On Thursday, Labor Secretary Marty Walsh signaled that so-called gig economy companies might finally be forced to follow U.S. labor law and reclassify their workers as employees.
“We are looking at it but in a lot of cases gig workers should be classified as employees… in some cases they are treated respectfully and in some cases they are not and I think it has to be consistent across the board,” Walsh told Reuters in an interview. “These companies are making profits and revenue and I’m not (going to) begrudge anyone for that because that’s what we are about in America… but we also want to make sure that success trickles down to the worker.”
This is not the first move by Walsh that suggests he is taking a close look at the gig economy. Recently, Walsh indicated his top choice for the Wage and Hour chief―head of the DOL division responsible for ensuring compliance with labor standards―was David Weil, a longtime critic of Uber and other gig economy companies. Weil previously served as Wage and Hour chief under Obama from 2014 to 2017, but also developed the idea of the “fissured workplace” to explain why so many corporations today have shifted from direct employers to firms that constantly outsource work to contractors or other firms. Additionally, acting wage chief Jessica Looman has spent the past few months moving to withdraw industry-backed rules, including one that would’ve made it easier to misclassify workers as independent contractors.
Gig economy companies have thrived only because they’ve been able to spend tens of billions of dollars of venture capital innovating new (and old) ways to exploit workers. For the past decade, that’s meant taking advantage of loopholes in US labor law that allow gig companies to misclassify workers as employees, denying drivers or couriers expensive benefits like a livable wage, healthcare, or workers’ compensation. It has also meant taking advantage of loopholes in antitrust law that allow gig companies to take misclassified independent contractors and organize them to fix ride-hail or delivery prices, then turn around and claim antitrust law prohibits them from unionizing.
When those existing loopholes have not been enough to protect the grift, gig economy companies have fought in courts to expand or preserve these exploits, usually by working to deny gig workers access to things typically reserved for employees, like unemployment insurance.
And when gig companies have found themselves unable to easily take advantage of, expand, or preserve the numerous loopholes that allow them to operate each year, they have taken to writing their own laws and carrying out massive public relations campaigns to persuade voters to preserve gig company exploitation.
In California, Illinois, New York, Massachusetts, Connecticut, and most recently Canada, Uber is spearheading efforts to rewrite laws that prevent the exploitation core to its business model and bring in piecemeal benefits to stave off regulation that would reclassify contractors as employees. Across the United States, it has been working behind the scenes to strike deals with labor unions reluctant to resist its bold-faced assault on workers’ rights.
The path forward is still unclear, especially as debates rage over whether certain proposals as they’re currently constituted―such as sectoral bargaining―go far enough to close the loopholes and end this exploitation, especially as that would likely mean significantly shrinking, or altogether ending, the gig economy as we know it. Still, this is a welcome development seeing as how Biden has appointed a key labor adviser who was instrumental in the ascendance of the gig economy and its ability to legitimize exploitation as entrepreneurship.
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