Why Now Is a Terrible Time to Limit Worker Flexibility
However, according to Senator Elizabeth Warren (D-Mass.), these companies fail to provide their workers with “basic rights and protections” in the midst of a pandemic. In a letter to CEOs of four food delivery apps last week, Warren called on companies to reclassify their workers as full-scale employees and provide increased protections like paid sick leave and a minimum wage. These attacks on businesses during the crisis have echoed general criticisms from politicians against some of these companies concerning worker protections against COVID-19 itself.
As America grapples with the pandemic and prepares for potentially unprecedented levels of unemployment, policymakers should provide employers with sufficient flexibility to make internal hiring decisions rather than push harmful policy ideas.
Last week, the United States saw a record-high 6.6 million new unemployment claims. For Americans who lose their jobs and have to juggle increased caretaking demands due to school closures and family illness, part-time contracting or gig work can provide a crucial lifeline. Forcing companies to reclassify their workers as full employees would make it more difficult for unemployed Americans to obtain work quickly and meet their immediate needs.
It’s important to note that Senator Warren’s preferred fix to the situation—along with that of other left-of-center politicians—would affect many more workers and industries than just the gig economy. Senator Warren and other Democrats have strongly endorsed California’s infamous A.B. 5 law, which reclassified thousands of workers as full-scale employees who were previously independent contractors.
The California model, known in policy circles as the ABC Test, is extremely stringent in its requirements, since it only allows workers to be classified as contractors if they work “outside” the “normal scope of business” of the company they are working for. This means that even jobs that have long operated under an independent contractor system—including real estate agents, emergency room doctors and freelance writers—would be upended unless they are specifically exempted.
The costs to workers of forcing them to reclassify is significant: It would eliminate their flexibility to set their own hours and work on their own schedules. While some contractors and gig workers rely on their jobs for full-time employment, many do not. As one example, the average driver for DoorDash works just three hours per week. This flexibility is important in regular times but becomes even more urgent in a time of crisis, when the ability to drive for several hours each week could mean the difference between making rent for a month or not.
As Senator Warren’s letter shows, the main impetus among left-leaning policymakers to push a reclassification agenda is based on concerns that these workers lack sufficient protections and benefits. But not only does the recent coronavirus relief package, the CARES Act, explicitly include gig economy workers, there are other better ways to address concerns over benefits.
A better alternative would be to both protect worker flexibility and enshrine worker protections. This could be done either by establishing a safe harbor for independent contractors under the law, or creating a new “flexible worker” status for groups like gig economy workers and other similar workers. This could then be paired with a portable benefits model, which might provide these workers with benefits such as a type of unemployment insurance or paid leave. While the exact contours of what this model would include is up for debate, it’s clear that it’s a more sustainable and targeted solution than forcibly reclassifying workers.
In an economic and public health crisis, we should be doing everything we can to support more flexible work arrangements—not enacting onerous labor regulations that stifle the gig economy and limit options for struggling Americans.
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