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NY Tech Companies Propose a Solution to Gig Economy Problems

NY Tech Companies Propose a Solution to Gig Economy Problems

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Uber autonomous vehicle testing in San Francisco in October 2016.

From The Village Voice:

 By Cole Stangler

Inder Parmar has driven for Uber since 2013.

It's a grueling routine. He puts in about sixty hours a week and drives another ten on side jobs he earns from giving his business card to passengers. Parmar takes the occasional day off at home in Nassau County, but he usually works seven days a week, picking up and dropping off customers in New York City. It all adds up to about $900 a week — and that's before gas and insurance. Since Uber considers Parmar, 54, an independent contractor, it doesn't pay him minimum wage or overtime. It doesn't reimburse him for basic upkeep costs. And it doesn't offer any benefits.

"I barely get by, from hand to mouth," Parmar says. "If any unnecessary expense comes up, I have to go to my elder son or take it out from my wife's savings account."

Uber is the largest and best-known company in the so-called gig economy, an umbrella term used to describe largely app-based platforms that offer a range of on-demand services: Handy offers variety of housekeeping services, its thousands of cleaners taking appointments with as little as a day's notice; Josephine sell users gourmet meals prepared by one of the company's distributed network of cooks; Jiffy, whose headquarters are in Toronto, dispatches licensed technicians to install your home appliances. While government statistics don't track the number of workers involved, a March study estimated that about 600,000 people work regularly for such apps nationwide — including tens of thousands in New York.

The growing sector isn't known for its workplace benefits, but the industry says that's about to change. The state is considering a bill that these companies say will provide much-needed relief to Parmar and others like him. Championed by Handy and Tech NYC, a newly formed statewide tech-industry trade association that includes Uber, the legislation would lay the foundation for the first-ever "portable" benefits plan for gig economy workers.

The assembly's majority leader, Joseph Morelle, is expected to introduce the bill in the upcoming session, which begins in January. The Village Voice has learned that Democratic senator Diane Savino, former chair of the labor committee, is leading efforts in the state senate. And in a bid to win support from organized labor, industry supporters have enlisted the aid of Andy Stern, former president of the Service Employees International Union, who co-signed a letter with other business leaders last December calling for benefits for "independent workers."

"The world of work is changing, whether we want to believe it or not," Savino says. "We can stand by and do nothing...ignoring the fact that more and more people are taking these nontraditional pathways to compensation, and leave them in some gray limbo, or we can try and be creative."

Here's how the program would work: Under the existing proposal, participation is voluntary. Companies that choose to take part would contribute at least 2.5 percent of the fee for each job performed by the gig economy worker to a benefits fund. Workers could then access the account in order to purchase retirement, health insurance, and other benefits — and it would cover all work performed for any of the companies that choose to join. According to a draft bill circulated by supporters, companies would have broad discretion over what kind of benefits are offered.

As it stands, though, the proposal comes with a catch. It would classify everyone who works for a participating company as an "independent contractor" under state law. Most of the apps already treat their workers as such, sidestepping basic employment obligations like the minimum wage, overtime, or unemployment insurance. The proposal would essentially codify this practice.

For Tech NYC executive director Julie Samuels, it's a necessary compromise. Companies in the gig economy don't see themselves as employers, and they don't want regulators or judges to view them that way either. Employment classification comes with an array of rules and costs. As a result, Samuels says, any portable benefit plan offered by the companies must come with the assurance that they can continue to operate under their existing business model.

"If they were to start [providing benefits] right now without any legislation, my understanding is the majority of the workers who use their platforms would be classified as employees," says Samuels. "And if all the workers on these platforms are classified as employees, it'd be very difficult for many of [the companies]."

For labor law experts and union leaders, though, the proposal marks a significant retreat in terms of workers' rights. They say it's not worth the costs.

"This bill is pure capitulation," says Bhairavi Desai, founder and executive director of the Taxi Workers Alliance. "Companies, whether it's Uber or Handy, they're not looking to make concessions. They're looking to have labor capitulate and have politicians lay down that framework for capitulation."

Desai says the bill offers companies valuable ammo to defend themselves against costly misclassification lawsuits.

As she points out, the question of whether people who work for apps are employees is far from settled. Former workers have filed dozens of lawsuits against app-based companies to that effect, asking for millions in unpaid wages. In response to arguably the most high-profile class-action suit, Uber brokered a $100 million settlement — but in August, a federal judge rejected the proposed deal on the grounds that it wasn't fair enough for drivers.

"Given that many of the gig economy companies are facing lawsuits that are pending on this issue directly, [the bill] seems somewhat problematic," says Miriam Cherry, a professor at the Saint Louis University School of Law who has written about the intersection of apps and workers' rights. "The legislation may in fact be an attempt to foreclose those lawsuits."

Chris Townsend is director of field mobilization for the Amalgamated Transit Union. ATU already represents New York City bus drivers and is seeking to organize a citywide union for Uber drivers. Townsend isn't just critical of the proposal's independent-contractor mandate. He says the benefits are paltry too. The current figure of two and a half percentof each job is unimpressive —Parmar, for example, would earn about $3.21 in benefits in an average workday under the existing proposal And anyways, he adds, drivers can already purchase health insurance on their own. "What is it that they're giving them that's new?" Townsend asks. "I don't see what the big innovation is with someone saying, 'We're gonna segregate your funds into an account.' "

Read more from The Village Voice.

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