How to make companies pay 'independent contractors' properly
GM is worth around, and has over聽聽employees. Its front-line workers earn from聽聽an hour, with benefits. 聽
Uber is estimated to be worth some聽, and has 850 employees. Uber also has over聽聽drivers (as of December 鈥� the number is expected to double by June), who average聽聽in Los Angeles and Washington, D.C., and聽聽in San Francisco and New York.听
But Uber doesn鈥檛 count these drivers as employees. Uber says they鈥檙e 鈥�.鈥澛�
What difference does it make?
For one thing, GM workers don鈥檛 have to pay for the machines they use. But Uber drivers pay for their cars 鈥� not just buying them but also their maintenance, insurance, gas, oil changes, tires, and cleaning. Subtract these costs and Uber drivers鈥� hourly pay drops considerably.
For another, GM鈥檚 employees get all the nation鈥檚 labor protections.
These include Social Security, a 40-hour workweek with time-and-a-half for overtime, worker health and safety, worker鈥檚 compensation if 聽injured on the job, family and medical leave, minimum wage, pension protection, unemployment insurance, protection against racial or gender discrimination, and the right to bargain collectively.
Not to forget Obamacare鈥檚 mandate of employer-provided healthcare.
Uber workers don鈥檛 get any of these things. They鈥檙e outside the labor laws.
Uber workers aren鈥檛 alone. There are millions like just them, also outside the labor laws 鈥� and their ranks are growing. Most aren鈥檛 even part of the new Uberized 鈥渟haring鈥� economy.
They鈥檙e franchisees, consultants, and free lancers.
They鈥檙e also construction workers, restaurant workers, truck drivers, office technicians, even workers in hair salons.
What they all have in common is they鈥檙e not considered 鈥渆mployees鈥� of the companies they work for. They鈥檙e 鈥渋ndependent contractors鈥� 鈥� which puts all of them outside the labor laws, too. 聽
The rise of 鈥渋ndependent contractors鈥� Is the most significant legal trend in the American workforce 鈥� contributing directly to low pay, irregular hours, and job insecurity.
What makes them 鈥渋ndependent contractors鈥� is the mainly that the companies they work for say they are. So those companies don鈥檛 have to pick up the costs of having full-time employees.
But are they really 鈥渋ndependent鈥�? Companies can manipulate their hours and expenses to make them seem so.听聽
It鈥檚 become a race to the bottom. Once one business cuts costs by making its workers 鈥渋ndependent contractors,鈥� every other business in that industry has to do the same 鈥� or face shrinking profits and a dwindling share of the market
Some workers prefer to be independent contractors because that way they get paid in cash. Or they like deciding what hours they鈥檒l work.
Mostly, though, they take these jobs because they can鈥檛 find better ones. And as the race to the bottom accelerates, they have fewer and fewer alternatives.听
Fortunately, there are laws against this. Unfortunately, the laws are way too vague and not well-enforced.
For example, FedEx calls its drivers independent contractors.
Yet FedEx requires them to pay for the FedEx-branded trucks they drive, as well as the FedEx uniforms they wear, and FedEx scanners they use 鈥� along with insurance, fuel, tires, oil changes, meals on the road, maintenance, and workers compensation insurance. If they get sick or need a vacation, they have to hire their own replacements. They鈥檙e even required to groom themselves according to FedEx standards.听
FedEx doesn鈥檛 tell its drivers what hours to work, but it tells them what packages to deliver and organizes their workloads to ensure they work between 9.5 and 11 hours every working day.
If this isn鈥檛 鈥渆mployment,鈥� I don鈥檛 know what the word means.
In 2005, thousands of FedEx drivers in California sued the company, alleging they were in fact employees and that FedEx owed them the money they shelled out, as well as wages for all the overtime work they put in.
Last summer, a federal appeals court聽, finding that under California law 鈥� which looks at whether a company 鈥渃ontrols鈥� how a job is done along with a variety of other criteria to determine the real employment relationship 鈥� the FedEx drivers were indeed employees, not independent contractors.
Does that mean Uber drivers in California are also 鈥渆mployees鈥�? That case is being considered right聽.听
What about FedEx drivers and Uber drivers in other states? Other truck drivers? Construction workers? Hair salon workers? The list goes on.听
The law is still up in the air. Which means the race to the bottom is still on.
It鈥檚 absurd to wait for the courts to decide all this case-by-case. We need a simpler test for determining who鈥檚 an employer and employee.
I suggest this one: Any corporation that accounts for at least 80 percent or more of the pay someone gets, or receives from that worker at least 20 percent of his or her earnings, should be presumed to be that person鈥檚 鈥渆mployer.鈥�
Congress doesn鈥檛 have to pass a new law to make this the test of employment. Federal agencies such as the Labor Department and the IRS have the power to do this on their own, through their rule making authority.听
They should do so. Now. 聽
