt gig companies from the state’s unemployment insurance laws. “The Texas Workforce Commission rule is weighed down under a cloud of corruption, and TWC needs to withdraw the rule, come clean, and be honest with Texans who depend on the agency,” said Jose Garza, executive director of Workers Defense, a membership-based organization that fights for fair, just employment for working Texans. “When this rule was first proposed, we asked to know who was behind a change that would strip Texas workers of essential benefits and lead to more misclassification in our state. We have since learned that digital platform Handy and their lobbyists were behind the rule all along, and that lobbyists representing the interests of Handy essentially wrote the rule that would eventually be proposed, despite TWC’s claims that they do not rely on outside sources.”

At the federal level, carve-out efforts that would strip away a host of labor rights, including the right to unionize and collectively bargain, continue despite a failed effort to slip a carve-out provision into the 2017 federal tax bill.

Rashad Robinson, president of Color Of Change, the nation’s largest online racial justice organization—and one of the groups targeted by Definers—said: “Silicon Valley hires smear agencies like Definers when they know they cannot win a policy debate in public. They may say they live for consumer feedback but their greatest fear is actually their own customers discovering how they hurt people. Whether Amazon, Uber, Lyft or even Marriott, these corporations fear dialogue and negotiation with the very communities they operate in and whose lives they affect—especially Black communities. And so they actively try to undermine our voices whenever they can, including hiring liars and con men to do it. I’d say they will stop at nothing in their strategy to trade corporate profits for the death of America’s middle class, but we can actually be the ones to stop them.”

The curious fact that Marriott and Hilton—the world’s largest hotel chains—are backing gig carve-outs suggests that major employers outside the gig economy also are eyeing tech-mediated labor platforms as a way to contract out more types of service work in the future. This raises troubling implications for job quality and labor relations across a range of occupations—cleaning, housekeeping, janitorial, security, landscaping, construction, home care, delivery, and transportation—where independent contractor misclassification is already rampant.

The carve-out advocacy by Marriott comes in the wake of nationwide labor strikes by its unionized hotel workers that won pay raises, protections against sexual harassment and assault, and bargaining rights over new technology and automation in the workplace—gains that could be moot if carve-outs are established and the hotel chain alters the way it dispatches workers.

NELP’s analysis shows that some 10 percent of jobs in the United States, and 20 percent of jobs projected to be added to the U.S. economy between 2016 and 2026, could be impacted by these laws. Although workers engaged by gig companies currently constitute a small portion of the U.S. workforce, carve-out policies are designed to grow their share and scale up gig companies’ business model.

Carve-out policies leave workers who find gig work via online labor platforms prone to economic insecurity and workplace abuse, disadvantage responsible businesses that pay their share of payroll taxes and abide by labor standards, shift liability onto consumers who become sole employers, and deplete social insurance systems.

Palak Shah, social innovations director with the National Domestic Workers Alliance, said: “The domestic workforce first dealt with carve-outs in the 1930s with the New Deal, so carve-out legislation is hardly new to our work at the National Domestic Workers Alliance. We will always oppose legislation that shifts inequity online, preventing domestic workers from gaining rights and protections, and that’s why we fought these legislative campaigns head-to-head and defeated them in states like Colorado, Georgia, and North Carolina. These unilateral approaches to setting the rules for the Future of Work do not work, and we’re hopeful that a worker centered approach will be part of the next chapter.”

“NELP’s new report highlights the big money fueling coordinated lobbying and messaging campaigns on behalf of gig economy platform companies to enact bills around the country that ‘carve out’ gig economy workers from employment status under workplace laws—with all the rights, protections and benefits those laws entail,” said Wilma Liebman, former chair of the National Labor Relations Board. “Importantly, these carve-outs not only erode rights and protections, but also starve governments of critical tax revenue that supports broad-based social protections. While the platform business model may fascinate, it also creates serious risks and anxieties: what does this business model, which treats workers as independent contractors, mean for workers’ economic security, what does it foretell about the changing nature of work itself, especially in the growing service sector, and what part does it play in exacerbating growing inequality and the unraveling of America’s social contract?”

Rights at Risk: Gig Companies’ Campaign to Upend Employment as We Know It


The National Employment Law Project is a non-partisan, not-for-profit organization that conducts research and advocates on issues affecting low-wage and unemployed workers. For more about NELP, visit Follow NELP on Twitter at @NelpNews.

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