Workplace Culture

Must workers choose between benefits and flexibility?

Meghan McCarty Carino Aug 11, 2020
Heard on: Marketplace
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A ride-share driver in Los Angeles calls for enforcing California Assembly Bill 5, which requires some companies to reclassify independent contractors as employees. Mario Tama/Getty Images
Workplace Culture

Must workers choose between benefits and flexibility?

Meghan McCarty Carino Aug 11, 2020
A ride-share driver in Los Angeles calls for enforcing California Assembly Bill 5, which requires some companies to reclassify independent contractors as employees. Mario Tama/Getty Images
HTML EMBED:
COPY

A California court Monday ruled that Uber and Lyft must reclassify drivers as employees rather than independent contractors. Employee status comes with many important benefits, like paid sick leave, unemployment insurance and subsidized health insurance.

But Uber CEO Dara Khosrowshahi argued in a New York Times op-ed that it comes at the expense of flexibility, the lifeblood of the gig economy. He called for a new “third way” to classify and provide benefits to workers who fall somewhere between employee and independent contractor.

Under existing labor law, workers in America have to be classified as either an employee or an independent contractor. Paul Oyer, an economist at Stanford University, said that binary system goes back to the early 20th century when work looked pretty different.

“So the law isn’t perfect,” he said. “There’s a spectrum of possible work relationships. And we want to both protect workers along that spectrum, but also allow some amount of flexibility.”

While the pandemic has highlighted the need for better protections for gig workers, most still prefer to be independent, according to one survey, so they can set their own hours.

Gig platforms have argued that won’t be possible if workers are employees.

“That is just untrue,” said Benjamin Sachs, a professor of labor law at Harvard University. “You can be an employee and have an entirely flexible work arrangement.”

Many workers already do, especially now. But Seth Oranburg, a law professor at Duquesne University, said allowing employees to set their own hours often doesn’t make business sense.

“An employee that brings in $500 a month and cost $1,500 a month just for health care doesn’t add up economically,” he said.

Worker classifications and their attendant benefits could become increasingly important as the pandemic accelerates changes to employment beyond the gig economy, said New York University business professor Arun Sundararajan.

“The crisis that we’re going through now has wiped the slate clean,” he said. “Many companies have let go tons of full-time employees and so they have a chance to reconstruct their workforce and work arrangements.”

With so many workers out of the office and working independently, he said white collar work could start to look more like the gig economy.

COVID-19 Economy FAQs

Are people still waiting for unemployment payments?

Yes. There is no way to know exactly how many people have been waiting for months and are still not getting unemployment, because states do not have a good system in place for tracking that kind of data, according to Andrew Stettner of The Century Foundation. But by his own calculations, only about 60% of people who have applied for benefits are currently receiving them. That means there are millions still waiting. Read more here on what they are doing about it.

Are we going to see another wave of grocery store shortages?

Well, public health officials are warning that we could see a second wave of the virus before the end of the year. And this time retailers want to be prepared if there’s high demand for certain products. But they can’t rely totally on predictive modeling. People’s shopping habits have ebbed and flowed depending on the state of COVID-19 cases or lockdowns. So, grocers are going to have to trust their guts.

What’s going to happen to retailers, especially with the holiday shopping season approaching?

A report out Tuesday from the accounting consultancy BDO USA said 29 big retailers filed for bankruptcy protection through August. And if bankruptcies continue at that pace, the number could rival the bankruptcies of 2010, after the Great Recession. For retailers, the last three months of this year will be even more critical than usual for their survival as they look for some hope around the holidays.

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