Debate around providing gig workers who work for companies like Amazon, Uber, Lyft, and GrubHub with workers’ compensation and other benefits is intensifying across the country.
Proponents, including some gig economy companies like NJ-based Postmates, argue that the long-term viability of the new labor model and its potential benefits will only happen if industry, organized labor and legislators “forge a new social compact that provides flexible app workers appropriate benefits and injury and civil rights protection.”
But opponents include both employers and many gig workers and freelancers. They argue that mandating a surcharge on services will drive up employers’ costs and cause them to stop hiring gig workers.
Bills moving through the state legislatures in Washington state and New Jersey propose “universal worker protections” that would fund gig workers’ benefits with contributions from employers to a non-profit “qualified benefit provider.”
Some proposals would leave it up to individual gig workers whether to take advantage of those benefits.
Gig employers face higher costs
In Washington state, HB 1601 would create a “universal worker protections act” to:
- Prohibit the misclassification of employees as independent contractors, allow them to organize under specific conditions and create remedies, including civil penalties and damages
- Provide for the creation of workers’ boards, when certain thresholds are met, to set minimum pay rates and other labor standards for workers in certain industries
- Establish procedures for creating portable benefits for workers in certain industries
- Specify certain rights for workers and prohibits retaliation
- Require contributing agents to provide data and reports about workers
- Require the Washington state Department of Labor and Industries to investigate complaints, impose sanctions, conduct surveys and fulfill other duties
But the current bill includes no appropriations to fund the measure, leaving it up to employers to cover 100% of the cost.
And the proposed contribution in Washington is 5% of the total charge collected from the consumer for each transaction of services provided, or $1 for every hour that the worker provides services, whichever is less.
California is also considering legislation that would grant gig workers some bargaining rights, making it even more likely other states would follow.
A similar bill in NJ, S943, would “establish a system for portable benefits for workers who provide services to consumers through contracting agents” in the state.
But the proposed employer obligation would be much higher in NJ.
Under S943, the required contribution amount would be “the lesser of 25% of the total fee collected from the consumer for each transaction of services provided or six dollars for every hour in which the worker provided the services.”
And the NJ bill would also entitle workers who opt not to take the benefits to receive half of that $6 surcharge for each hour worked.
Employers would have to provide “workers’ compensation insurance to workers entitled to workers’ compensation benefits, and other approved occupational accident insurance to workers who are not entitled to workers’ compensation benefits.”
In addition, providers in NJ would have to provide gig workers who opt in some or all of the following benefits:
- Health insurance
- Paid time off
- Retirement benefits, or
- Other benefits determined by the providers.
Of course, in order for the NJ bill to become law, the full Senate and Assembly must both approve it and the governor sign it.
NJ Governor Phil Murphy has not indicated if he would sign a bill if it makes it to his desk.
Likelihood of passage increasing
However, two similar bills in NJ died in committee in 2017 and 2018.
Neither the Washington state nor New Jersey gig worker bill faces a smooth run through the respective legislature.
But other state legislatures are debating similar measures and one will likely reach a governor’s desk in the next couple of years.
If the 2020 federal election results in a Democratic administration in Washington DC, similar measures might quickly move to a vote in Congress.