Takeaways From Day 1 of GrubHub’s Worker Classification Trial
Key in the debate is how to classify workers. Large platform-based companies, such as the ride-hailing companies Uber and Lyft, are built on the backs of independent contractors, rather than employees who are entitled to benefits such as worker’s compensation and health care under federal labor laws.
Republican committee chair Rep. Virginia Foxx, R-North Carolina, acknowledged the workers of this economy do not fit neatly into the “obsolete job categories” and that there are questions over how workers can gain access to health care, retirement and worker’s compensation benefits, which are reserved for employees rather than independent contractors. Yet, Foxx said, workers in the sharing economy have a choice to be part of such companies.
“People can go to work in a factory if they are looking for security or a regular paycheck and the things that come from different jobs,” Foxx said. “Sharing economy gives ultimate freedom to people in this country. We attempt to regulate it at our peril. It’s not the government’s role to create a level playing field.”
Democratic U.S. Rep. Bobby Scott of Virginia said lawmakers need to make sure the sharing economy model reverses a trend that he argued has made more families economically insecure, and to not exacerbate the loss of worker protections. He stressed the importance of collective bargaining for workers, for instance, as well as rights of employees.
“We need to make sure that people need to make sure they have a safe workplace and consistent income,” Scott said.
Gig economy companies have fought court battles and paid out millions of dollars in settlements over how to classify workers. Transportation, delivery and home service companies have paid back pay and wages but are reluctant to change how they label workers. Uber and Lyft, the housecleaning services Handy and Homejoy, and the delivery services Postmates Inc., TryCaviar and Amazon Prime are all now or have been the subjects of litigation over employee status.
Cities and states have passed laws regulating such companies, as well. Beckerman suggested that some of the local laws put in place to regulate the sharing economy are designed to keep out competition by existing industries, such as taxi companies or hotels.
Labor and employment laws do and should apply to this sector, Sharon Block, executive director of the Labor and Worklife Program at Harvard Law School, told the committee. Block said the application of current law should not stifle flexibility.
Arun Sundararajan, professor at New York University’s Stern School of Business, who wrote a book on the sharing economy, suggested that the government create a framework that would encourage stakeholders to contribute to a system that would provide benefits for the workers.
“Going back to a model where someone called the employer is providing all the funding is no longer viable, with so many entrepreneurs,” he said.
