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Gig Groups, Companies Join Forces as They See Peril in Labor Push

Sept. 5, 2019, 8:19 PM

Gig companies such as Lyft Inc., Postmates Inc., and TaskRabbit, along with some business groups see current proposals to make major changes to labor law as threats to their or their members’ business models, and they’re joining forces in Washington to fight back.

A Retail Industry Leaders Association initiative is bringing together companies and business and independent worker organizations to lay the groundwork to build a unified lobbying force with their new organization, Coalition for Workforce Innovation.

Labor policy has become an increasingly heated issue at the state and federal level. Unions and the business community are aggressively fighting over these types of efforts. Lobbying is a major part of that fight. Big-name companies like Uber Technologies Inc. and Lyft are launching a $90 million lobbying effort to fight a California measure to reclassify gig economy workers as employees.

CWI’s main target at the moment is congressional legislation, the Protecting the Right to Organize Act (H.R. 2474), a bill with heavy union backing that would substantially strengthen workers’ rights under labor and employment law. Beyond that, the organization aims to push lawmakers to update labor law to encourage the independent workforce.

For CWI-member groups such as iPSE-U.S.: The Association of Independent Workers, based in Detroit and Washington, D.C., it just makes sense to band together.

“We’re going to do much better together,” said the group’s founder, Carl Camden.

Worker groups are pushing at the federal and state level to close what they view as loopholes in federal labor laws, so businesses have responded, said Terri Gerstein, director of Harvard’s State and Local Enforcement Project. The project works with government agencies and officials responsible with enforcing workplace law to strengthen legislation and state-level initiatives.

“These efforts show the impact of recent worker organizing and activism. These companies know they’re losing control of the narrative and they’re losing public support, and this new development shows the level of corporate concern about this,” she said.

The Catalyst

Evan Armstrong, vice president of government affairs for RILA, called on various companies and groups tied to the gig economy to form a coalition after the California Supreme Court’s eyebrow-raising Dynamex Operations West Inc. v. Superior Court decision in 2018, he said. This ruling adopted a three-factor test to determine whether a worker is an independent contractor. The answer to this question has major implications for businesses as workers considered employees are eligible for overtime pay, minimum wage, and other benefits, while independent contractors aren’t.

After Dynamex, California’s Legislature started work on Assembly Bill 5, which is poised to go to Gov. Gavin Newsom’s desk for his signature if it clears the Senate. This would put into state law the Dynamex decision’s method of classifying workers.

“Around that time, RILA looked at this through a retail perspective, which culminated in this idea to bring these different stakeholders together to move forward,” Armstrong said.

“We are just starting to have conversations around what is working and what isn’t in terms of federal policy. This group will be able to evaluate policy proposals and educate lawmakers on how potential changes to existing workplace laws will impact modern workplace arrangements,” he said.

Lobbying is a big piece of that effort. The organization started meeting at the beginning of the year, holding monthly meetings after that, with a brief break during the government shutdown, said Hollie Heikkinen, founder of CWI member iWorker Innovations in Northville, Mich. iWorker Innovations is a benefits service provider for independent workers. It’s the exclusive benefits manager powering iPSE-U.S.

A.B. 5 still is on CWI’s radar, but the group won’t lobby directly on the issue and will leave it up to an individual business or group to lobby, Armstrong said, adding that CWI is laser focused on the Protecting the Right to Organize Act.

PRO Act and 2020 Focus

The PRO Act, introduced in the House and Senate on May 2, would boost workers’ rights to strike and unionize, and give the National Labor Relations Board more power to punish employers for blocking a union organizing campaign. It also would broaden the legal test for determining when companies in franchise, staffing, and other relationships should be considered “joint employers,” and therefore liable for violations by the affiliated businesses of employment and labor law. It also would expand the definitions of “employee” and “employer” to discourage the classification of workers as independent contractors.

The legislation is on unions’ and House Democrats’ agenda to get passed before the end of this term. If it’s not, it likely will be reintroduced.

Business groups refer to the proposal as a “grab bag labor wish list bill,” but it has enough lawmaker support that it’s become a major concern for some employers as a legitimate political threat to their current business models.

CWI, in some of its first public actions as an organization, sent the House Education and Labor Committee two letters expressing concerns about the bill, one in May and one in July.

Like just about every other lobbyist group based in Washington, D.C., CWI also plans to focus more on the 2020 elections going forward. So far, a number of Democratic presidential candidates have backed the PRO Act, A.B. 5, or introduced their own proposals that broaden collective bargaining rights for unions.

“Our No. 1 priority will be educating policy makers and their staff. As much as the gig economy is written about, not many people on the Hill have detailed knowledge about these things,” Armstrong said.

Businesses that invest heavily in opposing bills like the PRO Act and A.B. 5 are wasting an opportunity to engage with labor organizations to improve the workplace, Gerstein said.

“It’s telling that these companies are spending huge amounts of money to lobby instead of actually doing some analysis to figure out how to operate profitably while treating their workforce fairly.”

To contact the reporter on this story: Jaclyn Diaz in Washington at jdiaz@bloomberglaw.com

To contact the editors responsible for this story: Phil Kushin at pkushin@bloomberglaw.com; Martha Mueller Neff at mmuellerneff@bloomberglaw.com

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