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Why gig companies should be scared of a Biden administration

A divided government wouldn't stop Biden from classifying gig workers as employees. Here's how it could happen.

An Uber driver

Biden officials are likely to try to force companies like Uber and Lyft to pay their drivers federal minimum wage and empower gig workers to unionize.

Image: Dan Gold/Unsplash

Forget regulating Big Tech: Gig economy companies could face the industry's most aggressive government regulation during a Biden administration.

Tech lobbyists and labor experts told Protocol that gig companies are gearing up for an expensive, existential battle with the Biden administration. They know that an antagonistic Biden Labor Department has the ability to override state efforts to limit gig workers' rights, and experts described to Protocol how that could play out.

With a potentially divided Congress, it could be an uphill battle to pass any legislation on tech issues such as antitrust, privacy or Section 230, all of which have deep partisan fissures. So, if Republicans keep the Senate, "you're going to have a Biden administration looking to do as much as they can through agency actions" where Democrats can push regulations unilaterally, said Brian Chen, a staff attorney with the National Employment Law Project. That could make the already-powerful Department of Labor and National Labor Relations Board more important than ever.

Biden officials are likely to flex their muscles at those agencies to classify gig workers as employees, both forcing companies like Uber and Lyft to pay their drivers federal minimum wage and empowering gig workers to unionize. The companies already spent hundreds of millions of dollars to keep workers classified as independent contractors in California through Proposition 22 — but a Biden administration could make it difficult for them to expand that campaign across the country.

"Prop 22 was a tactical win but not necessarily a strategic solution," said one tech policy executive. "This is a huge issue for labor, and you have a presidential ticket that ran as closely aligned with labor as you had in a long time, so this is an area that's going to get a lot of focus."

Biden hasn't yet announced his picks for the DOL and NLRB, but it's widely expected that he will appoint labor-friendly candidates with deep ties to unions. An aide with the Committee on Education and Labor said "there's a lot the DOL can do by itself to help crack down on this misclassification of workers, not just in the gig economy but across the economy."

There's been some question as to whether Biden intends to follow through on his campaign promises to firm up rights for gig workers, as critics pointed out that he tapped Uber and Lyft officials to join his transition team. But two sources who have advised Biden on tech issues said those personnel choices are unlikely to sway his administration's resolve to crack down on employee misclassification.

A Biden spokesperson pointed Protocol to Biden's plan for workers. "Employer misclassification of 'gig economy' workers as independent contractors deprives these workers of legally mandated benefits and protections," it reads.

Uber did not respond to a request for comment. Spokespeople for Lyft and Instacart each said they are looking forward to working with the incoming Biden administration. "We are eager to work with lawmakers in Washington, DC and around the country on new policies that prioritize Dasher voices by protecting their flexibility and extending portable and proportional benefits," a Doordash spokesperson said. "Prop 22's success is proof that voters from across the political spectrum support finding new solutions that better support Dashers and independent workers like them."

Some companies said they are still holding out hope that there could be some compromise with the Biden administration and incoming Congress, separate from the DOL and NLRB's efforts. Vikrum Aiyer, vice president of global public policy with Postmates, said he predicts there is room for a "meaningful debate" in Congress and a Biden White House about how to provide expanded benefits to workers without exclusively focusing on the politics of classification.

He pointed out that even a divided Congress could work on a bipartisan basis to figure out a compromise solution on the controversial issue – especially during the COVID-19 pandemic, which saw the government offer unprecedented benefits to self-employed workers.

"Biden is a legislator and an innovator whose pandemic-recovery plan acknowledges that our economic resilience demands policies that are both pro-worker and pro-innovation," Aiyer said. "Pitting 'workers' and 'capital' against each other does little to identify durable frameworks to elevate protections for essential workers, while growing the essential technologies providing access to that work.

Agency action

The new administration's first priority will likely be to reverse the multiple steps the Trump administration took to roll back protections for gig workers, experts and congressional aides said. It's widely expected that a Biden administration will revoke an incoming Trump Labor Department rule that would make it easier for companies to avoid classifying workers as employees and roll back a 2019 NLRB analysis that claimed Uber drivers are independent contractors.

A Biden Labor Department official could then issue an opinion, called an "administrator's interpretation," to clarify that the DOL believes gig workers are employees under the Fair Labor Standards Act, which sets federal minimum wage and fair labor overtime pay for all employees in the U.S., regardless of what's happening at the state level. That was the DOL's stance during the Obama administration. To affirm that opinion, the DOL could sue Uber, Lyft or another gig work company, setting up a prolonged legal battle to establish whether they have violated the law by misclassifying their workers. The companies would likely fight such a case all the way up to the Supreme Court.

Meanwhile, the NLRB, which handles the question of who has a right to unionize, could issue a rule about whether gig workers are employees under the National Labor Relations Act or adjudicate an unfair labor practice charge from a group of gig workers trying to unionize. "That's two routes [at the NLRB] to the same outcome, which is 'drivers are employees,'" said Benjamin Sachs, a professor of labor and industry at Harvard Law School. "Once that determination was made, every Uber and Lyft driver everywhere in the country would have the right to form a union."

But the NLRB process will likely be stalled as Democrats wait for the tenure of NLRB general counsel Peter Robb — who has sided with gig companies on the question of worker classification — to expire in November 2021. "There really won't be anything that happens until the next general counsel comes in," one congressional aide said.

Heidi Shierholz, a former chief economist at the Labor Department and senior economist with the Economic Policy Institute, said it could take over a year for the agencies to finalize rules and regulations around gig work. And the lawsuits against gig companies could take even longer, especially if they go to the Supreme Court.

In the interim, Aiyer with Postmates said it's possible the Biden White House could try to hash out a deal among technology companies, workers and other stakeholders, such as racial justice organizations. "If Biden can wield the convening power of the White House to raise the level of debate in this country about what a new American safety net looks like for all workers regardless of who their employer is, that could go far beyond any singular proposed rulemaking," Aiyer from Postmates said. "Instead we can ask ourselves, how can we strengthen 20th century labor laws to broaden the tent of worker protections and close the delta between one class of workers with benefits and another without?"

For now, gig companies including Uber and Lyft are aggressively lobbying to export the Prop 22 model across the country. A group called Illinoisans for Independent Work, backed by $1.2 million from Lyft, recently launched an ad campaign lauding the "flexibility" of independent work, echoing the rhetoric of the Yes on Prop 22 campaign.

"The companies have already made it clear they're going to bring Prop 22 or something like it to other states," Chen said. "I fully expect them to do so in 2021."

But if all goes according to plan for a Biden administration, it won't be far behind.

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