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Gig Work, Contractor Status Land on EEOC’s Anti-Bias Radar

June 3, 2021, 9:31 AM

The EEOC plans to tackle discrimination and harassment faced by workers who say they’ve been misclassified as independent contractors, an issue that’s drawn more attention with the proliferation of the gig economy.

Across industries, lawsuits alleging that contractors are employees have focused on minimum wage, overtime, and other labor violations, more so than discrimination against women, minorities, and other protected workers.

Attorneys say that could change as the U.S. Equal Employment Opportunity Commission aims to participate in a multi-year, multi-agency effort to combat worker misclassification, an announcement that was highlighted in last week’s White House budget proposal.

The budget blueprint targets historical racial disparities, a central tenet of the EEOC’s mission, and President Joe Biden’s American Jobs Plan calls for up to $1.5 billion in EEOC funding over the next 10 years.

The commission would join other federal workplace agencies that have grappled with how to address misclassification in recent years, including the Labor Department, which signaled in its budget plan on May 28 that it would prioritize “ending the abusive practice of misclassifying employees as independent contractors, which deprives these workers of critical protections and benefits.”

The EEOC declined to comment on its budget proposal, referring inquiries to the White House’s National Economic Council. The White House didn’t immediately respond to a request for comment.

During the Obama administration, the EEOC indicated in its strategic enforcement plan that it would address workplace civil rights in the context of complex employment relationships that include temporary workers, independent contractors, and the on-demand gig economy.

Only employees, not contractors, can file federal discrimination lawsuits against an employer—one of many hurdles potentially misclassified workers face. The EEOC doesn’t have the authority to issue substantive rules under Title VII of the 1964 Civil Rights Act, so it can’t redefine who is an employee through regulation, former EEOC legal counsel Andrew Maunz said.

But the agency could issue guidance or advocate on behalf of misclassified workers through strategic litigation, said Maunz, now of counsel with Jackson Lewis P.C.

“If the companies don’t consider these workers employees, then they don’t have to worry about discrimination claims,” said Shannon Liss-Riordan, an attorney with Boston-based Lichten & Liss-Riordan P.C., who frequently files misclassification lawsuits against gig companies like Uber Technologies Inc. and Lyft Inc. “It’s a huge legal issue.”

‘Least Likely to Go to Court’

Workers who believe they’re misclassified as independent contractors face an uphill battle when alleging discrimination, and many of those workers are women and people of color.

Liss-Riordan is representing a group of Uber drivers in a federal court in California who are accusing the gig company of using a customer-based rating system that allegedly discriminates against Black and Latino workers. Former driver Thomas Liu originally filed a charge with the EEOC and is now pressing a nationwide class claim on behalf of non-White drivers.

Social science research is replete with evidence that customer ratings can be discriminatory, Liss-Riordan said, and employers who rely on these for decisions about job opportunity are “in really hot water if they allow customer bias to creep into decisions.”

Other examples of discrimination litigation involving contractors include cases brought by exotic dancers who’ve had to overcome the worker classification issue to proceed with harassment claims. A recent lawsuit against Delta Air Lines Inc. alleged that the misclassification of certain contingent workers has a racially discriminatory impact on Black workers.

“When employers designate employees improperly as independent contractors, they are redrawing the boundaries of where anti-discrimination law does or does not go,” said Charlotte Alexander, an associate law professor at Georgia State University, who has studied the intersection of misclassification and anti-discrimination law.

“To get access to those rights and protections, they first have to convince a court they were misclassified and only after they get over that hurdle can they begin arguing over whether they are discriminated against or not,” Alexander said.

Her study found that where misclassification happens the most often doesn’t overlap with which industries end up in court. She said this indicates that better-paid workers—who don’t fear retaliation as much, have a better knowledge of the legal system, and tend to earn more—are the ones to fight battles in court.

The people for whom misclassification might be a bigger problem, such as women, immigrants, and workers of color, are the most removed from the protections of discrimination law and may be the least likely to go to court, Alexander said.

Worker Status Tests

Another hurdle comes in the form of different worker classification tests that exist under various laws.

For anti-discrimination statutes like Title VII, courts and the EEOC apply a strict test that focuses on how much control an employer has over a worker.

By contrast, worker classification under the Fair Labor Standards Act is analyzed under what’s generally viewed as a more lenient test that analyzes a worker’s economic dependence on an employer.

“As such, in a great many cases, it is more challenging to prove employee status under Title VII and other discrimination statutes than under the FLSA,” said Andrew Murphy, a partner with Faegre Drinker Biddle & Reath LLP.

When it comes to how many misclassification lawsuits are brought, wage and hour lawsuits “far outnumber” discrimination misclassification lawsuits, Murphy said.

“Nearly every type of working relationship can give rise to a wage and hour claim—if you do the work and can show that you are an employee under the law, you are entitled to be paid as an employee,” he said in an email. When discrimination suits do arise, they tend to be brought “by single plaintiffs and thus garner less publicity than class or collective action lawsuits.”

VIDEO: App-based companies and governments are at odds over how to properly classify gig economy workers.

EEOC Action

Attorneys and academics say that while discrimination cases are harder to bring than those alleging wage and hour violations, there are many ways in which the EEOC or plaintiffs’ lawyers could sue on behalf of contractors who may be misclassified.

Veena Dubal, a law professor at the University of California, Hastings, said she can imagine the EEOC bringing disparate treatment claims against companies like Uber, like the Liu case.

She also said in the context of customer harassment, there could be a claim that the company’s practices lead to a hostile work environment. And finally she said if the pay rates drivers make aren’t uniform across the workforce to determine labor prices, that would also be a potential claim if it has a disparate impact based on race or gender.

“Workers in the so-called gig economy are experiencing impermissible forms of discrimination through the business model,” Dubal said.

The EEOC has consistently brought lawsuits alleging that an employment pattern or practice results in discrimination against a class of workers, and this type of enforcement will be a natural offshoot for employees who are misclassified, said Katherine Catlos, a partner in San Francisco with management-side firm Kaufman Dolowich & Voluck LLP.

“With a significant budget, I would expect them to include the gig workers,” Catlos said. “They could be increasing their budget to get at misclassified employees and take a different look at what is a true worker these days.”

To contact the reporters on this story: Paige Smith in Washington at psmith@bloomberglaw.com; Erin Mulvaney in Washington at emulvaney@bloomberglaw.com

To contact the editors responsible for this story: Jay-Anne B. Casuga at jcasuga@bloomberglaw.com; Andrew Harris at aharris@bloomberglaw.com

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