Gig companies resist US pressure for employee status, propose compromise

Gig companies resist US pressure on employee status and propose a compromise

Gig economy companies like Uber, Lyft, Doordash, and Instacart are pushing to keep drivers independent contractor status, albeit with added perks.

The companies, whose business model is based on low-cost flexible labor, argue that surveys show that the majority of their workers do not want to be workers and that a new generation of workers want to choose when and how much to work.

They hope to convince US officials and lawmakers to drop attempts to classify gig workers as white-collar workers. These efforts have become more urgent with the election of US President Joe Biden, who stood up for the promise to benefit gig workers.

US Secretary of Labor Marty Walsh intensified the debate on Thursday and told Reuters in an interview that “many gig workers should be classified as employees”.

Shares of Uber Technologies Inc, Lyft Inc and DoorDash Inc fell as much as 12 percent on Thursday after Walsh’s comments. Converting gig workers into white-collar workers would jeopardize the business models of companies that rely on millions of largely part-time workers who do not receive benefits such as unemployment or sick pay.

Less than two weeks after Biden was named the 2020 presidential election winner, Uber, Lyft, DoorDash, Instacart and Postmates joined forces to form the App-Based Work Alliance, a Washington-based advocacy group.

In response to Walsh’s remarks, the alliance said in a statement Thursday that it looked forward to meeting the secretary to “have much-needed discussions on the advancement of modern strategies that protect the independence and flexibility of workers while reaping the benefits and.” strengthen protection “.

The group says their goal is to achieve changes in U.S. labor law that will allow workers to remain flexible while receiving more modest benefits than workers need, including minimum wage standards, health care subsidies, and accident insurance.

The gig economy companies achieved a pivotal victory in California in November when Democratic state voters backed a company-sponsored election that cemented gig workers’ status as independent contractors and a state law converting them into employees would have done.

Gig workers in the state now have access to limited benefits, including health care subsidies, accident insurance, and minimum wages while passengers are in their cars. However, the proposals that companies have made so far lack the provision of unemployment benefits, one of the most expensive benefits for employers.

Gig workers’ lack of access to unemployment insurance came into the spotlight during the coronavirus pandemic when an act of Congress saw taxpayers pay the unemployment bills for such workers.

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