Punching In: Portable Benefits for Gig Drivers Movement Revs Up

Tuesday Morning Musings for Workplace Watchers

A Mad Dash for Benefits | EEOC Overhaul Hits Big Milestones

Rebecca Rainey: States are clearing the legal hurdles around providing benefits to independent contractors and the idea is gaining traction in Congress.

Earlier this month, online food delivery company DoorDash announced that it had rolled out a new pilot project with the state of Maryland, that would allow drivers for the app to receive contributions to a savings account that could be used for health care, retirement, or paid time off. For drivers that earn more than $1,000 a month and complete more than 100 deliveries, DoorDash will contribute 4% of their pre-tip earnings into the account, the company said.

This marks the third state DoorDash has partnered with to set up a portable benefits pilot, which company CEO and co-founder Tony Xu said allows drivers on the platform to get “access to meaningful benefits without having to sacrifice” their independence.

Independent contractors aren’t eligible for traditional employment protections and benefits like minimum wage or unemployment benefits. Many businesses are also leery of offering benefits to contractors out of fear it could implicate an employment relationship, which creates new legal requirements and liabilities for an employer.

Tennesseeand Alabama enacted legislation permitting businesses in the state to offer portable benefits to contractors earlier this year. They joined Utah, which passed the first-ever state portable benefits law in 2023, as the only states that have passed laws on the issue.

But, there has been a bipartisan recognition that independent contractors do need access to workplace benefits, an issue that was laid bare during the Covid-19 pandemic when thousands of contractors found themselves ineligible for unemployment insurance.

Democrats, unions, and some independent contractors say that companies are frequently misclassifying employees as independent contractors in order to avoid legal requirements, like paying minimum wage and providing job-protected leave, that apply to employees. They argue that these workers would have these benefits if they were properly treated as employees.

This debate over the issue took center stage on Capitol Hill last week. Researchers and economists urged House lawmakers to consider changes to federal law that would make it easier for companies to offer benefits like health insurance and retirement plans to independent contractors.

“Congress can fix this,” said Liya Palagashvili a fellow at the Mercatus Center at George Mason University. “A straightforward reform clarifying that the presence of benefits should be used and should not be used in employment classification determinations would clear the way for clients or companies to voluntarily contribute to workers benefits account without the legal risk.”

Republicans have introduced legislation to establish a “safe harbor provision” for employers to provide benefits that normally would indicate “employee status” under the Fair Labor Standards Act, while still treating their workers as independent contractors.

But Laura Padin, director of work structures at the National Employment Law Project said during the hearing that portable benefits “is a misnomer” for what companies are actually offering under these programs. Pointing to DoorDash’s pilots directly, she said that the company’s 4% contribution will largely amount to about $31 a month for most drivers.

“Thirty-one dollars is not a meaningful contribution to the types of emergencies like disability or sickness that true benefits are intended to cover. And again, these savings accounts are no substitute for sure, insurance based benefits like Social Security, Medicaid and unemployment insurance, which are portable, and other insurance based employment benefits like workers comp and health insurance,” she said.

A DoorDash Inc. delivery person places an order into an insulated bag at Chef Geoff’s restaurant in Washington, D.C., U.S., on March 26, 2020.

Photographer: Andrew Harrer/Bloomberg

Rebecca Klar: The Trump administration’s makeover of the EEOC has reached new milestones thanks to a commissioner nominee and a boost from two new court orders.

The Equal Employment Opportunity Commission currently lacks quorum to vote, a necessary step for adding or removing policy items and filing most lawsuits, after President Donald Trump fired two Democratic commissioners from their roles.

If Trump’s new nominee to the EEOC, assistant US attorney Brittany Bull Panuccio, is confirmed by the Senate, Republicans will have a 2-1 voting majority. Kalpana Kotagal is the only Democratic commissioner at the EEOC after Trump’s firings.

But it may be a while before Panuccio joins the commission. Kotagal, the most recent commissioner confirmed, waited over a year to be approved by the Senate after she was nominated by former President Joe Biden.

New court orders from federal judges in Texas and Louisiana vacating portions of the EEOC’s harassment guidance and Pregnant Workers Fairness Act rules also align with steps Republican Acting EEOC Chair Andrea Lucas indicated she wants to take to revamp the civil rights agency’s work.

Both are Biden-era policies Lucas signaled she would put to a vote to rescind or modify once the EEOC had a quorum of members. Now the courts have done a big part of the work for her.

Portions of the harassment guidance vacated included protections for transgender workers. The vacated portion of the PWFA rules included requirements for companies to provide accommodations for workers seeking abortions.

The orders reflect that the courts can take action that Lucas “would like to do, but doesn’t have the authority” to pursue now, said Andrew Scroggins, a labor attorney at Seyfarth Shaw LLP.

With a Republican majority in place, Lucas will likely follow through to change the guidance and maybe even trim it down further, Scroggins added.

The same may be true for the future of the PWFA rules.

While the court ruling only vacated “abortion” as a “related medical condition” tied to pregnancy and childbirth, Lucas’s 16-page statement opposing the final rules criticized what she said she viewed as the EEOC’s overly-broad construction of the phrase, “related medical condition” from the PWFA statute.

Her statement doesn’t mention abortion, but it does say the commission misinterpreted the statute’s protections to expand them beyond pregnant women and those birthing children.

The commission incorrectly expanded the definition to include past pregnancies and the potential for future pregnancies as “related medical conditions,” leaving “almost no bounds” on what condition a female employee could cite, her statement said.

Many other terms are included in the commission’s “related medical condition” definition, such as menstruation, which could “certainly could be narrowed in the future,” said Ogletree Deakins attorney Christine Bestor Townsend.

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