Lawmakers and unions wage war on self-employed workers: Part 2

Feb 7, 2019

In Part 1 of this blog series we explored how labor unions are working with state lawmakers to push legislation that would dramatically restrict how individuals who are licensed small business owners can operate as independent contractors.  Self-employed entrepreneurs who have chosen to work as independent contractors, so they can be free from the restrictions of traditional employee work, are under attack.

The benefit to unions is that while federal law prohibits independent contractors from unionizing, traditional employees are fair game.  So the fewer individuals who can work as an independent contractor, the more who are classified as employees and are therefore prospects for union membership.

HB 1601/SB 5690 take the idea even further.  Written by SEIU 775, these bills are titled the “Universal Worker Protections Act,” and include the same language as 1515/5513 that significantly restrict who could be classified as an independent contractor and severely penalize businesses found to be in violation. 

But HB 1601/SB 5690 would also require the state to set base wage rates (separate from the state’s minimum wage rate) for newly coined “intermediary employees,” the definition of which is nebulous but appears to be aimed at independent contract workers in the gig economy who obtain their work through platforms such as Instacart and Fetch.  Every so-called “intermediary employee” (aka independent contractor) would be subject to the base wage rates set by the state.

The legislation would also create “workers’ boards” charged with setting wages, benefits, working conditions, and other labor standards for the “intermediary employees” who meet certain eligibility requirements.  These boards would also determine how much gig economy platforms like Instacart and Fetch (the bill calls them “contributing agents”) must pay for the portable benefits program (health insurance, paid time off, retirement, and other benefits) created by the legislation. 

The unelected workers’ boards would cover five “nonemployee” industry categories: caregiving and domestic services or other services performed in and about the home; passenger transport; product movement; sales; and certificated professional services.

The process of creating a workers’ board is suspiciously similar to how a union is certified to represent a bargaining unit, but with a much lower trigger.  An “organization or association eligible to represent intermediary employees” (aka union) simply needs to provide “a showing of interest by presenting evidence that it represents either 250 covered intermediary employees or 0.5 percent of the industry, whichever is less.”  Viola, a worker board is created.

Once that happens, all platform employers within that industry are required to hand over to the union the names and contact information of all of the independent contract workers it hires as well as provide “physical access” to those workers.  Now these private sector workers, who, by seeking employment as an self-employed, independent contractor have clearly rejected the traditional employee-employer relationship, are forced to deal with the very traditional model of government dictating the terms of their work and a union representing them and negotiating on their behalf.

There is no language in the bill that provides them with an avenue to opt out of this representation.  Nor is the bill clear whether every independent contractor covered by a board would have to pay the union for that forced representation.

It is worth noting that the new “worker representative” (aka union) gets to decide which employer platforms within that industry fall within the scope of the workers’ board.  A business can appeal the inclusion of its workers in the board, but the burden is on them to prove the union made a mistake.  Notably absent is any say from the actual self-employed workers covered by the board.  The union gets to decide if they are included, the employer platform can argue they shouldn’t be, and the workers are voiceless.

To recap, once just 0.5% of the “intermediary employees” (aka independent contractors) in one of the five industries signal they want to be under the control of a worker board and represented by a union on that board, every other individual working in that industry is forced into the board and must suffer that representation, even if they don’t want it.  Whether they will have to pay for that representation is unclear in the bill as written.

In other words, the independent contractors covered by these workers’ boards, even if they object, would not be free to set the terms of their own contracts with the businesses that hire them.  Wages, benefits, rules governing scheduling, and other working conditions would be determined by unelected worker boards from which these workers could not opt out and by which the employer platforms would be bound.  And the platforms that hire them would be required to pay whatever portable benefit contributions (which must include some combination of health insurance, paid time off, retirement, or other benefits) the board decides.

It may sound a lot like unionization and collective bargaining because it is.  Stay tuned for Part 3 of this blog series to learn about the motivations behind HB 1601/SB 5690 and what union executives have to say about the bills.

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