Last week, Washington Gov. Jay Inslee signed a new law governing ride-hailing drivers that provides them with additional rights such as sick pay and minimum pay guarantees based on the time and distance they spend on each trip. Yet, drivers won’t get the full benefits that comes with being staff members, including healthcare.
The bill, which was the result of negotiations between Uber, Lyft and the drivers, maintains the independent contract status of drivers in the state. This solution offers the flexibility that drivers are looking for as gig workers and it protects the company’s core business model.
The final result of this bill may be seen as a victory for the ride-hailing companies as it will enable them to keep labor costs under control, despite the additional costs of the rights granted. But most importantly, it may encourage other states that are embroiled in discussions to pass similar bills, like Massachusetts and Illinois, to adopt an independent contractor rather than employee approach for gig workers.
The passage of this bill comes at a very relevant moment for gig workers. The National Labor Relations Board (NLRB) may take a decision in late April about whether to change the standard for determining the independent contractor status of workers.
The “independent-contractor standard” is based on the traditional common-law agency test, which analyses all relevant factors to find out whether a contractor is “rendering services as part of an independent business.” If the NLRB were to change the standard and return to the previous interpretation, it could put more emphasis on the “economic dependency” between the contractor and the employer.
A possible modification of the standard wouldn’t mean that gig workers would automatically be classified as employees, but it could make it easier for them to prove it.
In February, the NLRB closed a public consultation on this issue and the agency received numerous submissions, including reports from other government agencies like the Department of Justice (DOJ) or from U.S. senators.
The DOJ “supports clarifying the NLRB’s definition of “employee.” It does not go as far as suggesting that the standard should be changed or reverted to the previous standard, but it suggests that more should be done to protect workers’ rights in the rise of the so-called “gig economy.” “The Division believes that the NRLB is in a position to better protect both labor market competition and the welfare of workers by adopting a sound, up-to-date, consistent approach to worker classification that adequately protects workers’ rights to organize.”
U.S. senators Braun and Burr led a group of 12 lawmakers that sent an amicus brief to the NLRB “concerned with the potential attempt by NLRB to revise the definition of independent contractor under the National Labor Relations Act. Such a revision would constitute significant overreach and circumvention of Congress.”
Other associations of retailers, bakers, truckers, builders or electrical contractors also showed their discontent with the NLBR’s intention to review the standard as independent contractor.
The NLBR’s chairwoman and most of its members were appointed by President Joe Biden what could suggest they may be more poised to adopt a worker-friendly standard. However, last week, the U.S. Senate rejected the President’s nominee to head the U.S. Department of Labor office that enforces federal wage laws, David Weil. Weil was a strong advocate during the Obama administration to police the classification of workers as independent contractors that are not protected by laws covering employees.
The stakes for the definition of independent contractor are high with senators, federal agencies and trade associations involved. Uber and Lyft may continue advocating for workable solutions in different states like the new bill adopted in Washington, but the discussion could soon escalate at a federal level.
Read more: Federal Regulator Launches Consultation to Reconsider Gig Workers Status
We’re always on the lookout for opportunities to partner with innovators and disruptors.
Learn More