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Struggling With the Gig Economy (Part 1)

Strange Bedfellows in the Gig EconomyLyft_Car_Pink_Mustache

Recently there has bee a growing discourse around policies governing how employees working in the so-called “gig economy” should be treated for purposes of wages and benefits. It’s clear that the current safety net of American laws and corporate structures has not kept up with the evolution of new employment models, but lately it seems like everyone and their uncle is jumping into the discussion.  It’s important for CUE members and HR practitioners to note the proposed system changes and and the “strange bedfellow” alliances that are emerging as partners in working on these issues.

In November, the Washington POst reported that a letter entitled Common Ground For Independent Workers had been published on social media platform Medium.  The letter called for the creation of new set of policies that would allow “gig workers” to have work flexibility while maintaining a   level of wages and benefits akin to those enjoyed by employees working in a more traditional corporate structure.  According to the Post, “…companies in the “on-demand economy” find common cause with labor unions, and left-leaning think tanks join up with free marketeers around a proposition that seems to make so much sense that nobody could talk it down.”

Principles for delivering a stable and flexible safety net for all types of work

We offer these principles as a starting point for discussing how we can transition to a new social safety net for the workforce of today — and tomorrow:

1. Supporting both stability and flexibility is good for workers, business and society. New platforms are providing workers with the flexibility and mobility that many have wished for but not found in the traditional labor market. However, self-employed workers choosing to engage in flexible work may also encounter unforeseen work disruptions or other hardships without the protections and benefits that may be provided through full time employment. We are in agreement that flexible work should not come at the expense of desired economic security.

2. We need a portable vehicle for worker protections and benefits.Traditionally, benefits and protections such as workers compensation, unemployment insurance, paid time off, retirement savings, and training/development have been, largely or partly, components of a worker’s employment relationship with an employer. The Affordable Care Act has disrupted that model, providing more independent workers a different avenue of access to health insurance. Another new model is needed to support new ways of work. We believe this model should be:

Independent: Any worker should be able to access a certain basic set of protections as an individual regardless of where they source income opportunities.

Flexible and pro-rated: People are pulling together income from a variety of sources, so any vehicle should support contributions that can be pro-rated by units of money earned, jobs done, or time worked, covering new ways of micro-working across different employers or platforms.

Portable: A person should be able to take benefits and protections with them in and out of various work scenarios.

Universal: All workers should have access to a basic set of benefits regardless of employment status.

Supportive of innovation: Businesses should be empowered to explore and pilot safety net options regardless of the worker classification they utilize.

3. The time to move the conversation forward is now. The nature of work has been in flux for decades, and new technologies are accelerating these changes; progress on how we respond must begin immediately. Diverse stakeholders should gather to discuss how to accomplish these goals, including answering important questions such as: Who should contribute financially (and how much)? What type of organization (or organizations) should administer these benefits and protections? What type of legislative or regulatory action is required to create or enable this model while allowing for experimentation and flexibility? We believe these issues are best pursued through policy development, not litigation, with an orientation toward action in the public, private and social sectors.

Those signing the letter including think tank leaders, union officials and the CEOs and Founders of a number of tech companies including Etsy and Lyft.  The full list is show below.

Byron Auguste, Senior Fellow, New America & Managing Director, Opportunity@Work

Brad Burnham, Partner, Union Square Ventures

Laphonza Butler, President, SEIU Local 2015

Shelby Clark, Co-Founder and CEO, Peers

Maureen Conway, Executive Director, Economic Opportunities Program and Vice President, Aspen Institute

Bo Cutter, Senior Fellow, Roosevelt Institute

Chad Dickerson, CEO, Etsy

Natalie Foster, Fellow, Institute for the Future

Marina Gorbis, Executive Director, Institute for the Future

Logan Green and John Zimmer, Co-Founders, Lyft

Tracey Grose, Vice President, Bay Area Council Economic Institute

Andrei Hagiu, Associate Professor of Business Administration, Harvard Business School

Nick Hanauer, Co-Founder and Partner, Second Avenue Partners

Oisin Hanrahan, CEO, Handy

Douglas Holtz-Eakin, President, American Action Forum

Sara Horowitz, Founder and Executive Director, Freelancers Union

Eli Lehrer, President, The R Street Institute

Sheila Lirio Marcelo, Founder, Chairwoman and CEO, Care.com

Apoorva Mehta, CEO, Instacart

Lenny Mendonca, Director Emeritus, McKinsey & Company

Michelle Miller, Co-Founder, Coworker.org

Greg Nelson, Former Special Assistant to the President and senior advisor, National Economic Council, The White House

Tim O’Reilly, Founder and CEO, O’Reilly Media

Satya Patel, General Partner, Homebrew

Ryder Pearce, Co-Founder and Chief Community Officer, SherpaShare

Libby Reder, Freelancer and former Corporate Responsibility leader, eBay

Carmen Rojas, CEO, The Workers Lab

David Rolf, President, SEIU 775 and President, The Workers Lab

Simon Rothman, Partner, Greylock Partners

Part two of this post will cover additional efforts and reports that have been issued around the gig economy including a suggestion that the Department of Labor should create a new classification of employee to cover those working this way.

