In fairness, Lincoln had a long history of being poorly served by a taxi cab monopoly. Complaints about regulatory fairness from former monopolists fell on deaf ears. But Lincoln’s taxi monopoly was broken in 2012 before the rise of ride hailing apps. Lincoln and Omaha lack an organized voice for drivers like they have in New York City. Without such a voice, worker classification issues among urban professional drivers will likely continue to be unheard at a state and local level in Nebraska.
Lost among the din of Twitter feuds and even more serious reporting on tax reform, is attention to a tax bill about gig economy workers that could impact more than just tax policy.
The New Economy Works to Guarantee Independence and Growth Act (NEW GIG Act) essentially allows firms such as Uber to withhold income taxes for workers without that withholding being construed as evidence of an employee-employer relationship. Boston College of Law Professors Shu Yi Oei and Diane Ring perceptively point out that the NEW GIG Act will help define how gig economy workers are classified for purposes of laws that cover employees like anti-discrimination laws, unemployment insurance, wage and hour laws and possibly workers compensation laws. Their argument is that NEW GIG allows companies like Uber to define their workers as contractors within the tax code and that helps creates a presumption of independent contractor status.
Federal employment laws like the Fair Labor Standards Act depend on the so-called common law test distinguishing between contractors and employees. State wage and hour laws, fair employment laws and workers compensation laws may not always rely on those definitions. In cases where a state doesn’t use a common law test to distinguish between employees and contractors, the question would be whether NEW GIG would pre-empt those state laws. NEW GIG does not appear to have an express preemption clause, so courts could tend to uphold state employment laws that would conflict with NEW GIG. Lack of express pre-emption language in NEW GIG may also mean that courts wouldn’t pre-empt state employment laws that rely on the common law test distinguishing contractors from employees. If courts read NEW GIG as just a way for gig economy companies to collect income tax from their workers without creating an employee-employer relationship, then its impact could be muted on state laws and possibly on federal laws.
But Uber is not the only gig economy company and public statements by our elected officials don’t always match up with their actions. Even if NEW GIG is just a tax bill there is power in the perceptions and presumptions that would be created if NEW GIG were passed. Advocates for employee rights would be well advised to keep a close watch over the NEW GIG bills in the House and Senate.
The Lincoln City Council is scheduled to vote on an ordinance on October 16th that would formally eliminate a requirement that Uber and Lyft drivers pass a physical, background check and test about Lincoln that taxi cab drivers currently have to pass in order to drive a taxi in Lincoln.
The City of Lincoln doesn’t have a workers’ compensation ordinance. But allowing Uber competitive advantages over taxi cab companies indirectly impacts workers compensation because if Uber takes market share away from traditional taxi cabs fewer drivers will be covered under workers compensation.
Lincoln does a have a human rights ordinance that covers more employees than either state or federal anti-discrimination laws. By allowing Uber a competitive advantage over traditional taxi cab companies, Lincoln is potentially excluding workers from coverage of that ordinance since Uber denies it is an employer. Traditional taxi cab companies are subject to Lincoln’s human rights ordinance.
Though U.S. lawyers are generally free from official harassment, some corporate litigants have resorted to totalitarian tactics against plaintiffs’ attorneys. U.S. District Judge Jed Rakoff smacked down Uber for hiring a former CIA agent to investigate an attorney prosecuting a class action suit against the ride-hailing company. Investigation tactics included using fake reporters to try to probe the plaintiff’s attorney for personal information.
So while the rule of law is much more secure in the United States than it is in many other countries, it is still threatened by overheated rhetoric and underhanded tactics.
Lincoln-based startup Liberty has announced that it has partnered with Panhandle Trails in rural western Nebraska for a ride-hailing app similar to Uber or Lyft to supplement public transportation options. This could be a positive development for injured workers in rural areas, as long as Liberty protects the rights of its potential drivers.
It is fairly well known that disability rates are higher in the rural United States than in urban areas. This is often attributed to physical nature of rural jobs and the older rural population. However, transportation costs are another factor in these higher rates of disability. The cost of transportation from a relatively isolated rural area can be too high to justify taking a job. This concern is frequently an issue in workers’ compensation litigation in Nebraska. If Liberty can make it easier for injured rural residents to find employment, I wish for its success.
Liberty states that they want to comply with their legal obligations, which is encouraging. But when Uber CEO, Travis Kalanick, calls Uber drivers the “other dude in the car” and wants to have driverless cars so he can get rid of Uber drivers altogether, workers and their lawyers have good reason to be skeptical of the sharing economy. That’s part of the reason that advocates for employees are fighting legislative efforts to broadly exempt sharing-economy employees from workers’ compensation and fair-employment laws. Other advantages of having drivers classified as employees means that states will not miss out on tax revenue. Holding the status of an independent contractor also increases paperwork and the risks of not complying with tax laws for a driver.
Aside from the issues related to workplace law, I would hope that expanding ride-hailing apps to rural America won’t be used as an excuse to stop funding rural public transportation. But overall, ride-hailing will be a net positive for rural areas, as long as it is done in a way that protects the rights of drivers.