The U.S. Labor Department is scrapping a Trump-era regulation that would have made it easier for gig companies to classify drivers as contractors. The move by the Biden administration was expected, but the question remains — what’s next for gig workers?
Once the rule is rescinded, the DOL under Biden’s labor secretary nominee Marty Walsh will be positioned to decide whether federal wage law applies to gig companies.
The administration could issue a new rule, or issue more guidance on independent contractor status under the Federal Labor Standards Act (FLSA).
During the Obama administration, for instance, the agency issued guidance that analyzed the FLSA “economic realities” test for determining worker status, and encouraged the finding that “most workers” fall under the law’s employee classification.
But workers-rights supporters are pushing for broader solutions. For example, the Biden administration could adopt California’s rigid “ABC test” for worker classification — which favors “employee” status for gig workers, and which candidate Biden included in his platform.
Chris Wilkinson, former associate solicitor for civil rights and labor management at the DOL, told Bloomberg that the Department could alternatively implement guidance that mirrors that ABC test.
That Congress gave gig workers unemployment compensation in its Covid-19 relief packages both indicates, and helps facilitate, a changing landscape in the push for worker rights. There is growing talk around proposals for a third classification of “non-employee” workers that receive “portable benefits,” which are connected to the individual, rather than the employer, and so they can be taken from job to job without coverage interruption or loss of funding. Such moves could bring incremental, middle ground, changes that allow workers to remain “independent contractors” while retaining benefits.
Gig companies like Uber and Lyft are pushing for similar measures that would give drivers more job and health benefits without employment classification. The ride hailing companies, whose business costs could rise by as much as 40% if drivers receive employee status, are expected to mount a fierce lobbying battle to defend their business models. For instance, Bloomberg in October reported that the companies assembled “all-star casts of connected Democrats” for their lobbying effort. They still face a challenge in a Democratic house: for example, they vehemently opposed the Protecting the Right to Organize Act, which nonetheless passed the House this week. The law would give gig workers the right to unionize and to sue companies for retaliation for labor activities.
In other positive labor news, the National Labor Relations Board is also abandoning a Trump-era proposal that would have ended the recognition of private institution graduate students as employees under the National Labor Relations Act (NLRA), effectively banning them from forming unions. The decision to scrap the proposal makes it likely that student workers at private universities can retain their right to unionize for the rest of the Biden presidency.
The rule, which was proposed in September 2019 but never finalized, has created an air of uncertainty for graduate students across the country. like those at Harvard, who gained university recognition for their graduate students’ union in 2018 and began the bargaining process. Students at over a dozen private universities, including Harvard, have voted in favor of unionization.
The rule would have taken away the collective bargaining rights of roughly 57,500 graduate assistants working at private universities. But its ramifications would have been even broader: studies show that labor conditions within academia have only worsened in the last several decades. In 2003, researchers were already noting a steady trend of shifting teaching duties away from faculty and onto the shoulders of graduate students, who are a much cheaper source of labor. The Economic Policy Institute in 2018 reported that the shift has only accelerated: today, “universities rely heavily on graduate assistants to teach classes, grade papers and tests, and conduct research.”
Collective bargaining provides graduate students a degree of power over their employment and helps them secure better control over their working lives, such as by earning higher wages to adequately support themselves, or for gaining workplace protections like caps on workloads.
The NLRB is subject to presidential appointments, and it has consequently flip-flopped on the issue of student worker organizing depending on its partisan makeup. For instance, it granted labor rights to student workers in 2000, rescinded them in 2004, and restored them in 2016.
The move to abandon the rulemaking indicates that the board’s current three-member Republican majority, which is in its final months, is looking to triage its priorities. Democrats will be positioned to retake the majority of the five-member board in August when the term of one Republican member expires.