Democrats Introduce Bill to Test Benefits for Gig Workers

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By Tyrone Richardson

Congressional Democrats May 25 introduced legislation designed to spur the development of health insurance, retirement, and other portable benefits for on-demand workers as they go from job to job.

The Portable Benefits Pilot Program Act would create a $20 million Labor Department grant program for states, local governments, and nonprofits to experiment with portable benefits for gig workers. The Senate version of the bill was introduced by Mark Warner (D-Va.) and the House version, by Rep. Suzan DelBene (D-Wash.).

“The hope is that we can get some pilots across the country that can educate us on policies that will work or won’t work and that can inform future federal policy,” DelBene told Bloomberg BNA May 25.

The legislative concept is similar to the Labor Department use of grants to spur innovation. The agency in July 2016 announced a new $100,000 grant for nonprofits to experiment with portable retirement benefits for workers such as independent contractors.

Independent Workers Don’t Qualify for Benefits

On-demand, or “gig,” workers are often treated as independent contractors, who usually aren’t offered benefits and don’t get minimum wage, overtime, and workers’ compensation protections. Gig businesses are typically hesitant to offer benefits, at least partly because they fear that would make courts and regulatory agencies more likely to find their workers should be classified as employees.

There are varying reports on the size of the nation’s gig economy workforce. For example, research by economists Alan Krueger of Princeton University and Larry Katz of Harvard University, using Bureau of Labor Statistics methodology, concludes 16 percent of workers are in gig jobs, while a Federal Reserve survey found the share was closer to 36 percent.

“As more and more Americans engage in part-time, contract or other alternative work arrangements, it’s increasingly important that we provide them with an ability to access more flexible, portable benefits that they can carry with them to multiple jobs across a day, a year, and even a career,” Warner said. “These incentive grants will accelerate experimentation at the state and local levels to better support a more independent 21st century workforce.”

Warner is co-chair of the Aspen Institute’s bipartisan Future of Work Initiative. The pilot program is intended to encourage testing of portable benefit models that can be mirrored on a larger, national scale.

It wasn't immediately known May 25 if Republicans would support the portable benefits legislation. DelBene told Bloomberg BNA that she was optimistic it could draw bipartisan support.

“I hope it would be bipartisan. There is no reason it shouldn’t be,” she said. “We talk about issues and updating laws to address the new way the world works whether on economics or other issues like technology. Those have been bipartisan, and I hope we have a bipartisan conversation on this, too.”

The federal legislation comes as lawmakers in states including Washington, New York, and New Jersey are considering measures to provide benefits for gig economy workers.

It also comes amid calls for the federal government to tweak employment tax and worker classification laws.

Democrats and Republicans have talked generally about updating federal laws such as the Fair Labor Standards Act, which offers minimum wage and overtime pay protections, to create a third category of worker.

Grant Program for New and Existing Programs

The bill would set aside $5 million in DOL grants to assess and improve existing portable benefit programs and $15 million to implement and evaluate new models.

In addition to retirement and health insurance, eligible benefits would include workers’ compensation, life or disability insurance, sick leave, and educational benefits. The one caveat: “In order to encourage innovative thinking on these challenging issues, programs focused solely on retirement-related benefits will not be eligible,” Warner said.

Not a New Concept

There have been forms of benefits for some on-demand workers for years.

That includes the Black Car Fund, a nonprofit organization created in 1999 to provide wages and medical benefits for black-car and limousine drivers in New York who are injured on the job. The benefit is paid by a fee added to the ride fare.

Others include multiemployer benefit plans that some unions have negotiated with construction and entertainment businesses. Building trades unions created a similar system in the 1950s for carpenters working for multiple contractors.

Uber earlier this month raised fares in eight states as part of pilot program offering workers’ comp insurance to its workers. The pilot is a collaboration between the ride-share platform and insurers OneBeacon and Aon. The optional protection costs drivers 3.75 cents per mile and riders an extra 5 cents per mile, and offers $1 million maximum coverage of medical expenses and weekly earnings due to a work-related accident.

Officials for gig economy companies such as Postmates and Lyft released written statements May 25 lauding the proposed legislation.

Sara Horowitz, founder and executive director of the Freelancers Union, also voiced support. “The lack of portable benefits is one of the biggest impediments blocking independent workers from thriving in the new economy,” she said.

To contact the reporter on this story: Tyrone Richardson in Washington at trichardson@bna.com

To contact the editors responsible for this story: Peggy Aulino at maulino@bna.com; Terence Hyland at thyland@bna.com; Christopher Opfer at copfer@bna.com

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