Like lots of other employees across Florida, many of the workers who make the emerging “gig economy” possible have seen their incomes shrivel as businesses close and people isolate at home in the effort to slow the spread of the new coronavirus.
Unlike other lots of other employees across Florida, many of those Uber drivers and Handy home-repair men and women are frozen out of the state’s unemployment insurance system — thanks to laws that fast-growing technology companies have lobbied for, both in Florida and across much of the country.
In 2015, for instance, the administration of former Florida Gov. Rick Scott ruled that a former driver for Uber Technologies Inc. was ineligible for state unemployment insurance. Two years later, Uber and rival Lyft Inc. successfully persuaded the Republican-controlled Florida Legislature to cement that decision into law — which ensured that the rideshare companies don’t have to pay the taxes that finance unemployment benefits.
In 2018, with less than an hour left in the state’s 2-month-long legislative session, Florida lawmakers took up and passed a similar measure that excluded from the unemployment system workers who provide household services — such as furniture assembly, interior painting and television mounting — through digital platforms.
The language was provided to lawmakers by one of the state’s biggest Republican fundraisers — a lobbyist who had been hired by Handy, the online platform for home-repair jobs that is now owned by ANGI Homeservices Inc.
“It’s really the ultimate special-interest legislation bought and paid for by these companies. For a short-term investment in lobbying, they were able to get themselves exempted from laws that apply to everyone else,” said Rebecca Smith, a director at the National Employment Law Project, which lobbies for stronger worker-protection laws.
“And what that means — significantly in this crisis — is that while other workers are able to receive unemployment benefits because their employers paid payroll taxes, these companies are either going to just rely on the federal government to provide unemployment benefits for their workers or their workers will simply go without.”
These kinds of laws — variations of which have been passed in dozens of state legislatures around the country — ensure that the tech companies can classify their workers as “independent contractors” rather than traditional employees. Unlike contractors, employees are entitled a broad range of benefits and labor protections, from unemployment and workers compensation to minimum-wage laws.
But the industry and its supporters say employees don’t have the same flexibility and autonomy as contractors — like the ability to drive for Uber only when you want to or to drive for both Uber and Lyft at the same time — which is a fundamental part of what makes gig work appealing to many people.
Boosters say the arrangement offers benefits for all involved. The tech companies gain competitive advantages over legacy businesses that employ traditional employees, gig workers get near total control of their schedules, and customers get lower prices.
But one of the underlying problems with the model — income insecurity for workers — is now being exposed as the nationwide economy shrieks to a halt in hopes of preventing cases of COVID-19, the disease caused by the new coronavirus, from overrunning hospitals. In Orange County, leaders on Tuesday ordered all non-essential workers to stay home for at least two weeks starting Thursday night.
Lawmakers who have supported the industry in Tallahassee say the root problem is outdated federal worker classification laws that force a binary choice between employee or contractor.
“It’s kind of the square peg and round hole,” said Rep. Jamie Grant, R-Tampa. “It’s really impossible to consider an Uber driver an employee.”
Gig workers, self-employed people, some seasonal workers with intermittent work histories, and others who are typically excluded from Florida’s state unemployment insurance system are still expected to qualify for emergency unemployment assistance from the federal government, which is included in the $2 trillion coronavirus relief package that congressional leaders agreed to late Tuesday night. But those benefits will be financed entirely by the federal government.
The ability to classify workers as contractors rather than employees has helped subsidize the explosive growth in recent years of tech companies like Uber, Handy and restaurant-delivery platform GrubHub Inc. Avoiding some of the taxes that many other businesses pay — such as for unemployment insurance — can mean a savings for the companies of as much as 20 percent of payroll, by some estimates.
That, in turn, makes the companies more valuable to investors. Uber, for instance, raised more $8 billion when it went public last year. ANGI, whose digital businesses also include HomeAdvisor and Angie’s List, turned a $35 million profit last year and earlier this month launched a $20 million stock buyback plan after the stock market began to collapse.
Work hasn’t evaporated on all tech platforms. Grocery-delivery app Instacart said this week it is bringing another 300,000 shoppers onto its platform to handle surging demand.
But Uber told investors last week that ride volume has fallen up to 70 percent in Seattle and other coronavirus hot spots. Executives at ANGI have said that the livelihoods of the home-service workers in its networks are “at risk” as demand for home-repair work dries up while people socially distance and quarantine.
It’s difficult to say exactly how many gig workers there are, in part because of there’s no widely accepted definition of the industry. Lots of people with traditional full- or part-time jobs use the various tech platforms to make some extra money on the side.
But the federal government estimates that roughly 10 percent of American workers — more than 16 million adults — are in “alternative work arrangements,” a term that includes everyone from highly paid consultants to freelance journalists to TaskRabbits. Smith, of the National Employment Law Project, said an estimated 10 percent of those workers are doing app-based tech platform work.
In Florida, there are an estimated 1 million workers in alternative work arrangements, which would imply somewhere around 100,000 worker in app-based jobs.
But the workforce is growing rapidly — and so is a consensus that more needs to be done to protect the people in it.
In California, for instance, lawmakers last year passed a sweeping law that would make it harder for tech companies to continue classifying their workers as independent contractors. Uber, Lyft and DoorDash Inc. have contributed $90 million to a ballot campaign to repeal that law.
Uber is instead lobbying Congress to write new laws aimed finding a “third way” to provide benefits to gig workers.
“Put simply, our laws should protect all workers, not just one type of work,” Uber CEO Dara Khosrowshahi wrote in a letter this week to Congress — while also pleading with lawmakers to ensure the coronavirus relief package covered Uber driver and other gig workers.
jgarcai@tribune.com; @Jason_Garcia
Correction: An earlier version of this story misstated the way Florida’s unemployment insurance system will interact with the emergency federal unemployment insurance included in the coronavirus relief package that Congress is expected to approve this week.
