Thursday, March 26, 2020

Gig Battles Roll On in Midst of Covid-19 and Uncle Sam to the Rescue

According to the New York Times, platform companies continue to battle AB-5 in California, “investing tens of millions of dollars in a November ballot initiative that would effectively exempt them from it . . . “[and as] the companies’ legal challenges play out, the state is failing to approve many unemployment claims from drivers, potentially leaving thousands in the lurch as their earning power collapses.”

Similar scenes are playing out in New York where it has already been determined in prior rulings “that three Uber drivers were eligible for unemployment benefits, along with all ‘similarly situated’ drivers.” Dara Khosrowshahi, CEO of Uber, of course, regrets all of this, saying that the “situation certainly demonstrates the downside of attaching basic protections to W-2 employment,” and in a letter to the president “asked that any economic stimulus or coronavirus-related legislation provide “protections and benefits for independent workers,” along with “the opportunity to legally provide them with a real safety net going forward.” The hubris and irony are breathtaking, and the line I’ve set in bold reflects the disaster capitalism/shock doctrine “way”: Use the disaster to push for (in this case) “portable benefits,” a boondoggle likely to be of epic proportions.

Fortunately, Shannon Liss-Riordan, the notable scourge of platform companies’ backflipping tactics, will have none of it, and has already filed complaints seeking to force the companies to follow the state’s new law immediately, giving drivers access to unemployment benefits and sick days. As she put it, “It is very unfortunate that such a crisis may be necessary to prompt these companies into actually complying with the law and extending employment protections to their drivers.” The moral of the story may be that crises can work in more than one direction. If a company seizes on a disaster to push its agenda before the tactical ground has been properly prepared, it may provoke a response it did not anticipate. At the moment, at least, failure to comply with AB-5 makes you a lawbreaker (though the scofflaws would like you to forget it). And, if Liss-Riordan obtains a declaratory judgment and injunction quickly, the offending companies may swiftly find themselves on the precipice of being in contempt of court.

Look closely for other disaster maneuvers. Folks have asked me over the years why I’m so focused on workers’ compensation opt-out and mushrooming application of compulsory arbitration across legal regimes. It’s because this formerly-blue-collar professor knows how the game is played and who is playing it. Opt-out is a shock doctrine maneuver: the economy gets really bad, really fast (the Black Swan) and "players" start making arguments for dismantling liability. All you need is a social bankruptcy blueprint (and, as this bankruptcy teacher well knows, such blueprints are amazingly political). Once we've determined that you are a "secured" creditor and the other fellow isn't, the rest is easy. And rust never sleeps--those unsuccessfully seeking special treatment in the past will be back.

Along these lines, consider that in the new stimulus bill Gig workers’ unemployment relief appears to have been included. While this is an outcome I applaud (for the sake of workers), consider that companies that have never contributed a dime to the unemployment funds are, in effect, being publicly subsidized at a higher rate than those that did. Socialize risk. Privatize benefits. Just imagine if Uber was the last entity standing.  

Michael C. Duff

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