US Labor Secretary Marty Walsh told Reuters on Thursday that gig workers should be treated as employees. This is a clear shot across the bow of companies such as DoorDash, Uber, and others. Gig workers at these companies have been seeking this for some time.
This follows similar moves from overseas. In February, the UK Supreme Court ruled that Uber drivers must be classified as employees of the company.
“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.
“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,” he said.
More than one-third of US workers (36%) participate in the gig economy, either through their primary or secondary jobs. On average, gig workers earn 58% less than full-time employees. More than half don’t have access to employer-provided benefits. Globally, 52% of workers participating in the gig economy lost their jobs because of COVID-19.
Walsh said the Department will have conversations with companies that employ gig labor in the coming months to make sure workers have access to consistent wages, sick time, health care and “all of the things that an average employee in America can access.”
If gig workers begin to be classified as employees, costs for gig companies will rise, pushing profits down. They will be required to offer benefits, as well as unemployment insurance. Being considered an employee guarantees workers a number of benefits, like guaranteed minimum wage and overtime, that contract workers don’t have.
In addition, this opens the companies up for additional lawsuits. For example, currently, if an Uber driver hits someone in a crosswalk the company can use the shield that they are simply a technology company and the driver was an independent agent. If this shifts, it becomes more easier to hold Uber liable. They will also have to shift their recruitment strategies.
The passage of proposition 22 in California in 2020 had been a setback in the move to make gig economy workers into employees. The ballot initiative - written by Uber, Lyft, DoorDash, and other gig employers, effectively declared ride-hailing drivers independent contractors. Prop 22 overturned previous state legislation, Assembly Bill 5, which had ordered gig companies to prove workers’ jobs were outside of their core business, in order to consider them contractors. Uber declared its drivers were not part of its “usual course” because it was a tech platform for “digital marketplaces”.
Shares of Uber fell as much as 8 percent while Lyft dived as much as 12 percent. Doordash fell nearly 9 percent and Grubhub was down 3.3 percent.
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