Can Gig Workers Take Advantage of Independent Contractor Status?

Striking Drivers Monday in Los Angeles

Washington        At Georgetown University Professor Joseph McCartin showed some bite-sized clips from “The Organizer” documentary and followed up with questions he posed, as well as a variety that came from the audience.  One former union brother launched a rant that bemoaned the loss of workers’ weapons dating back to the passage of the Taft-Hartley Act curtailing unions since 1947, more than 70 years ago.  Secondary boycotts were outlawed, no-strike agreements became standard, dues provisions became a matter of state legislation crippling income for many unions, and the closed shop was made illegal.  His message stated plaintively was that unions and workers needed to break the law to have power.

It wasn’t a question, so there was no need to provide an answer, though I used it as another opening to advocate for organizing the growing number of informal workers proliferating both developed economies and dominating job development in emerging national economies globally.  Reading about the efforts of Uber, Lyft, Handy, and the host of other app-based tech companies in the so-called gig economy to go around various state and federal classifications of their work force as independent contractors rather than employees started me thinking about his rant from another perspective.

Here is what the companies have been doing pretty successfully according to a recent report by both the New York Times and the National Employment Law Project.  In the legislation that Uber and Lyft backed to legalize their business, they often sought provisions indicating that ride-hailing drivers are contractors. About 25 states have now enacted such provisions, known as carve-outs. In other states, like Texas most recently, Uber and Lyft worked with a broader group of companies to have most gig workers who are dispatched through digital platforms, not just drivers, classified as contractors.

Without clear federal protections and preemptions, it’s the same state by state anarchy that we find in minimum wages, public employee bargaining, and a host of other worker protections.  None of that is good for workers, but I wonder if there is an unintended consequence of this legislative attack on workers that could be a potential organizing opportunity?

My Georgetown interlocutor called for workers to “break the law.”  Is there potential for more innovative and dramatic action when workers are in fact no longer covered by laws that regulate workers?  An independent contractor is by definition, even if inaccurate, independent.  Restraints and regulations for workers, correctly classified as employees and finding themselves covered by the National Labor Relations Act, prescribe the avenues of action for their organizations.  For groups of workers who are not employees, such restrictions melt away.

Years ago, our union, Local 100 United Labor Unions, successfully organized garbage truck laborers in New Orleans, Dallas, and other cities who were employed by city garbage services or contractors through temporary employment agencies as casual laborers.  There is in fact an NLRB test for allowing such workers to achieve elections and bargaining rights.  As casual and temporary laborers they were similar to independent contractors, and we flipped their powerless on the companies during a stalemate in bargaining, when the majority didn’t “feel” like going to work in July and garbage wasn’t collected and began to pile up.  Was it a strike?  No.  There was no mandatory requirement or guarantee for work or hours given to these hoppers.  They could come and go as they chose.  We finalized the contract at 11pm on that Friday night more than doubling wages making them perhaps the highest paid garbage laborers in the country and the subject of a front-page story in the Wall Street Journal.

If “gig workers,” using classic organizing methodology coupled with social media networking, could be organized to act collectively, then the repertoire of potential tactics and strategies available for such workers in states, where the companies have now successfully and sneakily had them declared as independent contractors and not employees, are as wide open as the wild west again.

A news item is flashing in from the West Coast in fact:

…drivers are on strike in Los Angeles, protesting a 25-percent cut to their pay per mile. Hundreds of Uber and Lyft drivers in Los Angeles went on strike at 12:01 a.m. Monday, shutting off their apps for 25 hours to protest Uber’s recent 25 percent cut in per-mile pay in their area.

If any workers dispatched by an app in Texas and some other states is now an independent contractor, then if enough workers turn off their apps or simply don’t respond, a company could be crippled until it conceded.  It wouldn’t be easy, but where there is no law, there is also worker opportunity for collective action.

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Los Angeles Living Wage Move Might be a Game Changer for Some

 Members of Unite Here Local 11 in the Los Angeles City Council chambers on Tuesday before the Council voted to increase the city’s minimum wage from $9. Credit Jenna Schoenefeld for The New York Times
Members of Unite Here Local 11 in the Los Angeles City Council chambers on Tuesday before the Council voted to increase the city’s minimum wage from $9. Credit Jenna Schoenefeld for The New York Times

Little Rock       Lower wage workers might not be reading the paper, but it won’t take long before the word gets to everyone that Los Angeles, the nation’s second largest city, just took a giant leap forward by almost unanimously passing an ordinance to raise wages from $9 per hour where they stand now to $15 by 2020.  They join Seattle, San Francisco, and Emeryville, California in the Bay Area in moving the needle forward.   For some, and maybe for many, this could be a game changer.

Besides raising wages, the LA move knocks down some other barriers as well.  The wage is indexed to inflation so even after 2020, it will “keep giving” and stay up with the economic times.  There might just be a knife, or at least a pinprick, as well in the heart of the tip-regime for servers, which would be huge in changing the culture of the workplace for restaurants, coffeehouses, and similar locations.  California is one of a minority of states, eight to be exact, that do not allow a sub-minimum or tip-credit wage, so literally all boats will rise to $15, rather than just some.  The restaurants are already whining that they want to be able to add a “service charge” to help pay for the increase, and if they are successful, that will be an even deeper plunge into the heart of the servile versus service tipping culture, because the customers will get the message even more clearly that they are being asked to directly pay the wages of the restaurants’ workforce.  Only the rich and Hollywood big spenders are going to willingly agree to essentially pay twice.  This is almost as exciting as living wages!

Will it cost jobs?  Will it raise prices?  My answer would be “maybe, but….”

Most studies have established that the job loss numbers will be minimal to marginal.  In places dominated by the service industry, they can’t move, so they have to stay where the customers are.  In other lower wage jobs, like small manufacturing, warehousing, and the like, most of them have already moved out of Los Angeles into the Imperial Valley or Nevada where land costs are cheaper.  Others need to be close to the port corridor so for them it’s location, location, location as well.  The more interesting question for Los Angeles and other cities that take the plunge will be the impact on “wage compression,” as it’s called:  will wages between $9 and $15 also push up towards the $6 number in coming years in order to hold onto valuable staff that are now being paid $10, $12, or $14 and told to like it and they’re lucky not to be at $9?  This will be an important and interesting fight for labor in Los Angeles, so well worth watching.

That’s jobs, so how about pricing?  The nice thing about an area-wide increase like this one is that everyone is in the same stew, so there is no competitive disadvantage to raising prices to reflect real costs as opposed to the problem that places like our own Fair Grinds Coffeehouse face.  The fact that we are fairtrade only and therefore pay a premium for our coffee that is many multiples higher than all of our competition does not mean that we can charge the true price for a cup of coffee.  In Los Angeles, prices will rise to some level, but luckily they are rising in reaction to wages, rather than this being Buenos Aires where prices are rising and wages are stagnant.  We could all live with this and in fact the New York’s, Sydney’s, London’s, and elsewhere that prices seem sky high while people continue to stream in prove something as well.

The Lakers and Dodgers might not be all that anymore, but the Los Angeles City Council is a team worth watching and rooting for!

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The Expendables – Minimum Wage

 

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