Workers’ rights advocates called on the Texas Workforce Commission to abandon a proposed rule that would exempt gig economy contractors from unemployment benefits. They say the rule was crafted by industry lobbyists and could encourage businesses to adopt online-only models to dodge state taxes for worker benefits.
The rule, which passed on an initial 2-1 vote in December, exempts employees of online-based firms like Uber, Lyft and TaskRabbit from state benefits for unemployment insurance. It redefines employment for these workers, who are often in control of when and how frequently they work and don’t have the same requirements as traditional contractors.
At a press conference Tuesday, the Workers Defense Project and the Texas AFL-CIO said the Texas Workforce Commission’s rule could mean millions of online-based contractors in a growing labor sector will go without benefits, as the rule change could inspire others to abandon a brick-and-mortar business model to cut costs.
“That’s why we’re taking a stand now, because of the significance that it has on the lives of millions of workers – in this state alone,” Rene Lara, legislative director of Texas AFL-CIO, said.
While the share of app-based employees in the labor force may be relatively small now, he said, the sector is projected to grow. That growth is hard to predict, however, because these are often not full-time jobs and the contractors aren’t considered employees. Still, a Census Bureau analysis last year found Texas had four of the top 10 counties with the highest number of nonemployers.
State Rep. Ramon Romero chastised the unelected commission for its decision-making.
“I hope the Texas Workforce Commission truly is committed and is willing to acknowledge that this was not transparent, internal-external communication – and they are not treating people in a fair and equitable manner,” the Fort Worth Democrat said.
He said he hopes fellow members of the House join him in his concern over the matter.
Concern about how these workers are classified and the costs associated with that was the impetus for the new rules, according to the Workers Defense Project. The nonprofit obtained hundreds of emails related to the Texas Workforce Commission that reveal Commissioner Ruth Hughs had contact with and was briefed by lobbyists for Handy, an app-based contracting service bought by Uber last year.
That lobbying firm, Tusk Strategies, has lobbied in support of similar rules at state legislatures across the country, helping to pass laws in Arizona Florida, Indiana, Iowa, Kentucky, Tennessee and Utah, according to the National Employment Law Center. Tusk Strategies has also lobbied on behalf of Uber.
Emails show two Austin-based lobbyists, Jerry Valdez and Mackenna Wehmeyer, set meetings between Handy’s attorneys and the commission’s attorneys and even suggested strategies to avoid violating federal laws that require companies to pay unemployment benefits. Valdez and Wehmeyer also sent Hughs proposed language for the rules, which is nearly identical to what the commission voted on.
Lisa Givens, director of communications for the commission, said the agency “stands behind the integrity of our rulemaking process.”
“We see this rule proposal as providing guidance in clarification to staff, operators and contractors of marketplace platforms, not creating an employment exemption under the state’s UI law,” she said in an email. “These actions are within the agency’s authority under the Texas Labor Code.”
Gary Warren of the Central South Carpenters Regional Council, a group that includes members who use Handy and other app-based services, said he tried unsuccessfully to meet with Hughs about their concerns earlier this year. He said the commission denied any outside influence in writing the rules.
Warren said the process should have been put before state lawmakers.
“This issue is far too important to be settled by bureaucrats at the Workforce Commission and it should be before the Legislature,” he said.
Givens said the commission reviewed more than 200 public comments, which will “inform the final proposed rules.”
She said the public will be able to weigh in when the rules are brought up for a final vote.