Unions, gig-economy firms gear up for New York benefits battle

(Reuters) - Faced with a barrage of lawsuits from workers demanding benefits and recognition as employees, some companies in the fast-growing ‘gig economy’ are looking to settle the issues through legislation.

Joseph Morelle, the number two Democrat in the New York State Assembly, said he has been talking about portable benefits with such companies, which use occasional workers to provide rides, deliveries, house-cleaning and other services through websites and apps.

He said he plans to introduce legislation early next year, which would be the first of its kind in the United States and is likely to draw scrutiny from organized labor.

In advance of that effort, online home-cleaning company Handy has circulated a draft bill, seen by Reuters, that would establish guidelines for a portable benefits plan for New York workers at gig-economy companies.

A key element of the draft bill is that it classifies workers at companies choosing to participate in the program as independent contractors rather than employees under state law, as long as the companies’ dealings with their workers meet certain criteria.

Morelle would not say whether his proposed law would be based on the draft bill circulated by Handy, only that he was focused on passing some form of legislation to address the issues it raises.

“The gig economy is something more and more people will gravitate toward, and we clearly want to make sure they can get benefits,” he said.


Handy, ride-hailing service Uber Technologies Inc and other companies in the vanguard of the gig economy - also known as the ‘sharing’ or ‘on-demand’ economy - have ignited a national debate about how to classify and provide benefits to people who work flexible schedules and irregular hours.

Uber driver Sam Salem, 29, protests with other commercial drivers with the app-based, ride-sharing company Uber against working conditions outside the company's office in Santa Monica, California June 24, 2014. REUTERS/Lucy Nicholson/File Photo

Several labor unions and some of the workers themselves have argued they should be considered employees, and therefore entitled to guaranteed wages, employer-provided insurance and other benefits. The companies have maintained their workers are independent contractors.

Court actions brought by workers at Handy, Uber and other similar firms hoping to establish themselves as employees have not been finally resolved.

If New York lawmakers move forward, they would be the first in the nation to authorize industry-wide portable benefits, and could serve as a model for other states, particularly if a bill draws support from organized labor.

The legislation could also make it more difficult for workers at gig-economy companies to convince courts they should be considered employees.

The draft bill circulated by Handy requires participating companies to contribute at least 2.5 percent of the fee for each job to an individual account for the worker, which he or she could then use to buy health insurance or other benefits.


On its website, Handy says its “top professionals” make more than $1,000 per week. Under the terms of the draft bill, Handy would be required to contribute at least $1,300 per year for benefits for workers making $52,000 per year.

Companies would be allowed to pass along the cost to their customers. Since workers at participating companies would be classified as independent contractors, they could not join unions to collectively bargain for better benefits.

Larry Engelstein, executive vice president of 32BJ Service Employees International Union (SEIU), which represents thousands of janitors, said under contracts the union negotiates employers contribute an annual average of $18,000 per employee for healthcare costs.

“The amount of money that’s supposed to be put into these portable benefit funds seems so meager,” Engelstein said. “The actual benefit a worker is getting hardly warrants what the worker is giving up.”

The SEIU is a backer of the four-year-old “Fight for $15” campaign, which aims to raise pay and expand the right to join a union for low-wage workers including fast-food servers, home care aides, airport baggage handlers and others. For the first time on Tuesday, some Uber drivers plan to join the campaign’s protests.

A source familiar with the Handy proposal said it was meant to be a starting point for discussions, not a final bill.

In a statement, Handy said “it’s our view we need both regulatory change to clarify the law, and we are in favor of some form of portable benefits.”

Uber and Morelle declined to comment on the Handy proposal.

Morelle said he plans to draft the bill next month and introduce it in January.

Reporting by Dan Levine and Kristina Cooke in San Francisco; Editing by Bill Rigby