The Gig Is Up

I’ve sipped on the water in the People’s Republic of Cambridge, and it doesn’t taste any different than water anywhere else. But there has to be something in it to make people at Harvard lose all touch with reality.

What happened in California? Despite the state’s liberal reputation, voters there last week approved Proposition 22, a ballot initiative exempting many gig companies from state workplace laws and stripping their workers of basic, essential protections.

Uber, Instacart, Lyft, DoorDash and other on-demand providers of ride-shares and food and grocery deliveries spent $200 million pushing the proposal, an astounding sum that workers and their allies couldn’t remotely hope to match. Not surprisingly, Californians were misled by an avalanche of claims about the proposal’s impact on workers. The measure, which takes effect next month, was approved with 58 percent of the vote.

A 58% loss seems rather definitive. Was it the amount of spent by these evil enterprises? What else could it have been, since California is where the woke go to vote and workers are wonderful and deserve to be protected. Harvard Law School’s Terri Gerstein can’t see any other possibility.

What was at stake with Proposition 22 was whether workers for app-based driver and delivery companies would be considered employees under California statutes, which like workplace laws nationwide, cover only employees, or whether they should be classified as independent contractors. Proponents argued that requiring gig companies to follow current laws would badly damage their on-demand business model and result in longer wait times, higher prices and the loss of countless jobs. These were the same bleak prognostications gig companies made about the minimum wage for drivers that New York City enacted two years ago — predictions that did not come to pass.

And she’s not wrong about New York’s imposition of a minimum wage for gig workers, except that has nothing to do with the problems California invented when it decided to try to micromanage the gig economy. Ironically, Prop 22 learned from New York, requiring gig workers to be paid 120% of minimum wage. But that wasn’t the point of Prop 22. The point was that as passionately as the wobbly doyennes of Harvard believe that every worker should be treated as if Jimmy Hoffa loves them, California’s AB5 was fundamentally screwed up.

The reclassification of independent contractors to employees wreaked havoc with actual independent contractors, but the law’s proponents saw that as an unfortunate unintended consequence that other people had to suffer lest they allow a loophole that companies would exploit. They wouldn’t let workers be exploited in California, even if it killed the workers. It was an option, whether to leave a gap in the law to allow actual independent contractors to work or sweep them up with the rest so that no one who was meant to be helped would be left out.

Good intentions don’t make bad law any better, and California has a tendency to be on the cutting edge of bad law. The desire to save workers from exploitation is a worthy goal, but this law made it impossible for workers who wanted to be independent contractors from doing so, and businesses that wanted to avail themselves of the services of independent contractors from doing so, and would have spelled the death of the concept of gig workers.

But all that is why 58% of the vote favored Prop 22. It wasn’t flashing TV commercials or threats that Uber was outa there. It was the cries of writers, drivers, people who wanted to take advantage of independence but were now shut out by the best of intentions.

Now, workers for these gig companies in California will not have a right, as employees do under state law, to paid sick days, overtime pay, unemployment insurance or a workplace covered by occupational safety and health laws.

There are certainly real concerns here, not that Gerstein presents them honestly. The gap created here is that companies use workers as full time employees but treat them as independent contractors. The gap here is that companies that once had a full contingent of full time employees to staff its workspace will now game their hours, duties to eliminate employees and replace them with independent contractors, even though they will be the same people doing the same work exactly the same as they did before.

Is that wrong? You bet. Reimagining employees as independent contractors to deny them wages and benefits is the flip side of gaming the system, and now that gig workers are a “thing,” what’s to stop companies from taking advantage of it? The obvious answer is that if workers aren’t independent contractors as defined by law, then they have to be treated as workers. Except law doesn’t happen on its own, so if the companies are gaming the law, someone has to challenge it, pursue it and win.

And companies aren’t invariably stupid about it, making some cosmetic changes to their workforce to create the appearance of independence while keeping their thumb on workers’ heads. It won’t necessarily be easy to tell the difference with a little lipstick on that pig.

Can a workable law be crafted that can both allow independent contractors to exist and protect workers who are vulnerable to exploitation? That’s the question, and it’s not an easy one to answer. California’s AB5 was bad law, grossly overreaching and making it impossible for the array of workers who wanted to be independent from getting work. But if the effort was put into crafting a law that wasn’t so heavy handed, so myopic as to pass muster at Harvard Law School, maybe 58% of the voters in California would support it. Maybe even more.

Of course, you wouldn’t know any of this from Gerstein’s disingenuous rant, which is why workers in California can’t have nice things. And never will until we’re a lot more honest about both the real problems and real solutions needed to address them.