“I now pronounce you contractor”: Prop22, labour platforms and legislative doublespeak

The story goes that, during a Lent fast that must have felt very long for French king Louis XIV, his chief minister Cardinal Giulio Mazzarino decided to offer some relief to the impatient sovereign. Put in front of a superb truffle-stuffed pigeon, the Cardinal blessed the fowl by saying: “I now pronounce you a fish.” Fish was an acceptable meal during fasts, so problem solved – and pigeon eaten.

In a few centuries, the same story might be told about the Californian Proposition 22 and workers’ rights. After the landmark ruling of California Supreme Court in its Dynamex judgment, lawmakers passed a Bill, AB5, which fixed a three-pronged test in determining a worker’s classification. Businesses that seek to treat workers as independent contractors must show that: “(A) the person is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact. (B) The person performs work that is outside the usual course of the hiring entity’s business. (C) The person is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.” After the Bill entered into force, platforms tried to litigate against the test, alleging that their workers did not fall into it. This allegation was repeatedly unsuccessful in court.

Corporate money fights back

In the meantime, platforms decided to engage in a political campaign to neutralise the new legislation. They introduced a referendum proposition – Prop 22 – to carve out an exemption for their workers from the law and, after spending a reported staggering $200 million on the campaign, placing ads ubiquitously and bombarding their users with messages supporting the proposition. What they also did was to portray AB5 as a lethal threat to the flexibility afforded by their business model. They won, and the investment immediately repaid itself abundantly. Uber market value rose by 14%, circa $9 billion (with a “b”), after the vote.

Unsurprisingly, the Uber CEO declared: “Going forward, you will see us more loudly advocate for new laws like Prop 22, which we believe strike the balance between preserving the flexibility that drivers value so much, while adding protections that all gig workers deserve […] it’s a priority for us to work with governments across the US and the world to make this a reality.”

This should sound like a menace to labour protection systems worldwide.

“The protections that all gig-workers deserve,” under Proposition 22, are ludicrous. Workers will receive a healthcare subsidy, reimbursement of some car expenses, occupational accident insurance and a minimum earning guarantee while performing rides (thus leaving workers on their own during all the time they wait for rides). Also, they will be covered by anti-discrimination protection, which is otherwise reserved for employees.

Three-tier employment status systems

This boils down to a “third category” approach that had been advocated in the past to protect gig workers and that is not new. It corresponds to the idea of para-subordinate work in Italy or limb-b workers in the United Kingdom – a hybrid status between employment and self-employment, offering a fraction of the protection that workers would receive if they were classified as employees. Third categories, of course, vary extensively among countries, with some legal systems offering meaningful protection, as in the case of the UK, where “workers” enjoy the right to the national minimum wage, collective labour rights, working time and non-discrimination protection. But this is certainly not the case for the new Californian status. Platform workers there will still be entitled to more than what ordinary independent contractors receive, it can be argued. But this is not a half-empty, half-full glass scenario.

AB5 was introduced to avoid misclassification of employees and it is still good law for many businesses in California in traditional sectors. What platforms obtained was to just carve their workers out of ordinary employment status and protection, after several courts had declared the law also applied to them.

A Californian “third category” approach to platform work brings us back several years, after courts in numerous countries around the world, including Australia, France, Spain, Switzerland and Uruguay, ruled that many platform workers lack the actual independence that should underpin genuine self-employment. It is no wonder that the countries where reclassification into employment proved impossible are those where a hybrid category is in place and massively widespread, such as in Italy. Here, lower courts have interpreted the para-subordinate status as an obstacle to reclassification of food-delivery riders as employees, since the Italian hybrid category has traditionally allowed strict coordination of workers’ activities in exchange of protection that is far inferior compared to employees. Also for this reason, Italian lawmakers have recently been trying to re-absorb most para-subordinate workers into the scope of employment protection. The system, however, has so much interiorised the existence of vulnerable workers whose access to full protection is obstructed that it was easy for platforms to try and take advantage of its loopholes by reaching a questionable collective agreement with a minority union to neutralise protection in the sector. The Ministry of Labour reacted swiftly against this agreement so that one of the platforms recently declared that it is going to hire workers under employment contracts starting from 2021, while still allowing flexible schedules.

This case, which is not unique, together with the many judgments that have reclassified workers as employees around the world, proves that platform work is all but incompatible with employment status. Most importantly, it shows that it is possible to combine employment protection with flexibility.

In short, introducing hybrid employment status with lower protection should not represent the way forward to regulate platform work. Hybrid categories can represent obstacles to more meaningful protection and have not resulted in more clarity and lower litigation. What happens, when they are introduced, is that litigation occurs over three statuses instead of two, thus increasing legal uncertainty and favouring opportunistic choices. Meanwhile, workers who could otherwise aspire to the whole of employment protection get short-changed and are prevented from enjoying their employment rights in full.

This is what is going to happen in California, where platform workers will still be deprived of access to collective bargaining and unionisation as well as to the minimum wage, only because a referendum has pronounced them “contractors” artificially. Contrary to what the Uber CEO aspires to, this is not a model for going forward, even if this is what platforms are explicitly preparing to sell across the world.

A warning toll for Europe

It is not difficult to imagine that this will also happen in jurisdictions where hybrid categories already exist and platforms have nonetheless refused to classify their workers  under the intermediate status. It would not be surprising to see platforms lobbying lawmakers to introduce an additional category with lower protection than limb-b workers’ in the United Kingdom – after all, platforms such as Uber and Deliveroo have been fiercely litigating against the “worker” status in  that country.

It is vital to recall that, in Europe, a Prop22-model would only graciously concede rights that already belong to workers, including health insurance and non-discrimination, and strip them of most of the protection already fought and won in court. As platforms will mobilise to extend that model beyond California, we should avoid falling for the pigeon-fish storytelling – employment protection must depend on factual circumstances and protection needs, and according to many judges, most platforms exert strict control over workers.

There is nothing innovative in sidestepping labour and social security regulation. Bedazzled by the official technology narratives, few people have realized that the promise of enhanced flexibility, afforded by “elastic” models, has largely remained non-fulfilled. Conversely, we witness strong command-and-control dynamics which are not accompanied by the corresponding protections and safeguards for workers and are concealed behind corporate, and now legislative, doublespeak. We can definitely demand something better than putting lipstick on a pigeon.

Originally published on the UK Labour Law Blog