Gig Economy Firms Oppose US Government Efforts To Reclassify Company Drivers As Employees

Companies in the so called gig economy including Uber, Lyft, Doordash and Instacart are trying to retain the status of their drivers as contractors – with some additional benefits as compensation, given the realization that the new administration in the United States under Joe Biden are insisting on reclassification of the workers in the ride-hail and food delivery companies as employees with complete benefits. 

The business models of the companies in these companies depends on low-cost flexible labour and such companies have argued that surveys among gig economy workers has shown that majority of them do not want to be classified as employees and claimed that this new generation of workers want the freedom of choosing when and how long to work.

The companies in the gig economy also plan to try and convince officials in the new US administration and lawmakers to not push for reclassification of gig workers as employees even as the election of Biden as the country’s president has provided momentum to the efforts to reclassify them as employees as Biden had promised delivering employee benefits to gig workers during his campaign.

That debate has been intensified by the US Labor Secretary Marty Walsh who said in an interview on Thursday that “a lot of gig workers should be classified as employees.”

Following Walsh’s comments, there was a drop of as much as 12 per cent in the stocks of Uber Technologies Inc, Lyft Inc and DoorDash Inc. Business models of companies would get upended by turning gig workers into employees as the businesses critically depend on millions of largely part-time workers who are not provided any of the benefits that an employee gets such as unemployment or sick pay.

Uber, Lyft, DoorDash, Instacart and Postmates got together to form the App-Based Work Alliance, a Washington-based advocacy group within just two weeks after Biden was declared the winner of the 2020 presidential election.

The App-Based Work Alliance looked forward to coming together with the secretary to have “much-needed discussions about advancing modern policies that protect worker independence and flexibility, while strengthening benefits and protections”, the Alliance said in response to Walsh’s remarks.

The aim of the Alliance is to bring in changes to the labour laws of the US that will allow workers to choose flexibility work schedules while also being offered more modest benefits compared to what is given to employees including minimum pay standards, healthcare subsidies and accident insurance, the group said.

A call was given by Uber for support for what the company calls its “third-way” proposal in a letter that the company sent to the Biden transition team in December and one to all members of Congress in February.

A new underclass of workers with fewer rights and protections would be created by that proposal, said labour groups.

A call to regulators to step in and protect working people, was given on Thursday by Gig Workers Rising, a group of workers that advocates for greater benefits.

(Adapted from Reuters.com)

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