President Joe Biden’s Labor Secretary Marty Walsh told Reuters on Thursday that he supports classifying gig workers as employees, which could signal a policy shift coming from the federal government.
“We are looking at it but in a lot of cases gig workers should be classified as employees,” Walsh told Reuters. “In some cases they are treated respectfully and in some cases they are not and I think it has to be consistent across the board.”
Walsh said that he wants to ensure that the “success” of companies that employ gig workers “trickles down to the worker.” He’s planning discussions between such companies and the Department of Labor to secure “all of the things that an average employee in America can access,” like health care and other benefits.
As head of the Labor Department, Walsh’s view could lead to significant changes to the gig economy. After the story was published, shares of Uber, Lyft and Doordash dropped significantly. Uber lost more than 6 percent, and Lyft and Doordash dropped more than 10 percent by midday.
Gig workers and the labor movement were dealt a blow last year when California passed Proposition 22, which allowed companies like Uber, Lyft, Instacart, DoorDash and Postmates — which together spent hundreds of millions lobbying for the legislation — to continue classifying their workers as gig workers instead of full employees. That means that these companies could continue not guaranteeing their employees a minimum wage and denying them benefits like paid sick leave and access to unemployment insurance.
Nonwhite and immigrant gig workers also don’t get the same protections from discrimination as employees in the U.S., which is particularly concerning because the vast majority of gig workers are people of color.
The nonemployee designation has led to dire conditions for some workers, especially during the pandemic. The Los Angeles Times reported last year that one Uber worker died after having contracted COVID-19 while driving for the company. His family’s request for worker compensation was then denied because he wasn’t an employee of the company.
Labor advocates decried the passage of Prop 22 when it passed in November. Robert R. Raymond wrote for Truthout that it was “one of the most significant setbacks to labor rights in recent history,” while also noting that gig workers were quietly being denied employee status in state legislatures across the country last year.
Gig workers make up a large portion of the workforce in the U.S. According to a 2017 survey by the Bureau of Labor Statistics, 55 million people, or 34 percent of the workforce, were gig workers, a figure that was expected to grow. Other sources like the Freelancers’ Union have found that the figure varies between 25 and 35 percent of the workforce.
Workers are hurt by harmful gig economy policies, but the government also misses out on revenue when so many workers are denied benefits; companies can skirt paying for Medicare, Social Security and unemployment insurance taxes when they keep their workers from being employees. In California alone, the state has estimated that it loses out on $7 billion in revenue annually due to the classification.