Things don’t always get done in Albany on the first try. Or the second, third or fourth, for that matter. But some are hoping that after a failed start at the end of this past legislative session in June, state lawmakers will be ready to seriously consider updating employment laws for the 21st century.
The issue at hand is the classification of independent contractors, as labor organizations fight to have gig economy workers like Uber drivers and Postmates delivery cyclists classified as full employees – along with the many other jobs, like nail salon workers, that can fall under the independent contractor classification. As more work moves toward the gig economy, some labor advocates argue that the definitions of employment ought to change so that those workers can have the labor protections that others take for granted, including having a minimum wage and earning overtime pay.
The companies that employ those gig workers argue that their workers ought to be able to get some benefits without being classified as employees, emphasizing that workers enjoy the flexibility of working for different platforms and choosing their own hours.
California recently passed Assembly Bill 5, or AB5, a law that codifies a 2018 California Supreme Court decision that would classify workers using what’s called an “ABC test.” Under the test, workers would have to be free from the control of their employer, doing work outside the usual course of business of an employer and be engaged in an independently established business in order to be classified as an independent contractor. For companies like Uber and Lyft, it has been estimated that the cost of classifying drivers as employees in California could be around $500 million and $290 million, respectively.
In November, New Jersey has hit Uber with a $650 million lawsuit alleging the company has been misclassifying its workers as independent contractors. In comparison, it may seem that New York is moving more slowly to determine the rules of the new economy. But as the California law faces a backlash, people on different sides of the issue say that New York has a chance to nail down the right approach to affording gig workers and other independent contractors more labor protections. If only those parties could agree on what the right approach is.
“Everybody wants to hit the ground running come January, and I think we’re all on that path now to figuring out how to address this so that these workers, in fact, are treated as employees,” said Mario Cilento, president of the New York State AFL-CIO.
In California, Uber, Lyft and DoorDash said they plan to spend a collective $90 million on a ballot measure against AB5 in 2020. Whether or not efforts to combat a similar bill in New York would rack up such a hefty tab, the factions on either side of this issue are already forming and gearing up to have it out next year.
On one side is Flexible Work for New York, a business coalition that includes app-based companies like Uber and Lyft. The group points to existing programs that could be expanded to grant independent contractors more benefits without reclassifying them. “We’ve already seen New York be a leader and take successful programs like The Black Car Fund, which provides drivers across the state with free or discounted benefits like medical, vision and dental, and workers’ comp,” said Christina Fisher, the Massachusetts and Northeast executive director of the tech executive network TechNet who also acts as a spokeswoman for the Flexible Work coalition.
Opponents of the ABC test also claim that what gig workers really value is flexibility in their work schedule. A bill like AB5 doesn’t necessarily stop gig platforms from offering their workers a choice of when and where they work, but companies might choose to cope with the cost of complying with AB5, for example, by capping workers at off-peak hours or in less busy markets.
On the other side of the issue is the NY Do It Right Employment Classification Test (DIRECT) Coalition, which brings together groups like the New York Taxi Workers Alliance and 32BJ SEIU to advocate for an ABC test in New York.
At the end of the previous session, the debate kicked off in Albany with the introduction of the Dependent Worker Act, a bill sponsored by state Sen. Diane Savino and Assemblyman Marcos Crespo that would create an employment classification for gig economy workers and grant them the right to organize and collectively bargain. The bill didn’t pick up any momentum, and garnered criticism from labor and business groups alike.
"There's sort of this assumption that someone has to be an empoloyee in order to get benefits. That's not the case." - Arun Sundararajan, professor at New York University's Stern School of Business
After the session ended in June, state Sen. Robert Jackson and Assemblywoman Deborah Glick introduced a bill similar to AB5, which would reclassify many independent contractors as employees using the ABC test. Jackson emphasized that his bill also applies to those who wouldn’t be considered a “gig worker,” such as home health aides, adding that Albany could very well address this issue with a package of legislation that might incorporate measures introduced by Savino and Crespo as well.
In California, some have criticized AB5 over carve-outs for specific professions. Freelance writers, for example, are exempted from the ABC test but are capped at writing 35 pieces a year per employer, which some freelancers say will force them to try to publish at many more outlets than they already do. The bill by Jackson and Glick does not yet contain any carve-outs, so it’s not clear how it would treat other professions, but supporters of an ABC test in New York say they’re aware of the criticisms of AB5’s exceptions and are considering how to improve a New York version.
Crespo has said that he and Savino are working on new legislation that may move away from their proposed dependent worker model and consider a more “workable” ABC test for New York, while Savino has maintained that collective bargaining rights should be a part of any solution. Crespo and Savino did not return requests for comment for this story. Cuomo has not come out in favor of an ABC test, but has suggested that he favors classifying more gig workers as employees, and doesn’t want to fall behind California. The governor’s office also did not respond to a request for comment.
Many maintain that an ABC test is not the only way forward for New York’s gig workers, however. “There’s sort of this assumption that someone has to be an employee in order to get benefits. That’s not the case,” said Arun Sundararajan, a professor at the New York University’s Stern School of Business. “You just need a funding portal that funds the benefits for different work arrangements.” Others have proposed a portable benefits program, while having platforms contribute different amounts to workers’ funds relative to how much work they do for each employer.
One supporter of such an arrangement is Oisin Hanrahan, co-founder and CEO of the home services startup Handy, who also advocates for reclassifying gig workers as full-time employees, but only for people who work more than 25 hours per week for a single platform. That number – 25 hours – is just a starting point for discussion, he said. It’s entirely possible that companies would skirt reclassification by limiting workers to fewer than 25 hours per week.
Jackson acknowledged that the gig worker issue wasn’t likely to arise much in discussion during the Democrats’ presession retreat in Albany on Dec. 9 and Dec. 10, taking a back seat to larger issues, like housing, Medicaid and criminal justice. But with a long session ahead, the question of how to treat independent contractors is at least gaining steam as a debate that ought to be had.
“It comes in the context of a national discussion about the power of technology companies and the status of the American worker in the midst of this growing income inequality crisis the country faces. And I think state legislators are looking for the opportunity to provide solutions for that,” said Larry Engelstein, secretary-treasurer at 32BJ SEIU – a member of the DIRECT Coalition – who is leading efforts in Albany on this issue. “The fact that it happened in California obviously puts wind in the sails of others, to see that it can be done and that the threats of the platform companies to stymie it were not effective. And that should help us to bring the effort to a fruitful conclusion.”
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