Recent decisions stand to fundamentally change the relationship between workers and employers. Even as the U.S. economy expands, productivity gains and GDP growth have not translated to higher wages for most workers. And with our economy’s growing reliance on low-wage workers, it’s important that labor rules and regulations offer protections for this growing class of employees. As we’ve seen successful battles waged to increase state and local minimum wages, there have also been policies put in place to help address the gender pay gap and redefine rules that make it easier for employees to organize. Likewise, an ongoing legal fight has the potential to offer contract workers more protections. As businesses increasingly rely on a contingent workforce to increase flexibility, it’s up to organized labor, advocates, policymakers, and elected officials to identify the best mechanisms to enhance worker protections. Here’s a rundown of some of their latest accomplishments.
California Aiming to Close the Gender Wage Gap
The California Legislature recently passed what may be the toughest bill in the nation to address the gender pay gap. Authored by Senator Hannah-Beth Jackson, SB 358 (or the Fair Pay Act) aims to strengthen the state’s existing equal pay law by eliminating loopholes that hindered enforcement of existing anti-discrimination laws. The bill also empowers workers to discuss pay without fear of retaliation. Policies that aggressively target gender-based wage disparities have the potential to accelerate the process for achieving wage parity – and we could certainly use the boost. Based on current trends, the Institute of Women’s Policy Research estimates that California won’t close the gender pay gap until 2042 – making us number two in the nation behind Florida (they’re estimated to reach gender income parity by 2038). SB 358 currently awaits the Governor’s signature.
New Joint Labor Standard Could Aid Unionization Efforts
In August, the National Labor Relations Board (NLRB) voted to redefine what constitutes a joint employment relationship. These relationships are common in industries that rely on temporary labor, franchise workers, or labor management subcontractors. A common arrangement involves large companies hiring a subcontractor to manage its workforce. In this case, the company isn’t technically the employer – the subcontractor is. This allows companies to avoid liability for labor practices and employment standards used by the subcontractor. Under the old rules, the company could not be considered a “joint employer” unless it exerted direct control over operations, hours, and working conditions for contract employees – a relatively strict standard. In a 3-2 decision, the NLRB made it easier for companies to be considered “joint employers.” Under the new rules, employees do not need to demonstrate that an entity has actual and direct control over workers to establish a joint employment relationship. This less stringent standard gives franchise workers and laborers employed by temporary staffing agencies a better position for collective bargaining. By reclassifying these companies as joint employers, entities that rely on contract labor are ultimately liable for those workers and may “be required to bargain with unions representing those employees.”
The 1099 Economy Rethinking Its Worker as Contractor Model
Uber, arguably the most high-profile embodiment of the 1099 economy, has suffered a series of legal setbacks that may upend the firm’s pioneering business model. The California Labor Commissioner’s Office recently ruled that Uber misclassified their drivers as independent contractors instead of employees that are entitled to additional labor protections. This finding was followed by a federal ruling that permits a lawsuit against the ride hailing organization to move forward as a class action. The lawsuit’s plaintiffs similarly claim that Uber drivers are employees, not contractors. By allowing the lawsuit to move forward as a class action, the legal action’s outcome may have more far-reaching effects. Instead of a narrow ruling that may apply to only a handful of Uber drivers, a finding that the firm’s contractors are, in fact, employees is likely to apply to a much larger swath of the company’s drivers.
As the courts work to resolve the issue of contractor versus employee, Seattle is looking at policy interventions to help contract workers organize. A Seattle City Councilmember is planning to introduce legislation to grant drivers from ride-sharing companies like Uber and Lyft the right to collectively bargain with the corporations.
The uncertain regulatory environment has prompted a shift for several companies that rely on contract workers. Some, ceding to mounting legal challenges have shuttered, while others have sought to avoid the current uncertainty by reclassifying contract workers as employees.
As the U.S. economy grows, the dynamics between employers and employees will continue to change. Local, state, and national policies must evolve to keep pace with these rapid shifts in workforce dynamics. While we need a regulatory environment that allows businesses to be nimble, adaptive, and entrepreneurial, we must also take a balanced approach. Policies should promote access to jobs with fair compensation, mandate good labor practices, and require safe working environments