Shulou(Shulou.com)11/24 Report--

"many workers in the American shared economy should be defined as' employees' and they should receive job benefits. In the coming months, the Department of Labor will continue to communicate with companies in the shared economy to ensure that workers in these industries have continuous pay, medical benefits, paid sick leave and 'the treatment available to all ordinary American employees'." Marty Walsh, the U.S. Department of Labor, said publicly last week.

A regulatory document issued by the US Department of Labor this week has made Uber, Lyft, Instacart, Doordash and other travel giants in the shared economy feel a chill, leading to varying degrees of decline in the share prices of the giants. The regulatory document may not only directly affect the earnings prospects of these companies, but may even directly shake the business cornerstone of the US sharing economy.

After a statement and a document, the giants of the American sharing economy were filled with excitement: they finally spent $200 million to take care of California, and now they are facing the regulatory nightmare of the US government. What kind of regulatory document is this, and why does the U.S. Department of Labor have a problem with industries in the sharing economy?

The two policy adjustment factions are battling to give a brief introduction to the background: the Labor Department issued a new Federal Bulletin on Tuesday with plans to repeal a regulation from the previous administration. The former US government regulation was intended to make it easier for companies to classify workers as contract workers rather than regular employees.

This is not the first time the U.S. Department of Labor intends to repeal this rule. On January 6 last year, before the former president of the United States was about to step down, his government's Department of Labor formally issued a law on odd labor; just four months later, the new US government's Department of Labor announced that it would repeal the law. go back to the policy of the previous period.

The left and right governments of the United States take turns to be in power. After each change of president, the government is completely reshuffled and policies are swayed. After the former president took office, he massively abolished many policies of the previous government, and now the new president of the United States continues to roll back various policies and regulations of the United States. The Labor Department's repeal of gig regulations is just one of them.

Within a week, however, the Labor Innovation Association (Coalition for Workforce Innovation), a chamber of commerce representing the interests of Uber and Lyft, filed a lawsuit against the U.S. Department of Labor and shrewdly chose to sue in Texas federal court, where conservatives are dominant. There are also obvious left and right positions in the American judicial system, and there is an obvious difference between California prosecution and Texas prosecution.

As they hoped, in March this year, a conservative judge of the Texas Federal Court vetoed the decision of the US Government's Labor Department to repeal the previous government's odd jobs law on the grounds that the procedure was illegal. The judge had previously vetoed the government's fair and safe labor laws.

The sharing economy giants won an initial victory in the lawsuit between the sharing economy giants and the U.S. Department of Labor. Of course, the US government's Department of Labor immediately filed an appeal, and like the practice of every government change, this policy adjustment is once again caught up in legal proceedings between the left and the right.

In view of the fact that last year, the Labor Department of the US government was found to be illegal to directly revoke the previous government regulations (only 19 days of public review time was given), this time the US government strictly followed the procedures of the new rules, first announced the new policy plan, conducted 45 days of public review, and then promulgated formal regulations. It is expected that the whole process will be completed and formal regulations will not be promulgated and implemented until next year. Of course, chambers of commerce can still sue in federal court.

There is a huge difference in employee odd jobs. What is the difference between regular employees and contract odd jobs? Why did the previous government and the current US government take such a different position on this issue, and why do the giants of the sharing economy fight against this labor regulation point to the end?

According to the sharing economy model, whether it is Uber or Lyft,DoorDash or Instacart, the drivers and delivery men who provide services for consumers are independent contractors contracted with the platform, they provide labor services voluntarily, and the platform only acts as an intermediary between drivers and consumers. This means that drivers and couriers are self-employed, not employees of these platform companies.

However, at present, most federal and state labor laws in the United States only apply to regular employees and do not protect individual workers. The labor laws and regulations that enterprises must abide by, such as minimum wage, overtime pay and medical insurance, are only applicable to regular employees. Therefore, the shared economic platform does not need to be responsible for much of the labor security and medical benefits of contracted drivers and delivery workers.

The gig bill does not just affect the business model of the giant sharing economy. Because more and more American enterprises are accustomed to meeting the demand for labor through external odd jobs in order to reduce costs. According to a study by the U.S. Department of Labor, it costs 30% more for a company to hire a regular worker than a contract gig.

For example, hundreds of Meta cleaners went on strike in San Francisco and Silicon Valley headquarters last week to protest layoffs and hire large numbers of short-term odd workers, making their tasks heavier. These cleaners are not employed by Meta Administration, but provided by expatriate companies. And expatriate service contractors are also hiring short-term odd workers to reduce labor costs.

Obviously, the gig regulation of the former US government is a pro-business policy that helps enterprises to reduce employment costs, but the current US government's repeal of this regulation is from the pro-union position of ordinary employees, hoping to adjust the policy. force enterprises to bear more labor costs and help ordinary employees improve their salaries and insurance benefits.

The Labor Department wrote in the Federal Gazette that it had decided to continue to observe the regulation of gig regulations during the previous US government period, but now decided to press ahead with the proposed new regulatory changes. The Labor Department believes that the continuation of previous regulations may cause confusion and interference to employees and businesses.

Sharing economy giant shock if the US government's Labor Department successfully issues the new gig bill, it will directly benefit millions of cleaners, paramedics, construction engineers and contracted drivers.

