Contingent Workers Grabbing the Spotlight



Uber and Lyft, part of the growing gig economy, have attracted a lot of attention regarding the contingent workforce, and the Labor Department has taken notice.

This week, Labor Secretary Thomas Perez said the department plans to increase efforts to track the contingent workforce, which is composed of temporary workers such as freelancers, independent contractors and temporary workers who are not covered by numerous provisions of the Fair Labor Standards Act. Perez, in a blog post about his visit this week to California to meet with Silicon Valley high-tech employers, workers and others, said the department plans to conduct a survey of contingent workers for the first time in more than 10 years.

“Thanks in large measure to innovation in recent decades there, the American workforce, and the very nature of work, is experiencing some profound changes,” Perez said in the blog post. “It’s not just the growth of new technologies, but also the rise of entirely new industries and new job structures. For example, we’re seeing the tech-driven expansion of the gig or on-demand economy.”

The goal of the survey, which is to be included as part of a May 2017 monthly survey of households conducted by the Bureau of Census for the Bureau of Labor Statistics, is to gather information on workers who do not think they have sufficient job security or otherwise work in jobs that are considered temporary.

The survey, Perez said, “will give us reliable, credible insight into what’s going on across a range of work arrangements--from independent contractors to temporary employees to workers holding multiple jobs at the same time.”

The decision comes as policy makers and legislators are still trying to analyze the new sharing economy. The business model, in which workers often make their own hours, use their own equipment and can start or stop at any time, has raised some employment classification and tax issues.

Drivers for the ride-sharing services Uber and Lyft generally are classified as independent contractors. As workers, they may write off some business expenses for tax purposes, but they are not entitled to FLSA minimum wage and overtime protections, workers' compensation benefits or unemployment insurance.

Both companies have faced lawsuits filed by drivers. On Tuesday, Lyft agreed to pay $12.3 million to settle a lawsuit with its California drivers, who claimed they were treated unfairly, Bloomberg News said.  The proposed settlement, which would allow Lyft to deactivate drivers only for specified reasons rather than terminating them at will, according to a court filing Tuesday. Under the proposed settlement, drivers would receive a portion of the settlement based on the number of hours they have worked for Lyft. The drivers’ lawyers asked a federal judge to approve the settlement (Cotter v. Lyft Inc.,  N.D. Cal, No. 13-04065, 3/11/15).

Uber, meanwhile, recently won a ruling that may delay the outcome of a bid by California drivers to be treated as employees in a lawsuit that has grown dramatically in size and potential liability (O'Connor v. Uber Tech. Inc., N.D. Cal., No. 13-cv-03826, 12/22/15). The employer faces a trial in June over claims from drivers that they should be treated as employees rather than contractors.

If these two developments are any indication, we’ll be hearing more about the gig economy in the months ahead.

“This is an exciting, entrepreneurial development that is tapping into powerful consumer demand while giving workers flexibility and enabling them to monetize existing assets, like their cars or extra rooms in their homes,” Perez said. “At the same time, the on-demand economy raises important questions about how to continue upholding time-honored labor standards and how to promote economic security for American workers in a changing labor market.”

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