New Seattle Sick Pay Law for Gig Workers: Squishy or Full of Venom?

jellyfish

Horrifying images not intended to scare children. Thanks, PBS Learning.

I learned this week that a species of jellyfish found off the coast of China, Japan, and Korea can weigh up to 440 pounds. There’s a video here, and the size of this thing is terrifying.

In Finding Nemo, I learned that you can bounce on the fleshy heads of jellyfish without getting stung, and this creature has an abundantly fleshy head. The tentacles, though, are a different story. There are a lot of them. So the lesson here is that when approaching a Nomura’s Jellyfish, as they are called, be thoughtful in how you approach.

Which brings me to the City of Seattle. Seattle has been relentless in looking for ways to provide gig workers benefits of some kind, without getting caught up in the Independent Contractor vs. Employee question. The city has been aiming to grant gig workers certain rights, whether they are employees or not.

Seattle’s strategy is to aim for the jellyfish’s head, not wanting to get caught up in the tentacles of a dispute over whether the gig workers are employees or not.

In its latest head shot, Seattle has enacted an ordinance requiring transportation network companies and food delivery network companies (app based) to provide paid sick time to gig workers who perform services in Seattle. The requirement applies regardless of whether the workers are contractors or employees. The law was signed on June 12, 2020.

This move may signal a new strategy for states and localities that wish to provide benefits to gig workers. They can require benefits for gig workers, regardless of whether the workers are deemed employees.

This approach, if it works, may introduce other problems for app-based companies.

If companies start providing benefits such as paid sick leave to workers they consider to be independent contractors, that fact could be used against them as evidence the workers are being treated as employees.

In other words, this ordinance sets a trap. App-based companies will still be able to argue that they are providing sick leave only because they are required by local law, but surely the plaintiffs’ bar will argue that providing sick leave is evidence of employment status.

It’s a dangerous game, trying to bounce of the heads of the squishies while avoiding the sting. We’ll see how it plays out. In the meantime, obey beach hazard signs and try to avoid getting stung.

© 2020 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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Why Don’t Companies Offer Healthcare Benefits to Independent Contractors?

 

I found this on buzzfeed, while doing academic research for this blog post.

In the business world, it’s not quite as funny when good intentions are misunderstood. Which is why companies generally can’t offer healthcare benefits to independent contractors. Even if they would like to, they can’t.

Good intentions would be misunderstood, and the effect of offering healthcare coverage to independent contractors would likely be that they are turned into employees.

Why?

The law limits who can sell health insurance coverage. You need a license. It’s the same reason I can’t work as an Aquatic Antifouling Paint Operator in New York State. If you want to commercially apply antifouling paints, which are pesticides, on vessel hulls, boat bottoms, or other other marine surfaces to inhibit the growth of aquatic organisms, you need an Aquatic Antifouling Paint Operator license. (Apply here.)

Companies that aren’t licensed to sell healthcare insurance can’t go around selling healthcare insurance. But there’s a narrow exception, which allows companies to offer healthcare insurance to its employees. The exception doesn’t extend to vendors, suppliers, or independent contractors. Only employees.

Some of the large rideshare app companies have advocated for legal reform that would allow them to offer more benefits to independent contractor drivers. But there’s not much they can do right now. Companies without a license to sell healthcare insurance can only offer healthcare insurance to its employees, not to independent contractors.

Some companies have begun to get creative in an effort to offer more benefits to independent contractor drivers. According to benefitsnews.com, some app companies are beginning to offer limited benefits, such as access to accident insurance, free online college courses, and professional certifications.

Some states, such as New York, have considered legislation that would expand the availability of benefits to independent contractors, but the current state of the law severely restricts what companies can do.

The legal problem for companies who want to offer more benefits to contractors is not just that they can’t sell healthcare insurance to non-employees. It’s also that the more benefits they offer to contractors, the more those contractors may start to resemble employees. Since U.S. law currently sees the Employee vs. Independent Contractor issue as binary — you can only be one or the other — companies who offer increased employee-like benefits to contractors run the risk that the contractors will be deemed their employees, which creates a whole big mess of other legal problems.

A company might wish to provide healthcare coverage to independent contractors, but the company’s good intentions would be misunderstood. Which is also why if you want a haircut and dye, you should just type it into your phone’s calendar instead of just telling Siri.

© 2019 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

Need training on avoiding independent contractor misclassification claims? Hey, I do that!  

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Will New Bill Finally Allow Independent Contractors to Receive “Employee” Benefits?

Employee benefits for independent contractors

In 1983, Journey released the album Frontiers which, as you all know, is not as good as Escape but way better than Raised on Radio. The third song on Frontiers is After the Fall (youtube 80s refresher here), not to be confused with the later-formed Australian rock band, After the Fall (which is not to be confused with the much earlier British post-punk band The Fall, which came before After the Fall, but I digress). The Australian band, After the Fall, featured a drummer named Mark Warner, not to be confused with the Democratic Senator from Virginia, who, incidentally, is not related to John Warner, who was also once a Senator from Virginia.

Mark Warner the Senator recently introduced a bill that relates to the subject of this blog, and so for that, I am grateful, especially since it allowed me to mention the album Escape, which I really liked very much.

Sen. Warner has been trying for some time to gain traction on a bill that would promote portable employee benefits for gig workers. I am solidly behind this idea, as it would provide much more flexibility for independent contractors to carve out their own career paths without forfeiting employee benefits. I never understood why we tie health insurance to employment in this country, but that’s for another day.

Warner’s bill has never gone anywhere but, to his credit, he is trying again.

Last week, he introduced an amendment to a massive appropriations package. The amendment would set up a system to award grants for state and local governments and non-profits. The grants would support the creation of programs to allow portable benefits for gig workers, including health insurance, workers compensation, disability coverage, and retirement savings plans.

I hope the program succeeds. The current legal framework, which recognizes independent contractors and employees but no third option, is not consistent with how the modern gig economy works. If benefits can be de-coupled from employment, as they should be, we may eventually see a 21st century system that allows gig workers to receive insurance, workers comp, and other protections, without having to be reclassified as employees.

Thank you, Sen. Warner. I won’t stop believin.

© 2018 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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Lessons from a Reggae Cucumber Song: Draft Benefit Plan Eligibility Language Carefully

ERISA independent contractor misclassification cucumber

Reggae artist Macka B has a song touting the nutritional benefits of the cucumber. The song includes verses like:

Get the cucumber cut it inna slice
Put it inna jug of water overnight
You know what you get for a fraction of the price
Energy drink full of electrolytes

I learned about this song when I asked The Google for songs about benefits. But as much as I like the song (youtube here), this post is about a different kind of benefits.

One of the biggest risks of independent contractor misclassification is having to provide employee benefits to workers you thought were independent contractors. If it turns out those workers were misclassified and are really employees, they may suddenly be eligible for all sorts of employee benefits, including retirement plans like 401(k) match and employee stock ownership. And they’ll be eligible retroactively. This can be expensive. A goof of this type cost one major corporation $97 million back in the late 1990s.

As one recent federal court decision from Georgia reminds us, businesses can avoid this risk with careful drafting in its benefit plan document.

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