They will have the opportunity to be classified as regular employees rather than individual odd jobs. This is also the fundamental reason why the giants of the sharing economy hate the new policy.

"the purpose of withdrawing the individual gig law is to protect the rights and interests of necessary workers, and preventing it from taking effect could lead to a bruising of labor protection," said Marty Walsh, the Labor Department. "if employers mistakenly classify workers as independent odd jobs, they will lose important pay and corresponding protection very frequently."

It is worth mentioning that Walsh served as a member of the Boston City Council and Massachusetts before being nominated to the U.S. Department of Labor. Before going into politics, he worked in the construction union in Massachusetts and was elected president of the union. The nomination of Walsh for the post of the Department of Labor is an important measure taken by the US government to get closer to trade unions.

Even more shocking to the giants of the sharing economy, Walsh said publicly last week that many workers in the American sharing economy should be defined as "employees" and that they should receive work benefits. Walsh also stressed that the U.S. Department of Labor will continue to communicate with companies in the sharing economy in the coming months to ensure that workers in these industries have continuous pay, medical benefits, sick leave and "treatment available to all ordinary American employees."

After his comments, the Labor Department introduced new rules again this week, which was interpreted as a possible major adjustment to the industry model of the sharing economy. The two shared travel giants also reacted immediately. An official spokesman for Uber said that most contracted drivers want to maintain their independent identity because they can decide when and where to work and have more flexibility.

"this proposed new rule is a return to previous government-era labour regulations, when our industry was growing rapidly," said Utess, head of government affairs at Uber. "at a time when the economy is full of great uncertainty, the US government needs to continue to listen to the 50 million people looking for jobs from our companies."

Lyft also said in a statement that the new rule is still in the 45-day period of public comment and will not have an immediate or direct impact on Lyft business for the time being. Lyft also stressed that the new rules will not immediately reclassify contracted drivers of the platform as regular employees or force them to change their business model, but go back to labor regulations and standards used by the previous government. The announcement of the two shared travel giants is clearly intended to reassure investors to stabilize their share prices.

The $200 million deal with California, however, is no stranger to such regulatory challenges for sharing giants. Because they just went through a regulatory battle in California two years ago. In total, the giants invested $200 million to pursue an ongoing lawsuit with the California government. After the failure of the lawsuit, there was a lot of publicity and lobbying, and finally successfully won the regulatory exemption in the referendum.

In April 2018, in a labor lawsuit filed by delivery company Dynamex and its delivery drivers, the California Supreme Court unanimously ruled against Dynamax, arguing that they misdefined their drivers as independent contractors, depriving the latter of their rights in the labor bill. Drivers are required to enjoy the labor benefits and benefits stipulated by California law for normal employees.

The California Supreme Court also determined whether a worker belongs to an independent contract worker "ABC test": (a) when a worker is engaged in work (with or without a work contract), it is not under the control and guidance of the employing entity; (B) the work that the worker does is outside the day-to-day business scope of the employing entity; and (C) the worker usually engages in this kind of work, with independent operation and trade, occupation or business. Three criteria must be met at the same time in order to be recognized as a contract worker.

Affected by the penalty, the California House of Representatives passed the AB 5 Act in September 2019, which was sent to Newson, California, for signature and formally implemented in January 2020. The AB 5 state law incorporates the above ABC test into law as a formal criterion for determining whether a worker is a contract worker. The bill was basically led unilaterally by members of the main Party, and only one Republican state senator voted for it.

Why is the California government so determined to turn online dating drivers into full-time drivers? On the one hand, it is to protect the basic rights and interests of vulnerable groups of workers, and trade unions directly determine the direction of the vote; on the other hand, they also hope to increase taxes for the California government. Uber, Lyft, Doordash, Instacart, Postmates, if all five companies comply with the state's new labor law, it will add nearly a million full-time employees (in the case of one driver signing up for multiple platforms), which means an increase in payroll tax (Payroll Tax) for nearly a million people in California.

Obviously, sharing economy giants such as Uber and Lyft are unwilling to accept this new rule, let alone give up the online dating model on which they rely for survival. If drivers are counted as regular employees, Uber and Lyft have become taxi companies in California called App hire, which buy expensive health insurance for hundreds of thousands of online drivers, offering minimum wage, overtime pay and sick leave. Similarly, online delivery companies such as DoorDash and Postmates also have to maintain a costly team of takeout staff.

From 2019 to 2020, several giants of the sharing economy, such as Uber, Lyft, Instacart and DoorDash, refused to comply with California's New Labor Law and filed an one-year lawsuit against the municipalities of San Francisco, Los Angeles and the California government. On the one hand, a total of nearly $200 million has been invested, from social media to online platforms to offline advertising, and a great deal of publicity and lobbying has been carried out in California to launch a referendum proposal, Prop 22, calling on California electors to agree to grant them exemptions from the new labor law.

Companies such as Uber and Lyft stressed that the new labor law would destroy online dating and sharing economy industries, leading to a sharp rise in the price of takeout for California consumers, even threatening to withdraw from the California market. Before that, the two online dating companies had pulled out of the Austin, Texas market for a year. In the California referendum in November 2020, 58.6% of voters supported exempting the giants of the sharing economy from treating contracted drivers as regular employees. These sharing economy giants have also kept their business models without having to "make good on their promises" to withdraw from the California market where they are headquartered.

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