Earlier this fall, a group of lawmakers and business representatives of the “sharing economy” met to discuss some of the issues affecting these newly modeled businesses. One of the most interesting topics that emerged from the meeting involves the classification of workers. It is a topic that potentially affects thousands of New York City workers.
Sharing economy companies such as Lyft, Handy and Uber classify their workers in New York as independent contractors. By classifying them this way, the companies avoid the high costs associated with supporting full-blown employees. As independent contractors, because the employer allegedly does not exert control over them, the workers are not eligible for things like minimum wages, overtime pay, workers’ compensation insurance, unemployment insurance or automatic tax withholding.
Some of the company representatives at the meeting indicated that they would be happy to consider expanding their relationships with their workers and even experimenting with different benefits structures. They have not done so, apparently, because they fear any attempt to deepen their relationships would result in immediate reclassification of their workers as full-blown employees.
Offering training, for example, might improve the quality of the services the workers provide. It also might offer growth opportunities for the trainee, but it would also be an indication that the employer exerts some control over the worker. These businesses worry that efforts to treat their workers as some sort of mix between an independent contractor and an employee will result in cost and liability exposure that they simply cannot afford.
The meeting discussions led to several suggestions, one of which is that a “time-out” be legislated. This would essentially be a time period during which employers would be permitted to tinker with classification without fear of violating current federal laws. Representative Swalwell of California who is one of the chairs of the House sharing economy caucus, expressed a preference for the terms “safe harbor” or “sandbox.” Whatever you call it, the break would give employers an opportunity to offer things to workers without needing to take on all of the responsibility that goes along with reclassification.
Experiments might include more driver training for Lyft drivers or construction training for Handy workers. One company even said it thought about trying to create a benefits sharing system based on the number of hours worked by everyone. Independent contractors don’t receive any of these perks because employers are afraid to create the appearance of a traditional employer-employee relationship. They want to avoid all signs that they control the workers.
Any safe period to revisit employee classification will need to be legislated which will likely take some time. There are numerous federal tax and employment laws that will need to be updated. It will also take some convincing to get legislation passed. Rep Swalwell expressed concern over a “time-out” and not wanting workers to “have to fear about what protections they have and whether they’re being taken advantage of.” Surely, other legislators will have concerns as well.
Perhaps evolution is necessary and it may be worth the wait. Perhaps a third worker classification will emerge, and properly reflect the changing nature of our economy and working relationships. If businesses are creating new models, it makes sense that we revisit employment relationships that no longer fit into traditional definitions.
At Leeds Brown Law, we have the experience and commitment to tackle any workplace classification issues in New York City. Our New York City worker classification lawyers have spent years fighting for employees just like you. Give us a call today if you have questions or think your employer may be violating your rights.