Workers are changing. California Legislature must face that reality

By Allan Zaremberg

Allan Zaremberg is president and chief executive officer of the California Chamber of Commerce, az@calchamber.com. He wrote this commentary for CALmatters. Please see his past commentary for CALmatters by clicking here.

Labor protections are meant to address certain situations where there is an imbalance in control between the employer and employee. But when the workers themselves control their working conditions, are these labor protections still necessary? 

The heart of the debate over independent contracting in the gig economy is how can we improve protections for gig workers, without losing the control and flexibility they value.

Today, you can’t have it both ways. Having job security means the employer will schedule your hours. Without that control, you couldn’t get coffee in the morning if one day all the baristas choose to sleep in.

On the other hand, embracing the freedom to control your own schedule releases an employer from paying overtime or scheduling mandatory breaks, since you control when, where and how long you want to work. 

But times are changing and so is technology, and arrangements for gig workers don’t need to be an either/or proposition. The best approach is to explore new models that uplift work and extend labor protections where there are the most obvious needs.

The wrong approach is to shoehorn all freelance workers into an industrial model built for a different age and outdated technologies.

Technology hasn’t just created more choices for consumers. It has provided a flexible way for workers to earn money and supplement income in California and around the world according to their own lifestyles and preferences. 

Hundreds of thousands of workers in California are voting with their pocketbooks to forego or supplement traditional work arrangements with work in the gig economy to accommodate school, kin care, or avocations, or to bring in more income on the side.

But making way for change isn’t easy, particularly when traditional work arrangements are defended by special interests that can exist only within those old models. While progressive in other realms, the California Legislature has never grappled with how freelance workers and independent contractors fit into our dynamic economy, especially the gig economy. 

By default, workers have been governed by laws uninformed by the advances of mobile phones, information networks, or the innovation revolution of the past decade.

But don’t take my word for it. 

In a 2015 opinion on drivers in the gig economy, U.S. District Court Judge Vince Chhabria of San Francisco stated, “The test the California courts have developed over the 20th Century for classifying workers isn’t very helpful in addressing this 21st Century problem. Some factors point in one direction, some point in the other, and some are ambiguous … perhaps drivers should be considered a new category of worker altogether …”

The Legislature must get off the sidelines and set the ground rules for the networked, innovative, on-demand economy, not by rolling back the clock as if the gig economy doesn’t exist, but by recognizing and supporting nontraditional workers.

Freelance workers are overwhelmingly satisfied with their arrangements. According to a survey by the federal Bureau of Labor Statistics, independent contractors overwhelmingly prefer their work arrangement (79%) to traditional jobs. Fewer than one in 10 independent contractors would prefer a traditional work arrangement, according to the bureau.

What drives these attitudes?

• Flexibility.  Clearly the biggest benefit for the drivers on the network platforms. They can log on and off whenever they want. There is no minimum commitment for a number of rides or hours a driver must be on a platform in a week, month, year.
• Market data. Drivers receive a valuable benefit from the gig economy platforms, which compile the market data on demand for transportation, evaluate the price the market will bear for the ride, time, and distance, and provide that information to drivers in real time. 
• Choice. Drivers can turn down work when they have better alternatives, work with competing platforms simultaneously, or take months or years away and return on a moment’s notice. These options would not be available to a driver employed by a company.
• Location. A driver or courier can head from anywhere. The platform is not dependent on where the individual resides. The individual can chase opportunities in one city or another or can earn extra income while out of town, all while residing elsewhere.
• Low barrier to entry to work right now. A worker can be on the platform the same day as signing up and use many modes of transportation to start earning, including by walking, biking, or driving. While minimum requirements such as age, driver’s license, background check, driving record, vehicle insurance, proof of residency, apply for ride sharing, the flexibility of biking or walking expands the range of options to earn via other forms of on-demand work. That creates a path for work for residents without immigration documentation, a feature again unavailable to employees.
• Competitors. A driver or courier may work for any and all competing platforms. This creates a dynamic where the platform competes for the individual’s time and labor, rather than the other way around. 

California’s diverse and energetic workforce is the beating heart of our dynamic economy. The Legislature can further boost worker satisfaction, economic growth by updating work arrangements that suit 21st century lifestyles instead of leaving judges and juries to, as Judge Chhabria indicated, force a “square peg” into “two round holes.”