Ever since Uber and Lyft successfully bankrolled Proposition 22 in California, a ballot measure that carved gig workers out of traditional employment and all the rights and protections it conveys, those companies and others have been trying to replicate the victory in other states. They’ve followed a similar model in each place, crafting legislation or ballot measures that would deem rideshare and delivery drivers exempt from employee status but purport to offer them other benefits.
Now Uber, Lyft, and a coalition of large corporations are expanding their quest to rope off their workers from labor laws, and it’s dramatically more ambitious. With the backing of the Coalition for Workforce Innovation, a lobbying group made up of not just app companies but household names like Google, Kroger, and Target, Democratic Rep. Henry Cuellar and Republican Reps. Elise Stefanik and Michelle Steel introduced legislation, the Worker Flexibility and Choice Act, in late July that wouldn’t just help Uber and Lyft treat their drivers as independent contractors, but exempt virtually any American worker from minimum wage and overtime protections.
This federal foray goes far beyond the state-level bargains these companies had attempted to eke out. The legislation would deem any worker who signed a so-called “worker flexibility agreement” to be an independent contractor for the purposes of the Fair Labor Standards Act, which requires employers to pay minimum wage and overtime. “This bill would dramatically upend labor standards,” said Brian Chen, senior staff attorney at the National Employment Law Project.
The bill is unlikely to become law anytime soon; it hasn’t even been assigned to a committee yet. But these companies have now shown the hand they ultimately hope to play. The argument that app companies needed a new labor model for a new kind of work fades away when their new model applies to any and every American worker. They’ve shown that their ambitions are not just to exempt gig workers from employment law—which they claim is necessary to preserve their workers’ “flexibility”—but to allow any employer to wash their hands of labor standards.
Compared to what the companies were trying to broker in state legislatures, the Cuellar bill “is very, very different and much more ambitious,” said Marshall Steinbaum, assistant professor of economics at the University of Utah. The ultimate goal is still the same: to classify certain workers as independent contractors, not as employee. But instead of narrowly tailoring it to so-called gig workers—Uber drivers, DoorDashers, and the like—this bill would apply to any worker in any industry who signed such an agreement.
“Any employer in the private sector could embrace this model,” said Veena Dubal, law professor at the University of California, Hastings. “This is everyone. This is literally anyone.” And there would be a clear incentive for companies to make use of it. Without the requirement to pay at least minimum wage, employers could pay as little as they wanted, devoting less of their profits to their workforces. Without overtime requirements, they could force their workers to put in longer hours without having to pay them anything extra. While these agreements, were the bill to become law, might at first be most prevalent in low-wage service sector work, where workers already have little power to push back against restrictive working conditions and where wage theft runs rampant, they almost certainly won’t stay there. They would be an attractive option for any employer, including “more professional or managerial-style jobs,” Chen said.
Essentially, then, the bill would run roughshod over a core right American workers enjoy, which is a guaranteed wage—a certain amount they have to be paid per hour, with more when they put in over 40 hours a week. That right was won after decades of intense and often militant labor organizing and activism, which resulted in the Fair Labor Standards Act in 1938. The law was meant to ensure that working brought in some modicum of pay and that employers would have a disincentive to push workers to put in extremely long hours by making them pay extra if they did.
“The rationale for labor standards is to prevent a race to the bottom,” Steinbaum said. The Cuellar bill “would undermine the entire basis of labor regulation, which is to create floors under which labor standards cannot fall.”
Instead of those floors, the world envisioned by gig-economy companies would rely on something more akin to a “worker beware” standard. The worker flexibility agreements would have to be “knowingly and voluntarily entered into” to be valid, according to the bill. But to see that as fair, or even feasible, you have to assume that workers have the power to reject contracts they don’t like. “The idea that the labor relationship is a relationship of equals,” who bargain over the details of a contract, “is false,” Steinbaum said. Other kinds of contracts that are detrimental to workers’ rights, such as waivers to the right to join a-class action lawsuit, mandatory arbitration clauses, and noncompete agreements, have still proliferated, despite workers having the ostensible chance to walk away before signing them. “We know empirically that people do not read employment contracts, do not feel they can go to their employers and change any terms of their contract,” Dubal said. The few workers who might have the clout to change the terms of their employment individually are those who are most in demand and already paid at high levels, to whom minimum wages and overtime laws mean little anyway, not the workers who rely on those rights to guarantee their livelihoods.
And even if an employee stuck his neck out and refused to sign a flexibility agreement, he would likely find himself at a disadvantage compared to those who did sign. An employer could simply pass him over for someone else who would willingly sign such an agreement.
Worryingly, the bill also stipulates that it would supersede state employment regulation. Up until now, companies like Uber and Lyft have been lobbying federal regulators to adopt laxer standards for determining who is and isn’t an employee, but those regulations would still have left stricter state rules in place. Some states, such as Massachusetts and California, have more rigorous standards to determine who can be classified as independent contractors, But those standards would no longer apply to anyone who signed a worker flexibility agreement, subjecting them instead to the new federal carveout only.
Workers would also get a lot less in the deal envisioned by this legislation. In California, Proposition 22 promised that workers would get health care benefits, a minimum earnings guarantee, and occupational accident insurance, although workers have claimed that none of those have panned out as promised. Deals in New York and Connecticut would have allowed the workers to collectively bargain for better conditions through sectoral bargaining, although New York’s version would also have taken away some basic rights such as eligibility for unemployment insurance. The ballot measure in Massachusetts claimed that it would have set base pay of at least $18 an hour, although when time spent waiting for passengers was taken into account it would likely have been far less.
None of those promises is made in this legislation. In exchange for signing a worker flexibility agreement, a worker is assured that she will still have some protections, such as the right to be free from discrimination and harassment and to take unpaid Family and Medical Leave Act leave. The flexibility agreements also have to give workers the ability to reject offers without incurring any retaliation, as well as the ability to work for other companies concurrently. But while Uber and Lyft already claim that drivers can reject rides, that’s not how it operates in practice, Dubal said. Instead the companies use incentives to entice and coerce workers into taking rides at the times the companies want them to work. Meanwhile, the retaliation can’t happen for the duration of the worker flexibility agreement, but Chen noted that app companies could set them to expire every two weeks, essentially dodging that requirement.
These arrangements, then, offer workers a pittance in exchange for forgoing a core labor right. If people are seeking better conditions or greater flexibility at work, Chen noted, they don’t need these agreements. “It’s called a union contract,” he said. “There’s no need to create this specific mechanism whereby individual workers have to negotiate with their employers case by case by case.”
Uber and Lyft may have set their sights on federal legislation because the state-level gambit isn’t working out the way they had hoped. Their most high-profile state-level efforts have all stalled out. Proposition 22 is on hold after a California judge ruled that it was unconstitutional last August. A draft version of legislation in New York leaked to Bloomberg, and the ensuing backlash ensured that the bill died before the end of the legislature’s session. And in June, a Massachusetts court threw out the proposed ballot measure for violating state law.
But it’s clear the companies aren’t deterred, and in fact are setting their sights higher than ever. A decade ago they campaigned for a specific carve-out for their own workers, and then moved on to all platform-based work. “It’s been getting bigger and bigger, and finally there is no constraint,” Chen said. “It’s just all jobs, essentially.”