Sunday, April 8, 2018

Workers’ Compensation Deregulation in Iowa: Why State Gig Laws Now?

Iowa has joined the race-to-the-bottom parade by enacting (the bill was sent to the Governor last Monday, April 2) a Gig law of startling facial applicability to almost any employer dispatching employees from a remote location utilizing online technology. I would not want to be one of these “contractors.” 

As in the other laws previously discussed, here, and here, “marketplace contractors” are treated as independent contractors, and not employees of a “marketplace platform,” for all purposes under state or local law. A marketplace contractor is “a person or organization, including an individual, corporation, limited liability company, partnership, sole proprietor, or other entity, that does all of the following”:   

(1)  Enters into a written agreement with a marketplace platform to use the marketplace platform’s digital network to connect with individuals or entities that seek to obtain services from the marketplace contractor.
(2)  Performs services for individuals or entities upon connection through a marketplace platform’s digital network in exchange for compensation or payment of a fee.
(3)  Does not perform the services offered by the marketplace contractor at or from a physical business location that is operated by the marketplace platform in the state.

A “market platform” . . .   “means a person or organization, including an individual, corporation, limited liability company, partnership, sole proprietor, or other entity, that operates a digital network to connect marketplace contractors to individuals or entities that seek to obtain the type of services offered by marketplace contractors.”

A market contractor shall be treated as an independent contractor if the “The marketplace contractor and marketplace platform agree in writing that the marketplace contractor is engaged as an independent contractor;” “The marketplace platform does not unilaterally prescribe specific hours during which the marketplace contractor must be available to accept service requests submitted through the marketplace platform’s digital network;” “The marketplace platform does not prohibit the marketplace contractor from engaging in outside employment or performing services through other marketplace platforms;” “The marketplace contractor bears its own expenses incurred in performing services.”

Few words. Much damage.

There are relatively unimportant carveouts and caveats for freight operators (I am not sure who won this exemption, but I have a guess or two), governmental entities, Native American tribes (jurisdictional concerns), and religious entities (constitutional concerns). Interestingly, “contractors” previously required to possess a license under Iowa law for performance of a service before the Gig law must continue to do so. This inclusion reflects that legislators fully understand just how expansive the law may become. The company that formerly sent its electrician “employees” to your house may now be tempted to send much cheaper “independent contractors” instead—but at least those “contractors” will be licensed to do electrical work. Thank goodness for small favors, but, if fires break out, I hope the “platforms,” and not the contractors, are held responsible for non-possession of the license. As has been the case in other states, I will be interested to learn if special laws challenges ensue if it turns out that the legislation specially benefits a narrow swath of identifiable commercial actors, arguably discriminating against other commercial actors in the state, potentially in violation of Article III, Section 30 of the Iowa Constitution.

I now have an operating theory for the timing of these laws. It momentarily appeared that John Thune’s ceaseless quest for a national Gig law was about to conclude successfully with inclusion of an explicit independent contractor provision in the new Tax Act. Many understand that ensconcing such a provision in federal tax law could act as a driver, exporting a disintegrated employee definition to other realms of state and federal law. However, the current administration, while expanding tax breaks to “independent contractors,” did not supply the radical redefinition of employee status some had desired, apparently preferring to make Gig employment more attractive to Gig employees. (A move that strikes me as authentically “conservative”). I suspect that state legislators, understanding the volatility of the political landscape in a mid-term election year, decided to strike while the iron was hot. More’s the pity . . .

I’m disappointed that my law school classmate, Secretary of Labor Alex Acosta (we both graduated from Harvard Law School in 1995), appears now to be complicit in the “new economy” canard. Previously, I knew him at the National Labor Relations Board as a reasonably straight shooter. (I have defended him publicly from unfair broadsides in that regard). But regulatory capture is a dark game. Having been unable to reliably win on the merits of "classical" employee arguments in federal courts, weak state governments have been commandeered to change the playing field entirely by altering the law, even as the federal government withdraws guidance on employee misclassification. Policy makers in the 19th and 20th centuries rejected a bleak world of wholly unprotected contractors. Welcome to the 21st century.  

Michael C. Duff

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