Thursday, November 12, 2015

WTF of Work

You knew it was going to happen.

A group of technology executives, financiers, labor union leaders and public policy experts sent a letter, also published on the website, "Medium," posit to congressional lawmakers asking, "WTF?", or What's The Future of work.

Because workers are much more portable, and temporary, that in the past, the traditional two tiered analysis of employee and independent contractor no longer meet the needs of the economy or society, the letter argues, and it is now necessary to start discussions on a way to provide protections to the workers who are Dependent Contractors, the letter posits.

The earliest use of the term Dependent Contractor that I have found occurred all the way back in 2005 in a Berkeley Journal of Employment and Labor Law article by Elizabeth Kennedy.

In that article, "Freedom from Independence: Collective Bargaining Rights for Dependednt (sic) Contractors," Kennedy examines the history of collective bargaining, and goes back to the early 1930s and an attempt by newsboys in Los Angeles to organize.

That backdrop case, NLRB v. Hearst Publ'ns, Inc., 322 U.S. 111 (1944), recognized that there were marginal classes of workers that did not have sufficient bargaining power themselves to negotiate fair labor standards and benefits.

"The Court recognized that economic forces themselves may create conflict between employers and workers, who by strict definition do not have a proximate employment relationship," Kennedy summarizes. "In those instances, the economic realities of the relationship may more closely reflect the evils sought to be remedied by the NLRA [National Labor Relations Act] and justify the inclusion of independent contractors under the Act. The drafters of the Act had this imbalance in bargaining power in mind. This was the 'mischief' the NLRA sought to correct."

Business didn't like it, so Congress was petitioned, and did, exclude independent contractors from the NLRA when it passed the Taft-Hartley amendments to the Act in 1947.

Kennedy argues that the twin silo distinction between employee and independent contractor harkens back to medieval concepts that were no longer adequate to define the modern work force.

And the problem is that a large population of the modern work force is left without a voice, without representation and, most importantly, left in the vast void between the two silos in the world of work protections.

Kennedy posits that a Dependent Contractor Labor Board should be established to provide a mechanism for these workers to access the rights and privileges of employment while ensuring the benefits of independence that both those workers, and their employers, seek to preserve.

The model is already in place, Kennedy notes, in California with the Agricultural Labor Relations Board.

Kennedy was examining collective bargaining by disparate groups of workers who were classified as independent contractors but were singularly reliant upon an employment relationship.

Come full circle ten years later, and seeing the risk to their business models that eliminate the friction of "employment" in the "gig economy," big business is seeking what Kennedy posits - a new, third, classification of workers.

The tech giants and their financiers say, "Everyone, regardless of employment classification, should have access to the option of an affordable safety net that supports them when they’re injured, sick, in need of professional growth, or when it’s time to retire."

The group's tenets: flexible workers are good for the economy and should have protections from unforeseen maladies and calamities; the Affordable Care Act is a stepping stone towards providing an avenue to protections to this third class; and it's time to open the conversation.

But the group doesn't say how all of this is going to be paid for. Presumably, for now, the necessary first step is business' willingness to open the discussion towards a solution that won't destroy the investments behind Uber, Lyft, AirBnB, etc., and this letter is that step.

I can't help but think that the workers' compensation industry is uniquely poised with the long term experience and knowledge on how to make the concept of Dependent Contractor a reality, and provide mechanisms for the financing and administration of such a system.

Indeed, this has already started to happen - the Opt Out movement has drawn criticism from skeptical Labor and Insurance because of lack of transparency, mis or non understanding of ERISA, and mistrust.

But what Opt Out fans are saying is that independence is what the modern economy dictates - independence from the traditional two silo version of work.

Dependent Contractor relations is, essentially, workers opting out, but still having a back-up in case something bad happens.

Now is the time for workers' compensation industry leaders to help shape this emerging public policy change. It is THIS industry that has the knowledge, the know how, the intelligence, and the experience, that can direct how a new classification will be defined, how a system can be constructed to administer and regulate the relationships, and ultimately, how it's all going to be paid for.

The Dependent Contractor status is creating huge new opportunities for the business world and the economy. It is also a new huge opportunity for insurance and related industries to introduce new products and services to meet the needs of business and workers as this all evolves.

Dependent Contractors will, ultimately, be legally recognized. I have no doubt about that. We can help define it, and consequently benefit by doing so.

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