According to a recent Upwork study, more than one in three working Americans are freelancing during the pandemic, an increase of two million since 2019.
And now that President-elect Joe Biden's party has secured a Senate majority, he hopes to transform the freelancing space in 2021.
Here's how: Biden is aiming to implement a federal gig-economy policy similar to California's controversial AB-5 law. That measure, which has been fiercely fought by Uber and Lyft, extends the benefits and protections of a W-2 employee relationship to many freelance workers. Currently, over 100 other industries have been granted an exemption as well.
The problem: The law uses an "ABC Test" to determine whether workers are independent contractors under the California Labor Code. Freelancers are automatically presumed to be W-2 employees, and the burden is on the company to show otherwise. To reclassify the person as an independent contractor, the company must satisfy the test's three criteria.
The numbers: According to a study by the UC Berkeley Center for Labor and Education, 64% of independent contractors in California would be categorized as an employee under the current AB-5 law.
"This epidemic of misclassification is made possible by ambiguous legal tests that give too much discretion to employers, too little protection to workers, and too little direction to government agencies and courts."
The players: Over the summer, five union presidents served on Biden's unity task force, and two union Presidents (Teresa Romero of the United Farm Workers and Lonnie Stephenson of the International Brotherhood of Electrical Workers) were recently appointed to his transition team advisory board.
The Biden Administration looks to address employer misclassifications of gig workers that enable companies to withhold legally required benefits and protections from their employees.
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Background: Biden supports the Protecting the Right to Organize Act, which would hold company executives liable if they interfere with union organizing efforts. The Biden Administration maintains that it will "aggressively pursue employers who violate labor laws, participate in wage theft, or cheat on their taxes by intentionally misclassifying employees as independent contractors."
The issue: Biden's gig economy goals have alarmed many freelancers across the country. Some fear that the "B" portion of the ABC Test, which defines a "contractor" as a person performing work that is outside the usual course of the hiring entity's business, may make it difficult for freelancers to accept work within their actual industries. The federal act would use that same California-ABC test to decide who is considered a freelancer nationwide.
Looking forward: Even with a divide Senate, Biden's Administration would have had authority to influence existing labor laws. For example, a re-interpretation of the Fair Labor Standards Act could allow gig workers to qualify for minimum wage and receive overtime pay. But the president-elect's party won both houses of congress. So he'll have many more tools at his disposal.
What are your thoughts on the Biden Administration's goals for the gig economy?