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How the Gig Economy Hurts the American Workforce

What Texas and California are experiencing with 1099 classifications, should concern us all

Brian Young's picture
Mar 29, 2019

The gig economy is growing at an alarming rate. Companies like Uber, Lyft, Seamless and Postmates are changing the way that people work. In many states, laws have failed to keep up with these changing trends and are now facing heavy lobbying from these companies to make it easier to classify gig economy employees as independent contractors instead of company employees.

In Texas, the state Workforce Commission passed a new rule to reclassify workers engaged in gig work. The new rule looked to be a favor to big companies like Uber since new directive would make it clear that workers for “marketplace platforms” like Uber aren’t employees, exempting those companies from having to pay into the state’s unemployment insurance fund.

 A recent report from the Texas Observer found that beginning in December of 2017, Handy.com, an app-based cleaning, and maintenance company, began lobbying the commission to pass a new “marketplace contractor” rule. Due to lobbying from Handy.com and their high-priced NYC lobbyist, Tusk Strategies, similar laws have been passed in Arizona, Florida, Indiana, Iowa, Kentucky, Tennessee, and Utah. Tusk also lobbies for other anti-worker companies like Wal-Mart and Tesla.

The decision to go through the Workforce Commission was especially controversial since changes to labor laws usually are passed through the state legislature. According to communications obtained by the Texas Observer, Tusk Strategies assured Chair Ruth Hughs’ team that the Texas Workforce Commission wouldn’t be the only state agency making an end-run around the legislative process.

As more and more people begin to work in the gig economy it is important that states adopt and strengthen their laws governing how these workers are classified. Tech companies will be using their enormous war chests to push for less regulation and for the ability to pay less in benefits and wages.

For more on this issues, listen to this week’s UCOMM Live where we talk to Texas AFL-CIO Communications Director Ed Sills.

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