ABC Employee Test for Workers’ Compensation in NY?: The Lottery Class Resists

I think about the question of employee status, under workers’ compensation statutes and elsewhere, as in part a contest between the actual working class (and its advocates), and a class of purported “exceptionals” who hyper-focus and insist upon preserving their “liberty” to “hit” the lottery by becoming part of the one percent. Why would someone opt for a world bereft of law and without limits? Well, you might get lucky. You might not be the one to suffer a workplace injury (among other things). And so, even though as a matter of pure probability you will almost certainly never become part of the one percent utterly without need of the social contract, you identify with them: those who must be motivated by noblesse oblige and are rightfully—you contend—beyond the law. You argue that you have no need of nanny-state protections like “employee status.” Now I am not for demonizing your irrational exuberance, but neither am I for subsidizing it. Hence my resistance to a world without employees and full of lots (and lots) of underinsured, “independent” contractors.

A bill currently sits in the New York Senate, Senate Bill S6699A sponsored by Robert Jackson of the 31st Senate District. The bill reads in relevant part (that is, as it relates to workers’ compensation),

4. Subdivision 6 of section 201 of the workers' compensation law is amended by adding a new paragraph E to read as follows:

                        1. (A) The term “employment” includes, unless specifically excluded by a provision of this subdivision, any service by a person providing labor or services for remuneration unless the hiring entity demonstrates that all of the following conditions are satisfied:

                (i) 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; and

                (ii) the person performs work that is outside the usual course of the hiring entity's business; and   

                (iii) the person is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.

            (B) For the purposes of this section, any person providing labor or services for remuneration pursuant to subparagraph (A) of this paragraph shall be considered an employee rather than an independent contractor. 

5. This act shall take effect immediately.

This is essentially the ABC test/California’s AB-5, and represents the continuation of a struggle unlikely to abate soon. One of the public comments on the bill, located on the NY Senate’s website, argues that the proposed law is likely to harm the very people that it seeks to help. The commenter contends that the bill alarms “freelancers and self-employed people” who are not exploited but are “happy, productive people who have chosen freelance for a reason.” Artists, writers, and digital developers are cited as examples. Forcing enterprises to provide them with workers’ compensation coverage will purportedly interfere with their happiness (presumably by compelling the enterprises to stop using their services).

The commenter in my view precisely states the issue, but may misapprehend the analysis of the overall situation. If you think that most of the economy is, or will soon be, comprised mainly of, artists, writers, digital developers, and other such generally happy and productive people, then the actions of the California Assembly, and now potentially the New York legislature, seem incomprehensible. Why pass laws that would damage the economic fortunes of most workers (by forcing companies to go out of business rather than succumb to regulation)? Yet what would help most workers? This bill? Or the current state of affairs allowing enterprises to so easily categorize their workers as independent contractors? Is the greater evil that certain enterprises could be forced to prove that the economic reality of the working conditions they supply do not amount to an employment relationship; or is it that many workers who should be classified as employees are not because of artful manipulations of the current legal system? Maybe legislatures, particularly in very large states, are becoming suspicious that most workers are not participating in some golden-age, creative-class adventure; and that the ever-encroaching Gig economy has little to do with a new economy, and everything to do with the very old game of regulatory evasion. 

Here is a factual portrait of our economy: according to a recent Brookings study, more than 53 million people—44% of all workers aged 18-64—are low-wage workers and earn median hourly wages of $10.22 and median annual earnings of $17,950. Please don’t try to persuade me that these workers are philosophically in favor of low-paying, precarious, but “flexible” work. Pundits can call it what they want. I call it unacceptable. And this explosion of staggering inequality has occurred during the Gig economy. Legislators are entitled (indeed have the duty) not to be willfully blind to the obvious. So, yes, a golden age of flexible, creative work may be just on the horizon, and laws making it harder to “de-employee” society may turn out to be mechanisms frustrating the development of such an Age of Pericles. Or current law facilitating bad actors’ bad actions in obliterating the employment relation to avoid as much regulation as possible may be the veritable “man behind the curtain.”  

There is no denying that the lottery class prefers an employee-less world that preserves the maximal liberty of those for whom members of the class de facto work to “produce” according to whim—jeux sans frontiers. The question I have for this class is whether it collectively imagines that others will abandon the rule of law to preserve its “right” to try to hit the lottery. The lottery class should not be surprised if the slumbering giant of our democracy chooses instead to deploy the “disruption” of the rule of law.

Michael C. Duff