Will gig workers surrender employee status for other benefits?

Companies like Uber, Lyft, and Doordash hope to negotiate compromises with their workers without classifying them as employees. Some U.S. workers are willing to compromise, but many want to be classified as employees, which gives them the right to unionize.

First Look

Uber and other gig economy companies are trying a new approach to ending their battles with unions, and getting ahead of possible federal regulation that could upend their business based on classifying workers as independent contractors.

In New York, for example, gig economy companies are working with several unions including the Machinists and Transport Workers Union to strike a compromise that would allow drivers and food delivery workers to organize in a union and negotiate minimum pay and other benefits without being reclassified as employees.

With the support of the unions, the gig economy companies are pushing state lawmakers in Albany to pass a bill that would allow workers to negotiate wages and caps on company commission fees, and provide unemployment insurance in some circumstances.

Among the most vocal opponents of a proposed bill to achieve that goal is the Service Employees International Union’s (SEIU) northeastern Local 32BJ, which says the compromise would enshrine gig workers’ misclassified status and create a company-sanctioned union that would only further erode workers’ rights by setting no floor for the negotiations.

“This legislation moves workers backwards,” Kyle Bragg, 32BJ’s president said. “There’s too much company manipulation.”

Amid the controversy, efforts to have the bill introduced before the end of the state’s legislative session this week failed.

New York is just one of several states where gig economy companies led by Uber, Doordash, Lyft, and Instacart are courting unions and state officials in an effort to cement their workers’ status as independent contractors across the United States.

Fault lines 

The push by the gig economy companies has exposed divisions within organized labor over whether to bargain with the companies, or insist on workers being reclassified as employees with full protection of U.S. labor standards – and a clear legal right to join unions.

The rifts at times also run within the same union. For example, while 32BJ rejects the New York bill, SEIU President Mary Kay Henry in the past said she would back workers’ demands in reaching a deal with companies. The SEIU declined to comment for this story.

Similarly, the New York chapter of the AFL-CIO, the largest U.S. labor federation, backs the compromise proposal, while members of its Colorado chapter said they were opposed to bargaining agreements with the gig companies.

According to a Reuters review, the companies over the past few months set up lobbying groups in Massachusetts, New York, New Jersey, Illinois, Colorado, and Washington to push for laws that declare app-based ride-hail and food delivery drivers independent contractors, while proposing to offer them some benefits. In some states the companies hope for buy-in from labor groups, company and union officials said.

The companies are trying to build on their success in California, where voters approved an industry-backed ballot measure that exempts ride-hail and food delivery workers from rules that require other types of contractors to be classified as employees, and provides them with limited benefits.

The companies say they pursue tailored policies for each state to combine flexibility for their mostly part-time workers with benefits and protections. They have yet to offer concrete proposals in most states.

Some executives hope state-based independent contractor laws can also forestall federal action by the labor-friendly Biden administration, which has vowed to end the misclassification of workers as independent contractors.

“The models that are developed at the state level can be given a framework at the federal level,” Lyft President John Zimmer said during an interview last month.

While any state law could be superseded by federal rules, Mr. Zimmer’s calculation assumes that the U.S. Labor Department is less likely to act once facts on the ground are established.

The companies’ race for state backing runs counter to the labor movement’s single biggest legislative priority, the passage of a far-reaching labor reform bill known as the PRO Act in Congress. The bill would make worker organizing easier and among other things reclassify most independent contractors as employees for the purpose of collective bargaining, though not for wage laws and benefits.

The bill is unlikely to pass the Republican-led U.S. Senate, but even if it did, several years of regulatory and court wrangling would ensue, a time during which gig workers’ rights would remain unchanged, said Wilma Liebman, former chair of the National Labor Relations Board.

Skeptics on both sides 

Some union figures have therefore taken a more pragmatic approach. Andy Stern, former president of the SEIU and at the time one of the most politically influential labor leaders, for the past six years has been trying to strike deals between the gig companies and unions, including failed attempts in California to ward off the ballot measure.

The California referendum, a costly victory for the gig companies, was also a cautionary tale for unions, as well as for drivers, who are now left without any avenues to organize or object to the terms stipulated by the companies.

Mr. Stern said internal union surveys in New York had repeatedly shown that a majority of drivers did not want to be employees and said debates focused solely on reclassification were based on unrealistic and purist sentiments.

Mr. Stern instead advocates for drivers’ rights to organize in unions and negotiate their own contracts.

“Give a worker a union and collective bargaining and they’ll decide themselves what kind of status, wages, and benefits they want. People who believe litigation and legislation are the solution have failed these workers,” Mr. Stern said.

Mr. Stern and others dubious of reclassification point to Seattle and New York City, where years of union efforts to organize drivers have led to the only driver minimum wage laws in the country.

Uber and Lyft have rocky histories with unions and workers who want to organize. The companies in 2015 enlisted the U.S. Chamber of Commerce for a years-long court battle against a Seattle law spearheaded by the Teamsters union that would have allowed ride-hail drivers to bargain collectively.

Uber more recently appears to have opened up to such agreements, however. The company last month recognized Britain’s GMB union as the collective bargaining unit of its 70,000 British drivers. Mr. Zimmer from Lyft said the company was having constructive conversations with labor leaders.

Many union officials remain skeptical about basing workers’ fate on the goodwill of companies.

“You never get everything you want out of collective bargaining...and it would be better to give drivers more options and protections under the law,” said Kjersten Forseth, political and legislative director for the Colorado AFL-CIO, which plans to make state-based gig worker policy solutions its focus over the next two years. 

This story was reported by Reuters.