Welcome
Bloomberg Law Analysis

ANALYSIS: Gig Worker Battles Poised to Outlast Pandemic

May 11, 2020, 9:56 AM

Covid-19 and the economic downturn have forced many gig workers to take on risky, difficult work, and has forced many others out of work altogether. But the crisis also has positioned gig workers—those currently working and those who are not—to win greater employment protections and benefits in the future.

Fights over gig workers’ classification have been under way for as long as there has been a gig economy. The debate impacts a host of issues such as wages and benefits, liability for injuries caused by gig workers, and protections from discrimination.

The Covid-19 pandemic paused the immediate legislative fight at the state level over worker classification. But the debate will likely intensify once state legislatures turn back to this issue, and they will be operating against a new backdrop of federal, local, judicial, and business actions taken during the crisis.

Legislative Developments

Before the crisis, California’s AB 5 went into effect on Jan. 1, imposing a three-part test to make it more difficult for businesses to classify their workers as independent contractors. This legislation has been fraught with conflict, as companies—and even some workers—have fought to amend it though the courts and the legislative process.

Several high-profile cases are pending, such as a May 5 suit by the state of California against Uber and Lyft to enforce AB 5, and an Uber and Postmates case to block application of the law to their drivers. In the meantime, courts are continuing to hand down decisions relating to AB 5.

On the legislative side, over 40 bills have been introduced in California’s current legislative session, indicating a strong desire to amend the state’s legislative landscape. Despite Covid-19, the huge impact of this law on the state’s workers and large technology companies will ensure that courts and state legislatures continue to discuss amendments for the foreseeable future.

Other states also were taking legislative steps to consider benefits for gig workers prior to the Covid crisis: New Jersey and Washington have pending bills, Wisconsin established a task force, and New York was planning to create a task force. Although the crisis has—or likely will—derail states’ plans for this year, they are unlikely to be abandoned for good. There are also signs of localities stepping in during the interim, trying to protect certain workers during the height of the crisis.

On the federal level, the House passed a bill earlier this year that mirrors the three-part test of AB 5, but there is little hope that it will pass in the Senate. Certain independent contractors were included in the CARES Act, which is supposed to provide them with specific unemployment benefits during the Covid-19 crisis, but implementing the bill remains a challenge in many states. Federal debates about gig companies and workers will likely continue as Congress considers additional stimulus bills.

Court Battles Wage On

Despite physical courtroom closures, neither parties nor judges are expected to slow down litigation on worker classification issues any time soon.

California’s AB 5 is not the only subject of ongoing gig worker litigation. So far, this year’s gig driver class action filings are on pace to end up close to 2019’s filing numbers, indicating that the Covid crisis has not yet caused a decrease in filings. The fight over arbitration in these cases is also still under way and unsettled, although Uber and Lyft will not be able to use arbitration agreements as a shield in the case filed by California. Federal courts in Massachusetts and the California’s Northern District recently issued different interpretations of the “interstate transportation worker” exemption to the Federal Arbitration Act, impacting which drivers can potentially get out from under their arbitration agreements.

In a particularly timely case, the Pennsylvania Supreme Court soon will decide whether picking up gig work, like driving for Uber, disqualifies someone from receiving unemployment insurance. Although argued back in September, this ruling could be especially significant given the current levels of unemployment.

Coronavirus-related litigation has sprung up as well. Plaintiffs in at least six cases have filed emergency motions for a preliminary injunction to classify gig drivers as employees to help them obtain certain benefits during the crisis. (As of this article’s publication date, none have been granted.) Consumers in New York also have filed a class action against restaurant delivery services GrubHub, Doordash, Postmates and Uber Eats, accusing them of antitrust violations related to price fixing and monopolization during the crisis.

The Future of Gig Work

The important role of gig workers during the shutdown has pushed some companies to provide gig workers with certain benefits—like employer-provided paid sick leave, a child care stipend, and personal protective equipment—that seemed out of reach for workers before the crisis. These benefits help the workers, and can bring a boost in retention to the businesses, but they also make gig workers look a lot like employees.

Those steps could signal the start of fundamental changes to the gig economy. Pandemic-related benefits give gig workers a powerful foot in the door in the worker classification fight: By providing even temporary benefits, a company is exercising control over a worker’s environment. That control is a key element in the employee/independent contractor distinction. The more companies exercise that control, the more gig workers look like employees, and the more willing courts will be to treat them like employees.

Not everyone is on board for reshaping the gig economy.

A Republican-backed plan would create a “safe harbor” for businesses that provide increased benefits during the pandemic, allowing companies to increase worker protections without endangering gig worker status. But, as walkouts become more common and groups like Gig Workers Rising gain prominence, it’s clear that gig workers won’t let the benefits and protections they’ve won during the pandemic disappear without a fight.

If you’re reading this on the Bloomberg Terminal, please run BLAW OUT <GO> in order to access the hyperlinked content.

To read more articles log in. To learn more about a subscription click here.