At the same time, these companies are trying to defend a controversial business model, one in which they treat their employees as independent contractors rather than employees who would be entitled to traditional benefits and protections such as work accidents, unemployment insurance, family leave, sick leave, or the right to associate.
“Right now, we are at a crossroads,” said Shannon Liss-Riordan, a Boston labor attorney who has challenged Uber and Lyft over the classification of workers for seven years in several lawsuits. “If he rises to the challenge, Marty Walsh could have one of the biggest impacts on labor in this country since Frances Perkins,” she said, referring to Franklin D. Roosevelt’s labor secretary, who was the lead architect behind the New Deal.
New industry, known issues
While Walsh has yet to delve extensively into the issue of app-based gig worker classification, labor experts and friends who have known him professionally throughout his career say they are encouraged by his background advocating for construction workers, which has long been dealing with the subject of misclassification.
“When construction contractors started to reclassify their workers from workers to independent contractors, it was just a scam to save money,” said Mark Erlich, a fellow at the Harvard Labor and Worklife Program who previously served as executive secretary-treasurer of the New England Regional Council of Carpenters and which Walsh has known for about 20 years. “What’s different now is that it is no longer [viewed as] a ‘scam’, it is [positioned by the companies] as a nice schedule – a new conception of work in which you are your own boss, have a flexible schedule – it is actually seen as desirable. “
The companies have long defended their business model, which was popularized by Uber during the latest recession and claimed that employees have more flexibility when treated as independent contractors than employees. But nothing prevents companies from offering their employees flexibility. Rather, it’s a business decision – and critics say workers are being exploited in an effort to keep costs down for the companies.
In statements, a Lyft spokesperson said the company looks forward to working with Walsh and the new government “to enhance the opportunities for app-based workers.” An Uber spokesperson echoed the sentiment, stating that it “supports efforts to ensure employee independence while providing drivers and delivery drivers with new benefits and protections.”
Instacart and DoorDash pointed out to CNN Business a spokesman for the App-Based Work Alliance, a coalition backed by Uber, Lyft, Instacart, DoorDash and Postmates owned by Uber.
“Our country’s independent workforce has been essential in helping our communities overcome the many challenges we faced during this pandemic. We look forward to working with the Biden-Harris Administration, including the Secretary of Labor, to to meet the rapidly evolving needs of the 21st century workforce, “said Whitney Mitchell Brennan, a spokesperson for the App-Based Work Alliance in a statement to CNN Business.” We encourage Mayor Walsh to work for promoting federal policies that support the growing on-demand economy. “
Representatives for Walsh and the White House did not respond to requests for comment. Walsh’s appointment as Secretary of Labor is pending Senate approval. During his Thursday hearing, Walsh spoke of pivotal moments in his life – from cancer as a child to following in the footsteps of his father’s union job and recovering from addiction – that have highlighted how he sees the work of the Labor Department.
“Protection of workers, equal access to good jobs, the right to join a union, continuing education and vocational training, access to mental health and substance abuse treatment. These are not just policies for me, I lived them,” said Walsh. “Millions of American families need them now. I’ve fought for them at various levels throughout my career.”
Walsh was not questioned his stance on the classification of handy workers, but he did give some support to the PRO Act, legislation reintroduced by Democrats on Thursday that would significantly change the existing labor law and make it easier for workers to join a union. “That’s a step to help people organize themselves freely. I really believe in the right to organize. I really believe in the right of people to join a union if they want to join the union. So I’m sure of that, ”Walsh said.
The PRO Act would affect the gig economy, as it would implement an “ABC” test – against which the gig companies in California fought – to determine whether an employee is an employee or an indentured servant, if passed.
Walsh’s Department of Labor can have a significant impact on employee classification, not only by interpreting existing laws and using the office as a pulpit, but also by directing and coordinating enforcement action against employers who may not be complying with the laws, according to labor experts.
Joanne Goldstein, who has known Walsh for 15 years through various jobs of hers, such as the head of the Massachusetts Attorney General’s Fair Labor Division and as Secretary of Labor and Workforce Development, said he cares most about workers who have access to social and economic safety nets.
“We had a number of situations where he approached me in my capacity to see what we could do in the context of the law to help employees get the wages, benefits, safety and training that employees deserve,” Goldstein told CNN Business.
Rethinking the Trump administration’s stance on independent contractors
Given the current economic downturn, the issue of handy worker classification may not be the first priority on Walsh’s list. But as Becki Smith, a director of work structures at the National Employment Law Project, notes, “There is an urgent need for them to be very clear about their interpretation of the law very quickly.”
“The first step is to scrap Trump’s policies that very radically reinterpret which of us gets access to basic legal protections,” Smith said. Much of that can be done administratively without changes to federal law, Smith added.
Still, the coalition, backed by Uber, Lyft, DoorDash and Instacart, wasted no time issuing a statement on inauguration day to congratulate Biden and Harris, while promoting its agenda for ‘modern policies’ that give employees access to benefits, while protecting their flexibility. to earn independent income according to their schedule. ”
To really make a mark on the issue, Walsh will have to go up against “the entrenched people of Silicon Valley,” Erlich said. Among that group are former Obama administration officials who now hold key roles at gig companies such as Lyft’s chief policy officer, Anthony Foxx, and Lyft board member Valerie Jarrett. Uber’s chief legal officer, Tony West, served in the Justice Department for the Clinton and Obama governments and is Harris’s brother-in-law.
As the Boston attorney Liss-Riordan put it, “This could be an extremely important position, and there are many people who have very high expectations of Marty doing what needs to be done.”