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Week 1 – DOL Persuader Rule Update

  • December 11, 2015

Persuader Rule UpdatePersuader

As I’m sure you aware by now, the Department of Labor (DOL) surprised a lot of people earlier this week when they sent the long-delayed persuader rules to the Office of Management and Budget (OMB, thereby indicating their intent to implement some version of the new rules in March 2016. The new rules would require employers to report more details on some provisions of their labor relations.

As first mentioned here when the story broke a few days ago on Politico Morning Shift when the Labor Department sent its long-delayed “persuader rule” to the Office of Management and Budget, according to several people familiar with the matter, including a senior administration official meaning that the proposed regulation has moved one step closer to implementation.

A key provision in the final rule would narrow the range of activities exempt from public disclosure under the Labor Department’s “advice exception.” …

But the Labor Department concluded in 2011 that its “advice exception” might be overbroad, noting that “the consultant may have devised and orchestrated certain, or even all, aspects of activities with a direct or indirect object to persuade employees about their rights to organize and bargain collectively.” OMB review is a key prerequisite for finalizing the rule. In its unified agenda released last month, the Labor Department said it hoped to finalize the regulation by March.

We’ve placed some additional links containing more details on the rules changes and how they could potentially impact employers in the CUE Weekly newsletter which is going out today, but here are some highlights from those resources for anyone who doesn’t receive the newsletter, but wants to learn more.

From the Littler Labor Blog:

This broad interpretation would have a drastic impact on the confidential nature of the attorney/client relationship, as it would expand the types of union-related activities that would trigger reporting requirements from both employers and law firms. Small employers would be at a particular disadvantage, as they often lack in-house counsel to assist with the LMRDA’s reporting requirements.

From Labor Relations Today, regarding possible legal challenges to the new rules:

Not surprisingly, the final rule is not without its critics, and there has been some speculation that DOL has taken its time in order to bolster the rule against potential legal challenges. Specifically, critics claim that the proposed rule is improper because it effectively writes the advice exception out of the statute. Moreover, the American Bar Association and the Association of Corporate Counsel assert that the proposed rule is also inconsistent with the rules of professional conduct pertaining to lawyer-client confidentiality. They and others believe that the proposed rule forces lawyers to disclose privileged attorney-client information and that it will discourage employers from seeking legal assistance during union organizing campaigns.

Opponents also claim the new persuader rule will place enhanced burdens on employers to comply, and they take exception to the DOL’s estimate that compliance with the rule will only cost all employers and their lawyers about $826,000 a year. Indeed, others project the increased burden from the narrowing of the “advice exception” to cost employers over $200 million a year, with a former chief economist at the DOL estimating that the new rules will cost approximately $60 billion over a 10 year period.

At the moment, it is unclear what the final rules will look like, but we have already started discussions with CUE experts about developing guidance for CUE members based upon what is known. We’ll have more information on this in the coming weeks here on the blog and via direct communication with members to assist you in preparing for these changes, if they are implemented.

 

Breaking: DOL Persuader Rules Moving Ahead

  • December 8, 2015

Persuader Rules Moving AheadDOL

According to the featured story on Politico Morning Shift today, the Labor Department sent its long-delayed “persuader rule” to the Office of Management and Budget, according to several people familiar with the matter, including a senior administration official meaning that the proposed regulation has moved one step closer to implementation.

A key provision in the final rule would narrow the range of activities exempt from public disclosure under the Labor Department’s “advice exception.” …

But the Labor Department concluded in 2011 that its “advice exception” might be overbroad, noting that “the consultant may have devised and orchestrated certain, or even all, aspects of activities with a direct or indirect object to persuade employees about their rights to organize and bargain collectively.” OMB review is a key prerequisite for finalizing the rule. In its unified agenda released last month, the Labor Department said it hoped to finalize the regulation by March.

Check out the story on Politico here.

The rules were originally proposed in 2011 and have been dragging their way through the government bureaucracy since then. We’ll keep you advised of any new developments.