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Punching In: Gig Workers, Pay Data, and a Big Bill for Employers (1)

Jan. 21, 2020, 11:01 AMUpdated: Jan. 21, 2020, 9:43 PM

Monday morning musings for workplace watchers

Cuomo ‘Combo’ on Gig Workers? | Dhillon Dishes on EEOC Pay Data | New Analysis of PRO Act

Chris Opfer: Everyone knows New York City is the center of the universe (at least before President Donald Trump moved into the White House), but for a brief moment on Tuesday business and labor advocates may want to turn their attention about 150 miles to the north. Gov. Andrew Cuomo (D) is slated to be in Albany to unveil his annual budget request, a comprehensive proposal often loaded with policy items the state’s leader wants to get done by the end of the year.

Lobbyists on both sides of the worker-classification divide say he’s likely to roll out a new legal standard for classifying workers. But others plugged in on the issue say they don’t expect Cuomo to use the budget to spell out exactly how he wants to tackle updating New York’s worker classification law.

Cuomo has been talking tough about making sure that all workers in the Empire State get the protections and benefits currently allotted to those who are classified as employees, rather than independent contractors. He’s said he wants to catch up to California, where an ambitious and controversial new law to make it harder for businesses to treat workers as contractors has gone into effect. That law, A.B. 5, is aimed at gig companies like Uber and Lyft, but it also applies to workers in a wide range of other settings who have been treated like self-employed entrepreneurs.

Here are the four options drawing the most chatter:

  • ABC: A proposal for a new “ABC” framework, based largely on the approaches used in California, New Jersey, and Massachusetts, which would require companies to jump through three pretty narrow hoops if they want to classify workers as contractors.
  • ABC-Plus: Enact an ABC test and give gig workers the right to join unions or otherwise collectively bargain. The New York AFL-CIO favors this path, but it would face big legal hurdles.
  • Third Way: Create a new, third classification for workers who are connected with customers through online platforms and give them at least some of the wage and other protections afforded to employees. Some might call this the Harris-Krueger approach.
  • ABC-Carveout Combo: Enact an ABC test, but include an exemption for gig companies and require them to provide some, but not all, of the workplace protections that employees get.

If I were a gambling man, I’d put my cash on the combo. That would give Cuomo the chance to say he’s cracking down on misclassification while also buying time for discussions to play out about what to do with Uber, Lyft, Postmates, DoorDash, and other gig companies.

Bloomberg Law’s Keshia Clukey is following the action in Albany.

Ben Penn: On Friday, a courthouse here in Washington, D.C., will host one of the most consequential oral arguments of the year for federal labor and employment policy.

The Trump administration will make its case to the D.C. Circuit Court of Appeals to allow the feds to kill an Obama-era policy requiring employers to fork over pay data broken down by race and gender. The Equal Employment Opportunity Commission has been collecting that data from businesses with at least 100 employees since last year, when a federal district court judge revived the pay collection policy.

If the appeals court sides with the government and, once again, puts the policy to rest, that raises the question: What happens to the voluminous company data the EEOC has already received?

It turns out EEOC Chair Janet Dhillon (R) pondered that possibility at a U.S. Chamber of Commerce event in November. Dhillon suggested that an appeals court ruling in favor of the Trump administration’s argument could be interpreted to mean that the EEOC wasn’t entitled to the data and, therefore, doesn’t have the authority to use it for any purpose, according to a source who attended the closed-door meeting for lobbyists and management lawyers. The source requested anonymity because the meeting was supposed to be off the record.

Dhillon was merely speculating without offering her personal view, the source said. Still, her remarks could present a conundrum, even for the Chamber’s pro-business membership. Sure, employers who’ve been sweating out the uncertainty over the fate of the EEO-1 data would be thrilled to see the information collected by the EEOC get buried along with the requirement for companies to continue reporting in future years. The business community has always despised this policy and said the data is unreliable and useless, not to mention a hassle to compile.

On the other hand, businesses may have some use for the data. They may want the EEOC to look at the figures and conclude that the data is junk—at least when it comes to determining whether a company has a pay discrimination problem—so that the agency won’t try to issue similar reporting requirements under future administrations.

The more immediate question is how will the D.C. Circuit rule? For that, Bloomberg Law’s Paige Smith has you covered; she’ll be reporting from the courthouse.

Jaclyn Diaz: Chances are good the Protecting the Right to Organize Act (H.R. 2474) will get a floor vote in February. The bill, which would amend federal workplace laws to bolster a wide range of legal protections on the job, got early and aggressive support from unions, who’ve pressured lawmakers to back it.

The bill’s architects are feeling confident, given the 220 or so co-sponsors, that it will pass without much additional whipping on their end. But that doesn’t mean Republicans and business lobbyists are going to sit on the sidelines. A new report by the American Action Forum, a conservative think tank, could be a tool they use to peel off some of the bill’s support.

A Congressional Budget Office analysis, released in December, predicted the PRO Act would cost the federal government $3 million over the 2020-24 period, if enacted, but would bring in $14 million in revenue over the same time period. The CBO said it couldn’t anticipate the number of private businesses likely to be affected by the bill, so it didn’t estimate potential costs for employers.

The AAF’s report, out Tuesday, tried to put a finer point on the business impact. It isn’t pretty.

The PRO Act, by expanding the number of businesses potentially subject to joint-employer liability, could affect 44 percent of private sector employees and lead to as much as $33.3 billion in lost annual production for franchise businesses, and put small businesses at risk, according to AAF.

Provisions of the bill that would limit classification of workers as contractors would affect 8.5 percent of gross domestic product and create up to $12.1 billion in new, annual costs for employers, the group says. New restrictions on employers’ ability to replace strikers could also result in over $1.9 billion in “total additional annual upward cost pressure,” AAF concluded.

“It is a flawed approach that promises negative consequences for the economy and the rights of workers and employers alike,” the AAF said.

Of course, the bill’s backers are likely to have their own view of the law’s potential impact, including the additional money they say it would put into workers’ pockets.

We’re punching out. Daily Labor Report subscribers can check in during the week for updates. In the meantime, feel free to reach out to us.

See you back here next Monday.

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(Updated to clarify the cost and revenue estimates by the Congressional Budget Office.)

To contact the reporters on this story: Jaclyn Diaz in Washington at jdiaz@bloomberglaw.com; Chris Opfer in New York at copfer@bloomberglaw.com; Ben Penn in Washington at bpenn@bloomberglaw.com

To contact the editor responsible for this story: John Lauinger at jlauinger@bloomberglaw.com

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