In rare good news today,
we've learned that the Biden
administration has canceled
a signature Trump era rule that
would have allowed for
companies to reclassify workers as
independent contractors.
This is so important guys,
because if you take a look at what
has happened in California after
the passage of Prop 22,
you can really understand and
grasp how disastrous this
Trump era rule would have been for
workers across the country.
Now the Biden administration
rescinded the pro-business
regulation without replacing it
with a new interpretation of when
workers can function as independent
contractors and when they must
be be classified as employees under
federal law, who are entitled to
minimum wage and overtime pay.
So the reason why it's a problem to
just allow for these businesses
to reclassify workers willy nilly
is because if they can reclassify
you as an independent contractor,
you don't get many of the on
the job protections that typical
employees get, things like workers'
compensation, things like,
in some cases, health care, right?
The benefits that workers typically
get as part of the job,
independent contractors don't
get those benefits.
Now, Jessica Looman who is with
the Department of Labor for
the Biden administration said that
the misclassification of employees
as independent contractors presents
one of the most serious problems
facing workers today.
We are committed to continuing
to combat misclassification and
we're particularly focused in
sectors where we know workers
are vulnerable and
violations are rampant.
She also says that Trump's
simplified test for determining
employee status would have,
frankly, resulted in more workers
potentially being classified as
independent contractors instead of
employees, which means that they
would not have had the protections
of the Fair Labor Standards Act.
I can't underestimate, and
I don't want you to underestimate
how good this news is.
If you are a worker in this
country, and I'm sure most of you
are, this is fantastic news.
And I would encourage
the Biden administration and
the Labor Department to go even
further, to offer more protections
for workers, including
people who currently are classified
as independent contractors.
Now, let's also talk a little bit
about what happened in California
so you can understand why workers
in other states have really
dodged a bullet here.
So, in California,
these app based employers, and
I'm talking about Instacart,
Uber, Lyft, all of those types of
companies, fought aggressively to
pass something known as Prop 22.
And Prop 22 would allow for
them to reclassify workers as
independent contractors.
They spent quite a bit of money
to get this done.
And unfortunately that ballot
initiative did pass, and now
workers in California are suffering
the consequences of it.
Let's take a look
at this video because I think
it gives you a good idea
of just how disastrous it's been.
>> In California, gig economy
companies have written a new law to
suit themselves, spending the most
money ever on a California ballot
proposition, passing last week with
58% of the vote.
Companies like Uber, Lyft and
Instacart spent more than $200
million to gather support for
Proposition 22,
which exempts them from a 2019
law that would have turned their
drivers into employees.
Some labor experts worry that this
is the beginning of the end of
worker protections.
>> Prop 22 is probably the most
dangerous labor law that has has
been passed or
voted on in my lifetime.
They've sort of taken a desire that
companies have had for,
since capitalism began which is to
keep labor costs as low as possible
>> What drivers don't get is paid
time off, sick days, or
unemployment insurance.
That could save these companies 20%
on employee costs.
And as independent contractors,
legal challenges will be more
difficult than they are for
employees.
Steve Greg says he doesn't feel
protected.
>> I feel manipulated and
exploited, I don't feel spoken for.
>> Greg did 16,000 rides as a full
time driver for Uber and
Lyft until the pandemic hit.
>> I love the work because I just
fell in love with
the human race doing this, and
I stayed a driver for a while
despite the decreases in pay.
>> He says that Proposition 22 will
make it impossible to
earn a living driving full time.
>> They're trying to push it down
into a minimum wage job.
You should get paid by tips.
>> He's right about that.
And unfortunately, after Prop 22
passed, many of the drivers who
were promised all sorts of perks
and benefits found themselves
getting quite the opposite.
So as I mentioned earlier,
being able to reclassify workers as
independent contractors means
that they don't get many of
the protections that ordinary
employees get.
And let me also be clear about
one thing.
I mean, ordinary employees in
the United States,
it's not like they're enjoying
a great work environment right now.
Obviously, we need to do more to
increase the protections but
also the power of workers in
workplaces across the country.
Now, putting that aside for now,
let's talk about the fact that they
don't get workers' compensation if
they're reclassified as
independent contractors.
In the case of these rideshare
apps, remember,
we're talking about employees who
are using their own vehicles and
they're paying for their own gas.
They're not being reimbursed for
their gas.
And that's another issue.
They were promised by these
companies before Prop 22 passed
that if it passes, you could get
this we're going to look out for
you, and that's not what happened.
Ben Valdez, who's a gig worker in
California, said a lot of drivers
were duped because they expected
they were magically going
to be able to qualify for benefits
that the companies made it sound
like they were going to pay for up
front and that drivers were going
to be getting reimbursement for
the mileage.
They didn't.
In fact, Valdez also says,
I've had maybe three or four nights
where I literally made $4.
So, some of you might wonder,
how is that even possible?
Well, under this law, Uber gets to
avoid paying their workers when
they do not have someone in their
vehicle.
So, if they're on the road looking
for someone to give a ride to,
they're not getting paid for
that time.
They only get paid for
the rides that they give.
Also, a study by labor economist at
the University of California,
Berkeley, in October of 2019 found
that Prop 22 guarantees a minimum
wage of just $5.64 an hour, as
only engaged time is accounted for
in the wage calculations.
And one other graphic because it's
important for you guys to know all
the details here.
Shortly after Prop 22 passed,
several gig apps announced fees for
customers in California would
increase to cover the cost of Prop
22 benefits after several of
the apps claimed prices
would hike if Prop 22 didn't pass.
So they're facing some legal
consequences for that lie, because
I'm sure that that persuaded some
consumers in California to vote in
favor of Prop 22 thinking that they
wanted to keep the costs of using
these services low.
But at the end of the day,
these rideshare companies decided
to hike the prices up anyway.
So when I say that the Biden
administration made the good move
here, I really do mean it.
But I'm still uncomfortable
with where we're at.
The Labor Department's decision
here is important, because they
effectively prevented a Trump era
rule from taking effect.
But it's not enough.
We need to do more to ensure that
what happened to workers in
California doesn't happen to
workers across the country.