Within the last six months, legislators in at least eight states have introduced bills that declare workers for “online digital marketplaces” to be freelancers, or independent contractors. In three states, those bills have already been signed into law.
The bills in most cases were drafted and lobbied for by building services company Handy.…Handy, which has raised more than $100 million in venture capital, says that the new will bills provide clarity, and will allow the company to provide training and benefits for workers without fear of lawsuits. The company has already been the target of lawsuits arguing its workers are employees (some have been settled out of court, others have resulted in mixed rulings). It is also currently facing a complaint from the National Labor Relations Board that argues its workers are employees, saying Handy has more control over their work than it would a freelancer’s work.
The bills’ opponents argue that that they could easily be abused by employers who want to call their workers freelancers in order to avoid payroll taxes and other benefits to which employees are entitled—leaving more workers without social security, health insurance, and the protection of labor laws as a result.
The relationship that gig economy companies like Uber have with their workers is widely considered to be a gray area, and court rulings on the question have been consistently inconsistent. In the debate outside of state legislatures, some have proposed addressing the relationship by creating a new category of workers that would have more rights than a freelancer, but less than an employee. Others have sought new types of benefits for this on-demand worker, which when classified as an independent contractor is left out of social safety net programs.
Bills with nearly identical language around online marketplaces have been introduced in seven states where Handy paid lobbyists within the last six months. They have passed one house of the legislature in Georgia and Colorado; passed both houses in Iowa and Tennessee; and been signed into law in Kentucky,Utah, and Indiana. A similar bill was also introduced in Alabama.
Most of these bills propose a law that, once in effect, would clarify that workers who find jobs through a website or mobile app are independent contractors, as long as the company running the digital platform does not control their schedules, prohibit them from working elsewhere, and meets other criteria (at least two specifically exclude transportation network companies like Uber).
Uber has embraced a similar state-by-state strategy as it faces the question of whether its drivers should be considered employees. According to a report from the Partnership for Working Families and the National Employment Law Project (NELP) that details these lobbying efforts, about half of US states have passed laws that “declare variously that drivers are not TNC employees, state that the TNCs do not ‘control’ or ‘manage’ their drivers, and/or impose entirely new tests of ’employee’ status, written only for the TNCs.”