The Fight for Fair Pay Must Include Independent Contractors

When President Biden announced his $1.9 trillion stimulus plan in January, he included a provision to raise the federal minimum wage to $15 an hour and eliminate the subminimum wage for those who work for tips and people with disabilities. He listed his arguments in favor of it: a minimum wage that hasn’t been raised since 2009, the ever-increasing cost of living, and the global pandemic. But one other reason stood out: “Florida just passed it,” Biden said. “The rest of the country is ready to move as well.”

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In November, Florida joined a long list of cities and states that have increased their minimum wage above the federal level of $7.25. Sixty-one percent of Floridians voted to raise the minimum wage to $15 an hour, a move that will bring more than 1 million residents out of poverty. However, the amendment left out a crucial group: the state’s 2 million independent contractors, who don’t fall under federal minimum wage regulations. For decades, Florida’s lack of protections for these workers has led to widespread misclassification and wage theft. Even as the state passes some of its most progressive wage legislation in decades, its exploitative independent contractor system threatens to undermine its endeavors and points to broader weak spots nationally.

Around 10 percent of the state’s population, or 2 million people, work as independent contractors — 40 percent more than the national average. Under the independent contractor framework, employers aren’t required to meet Fair Labor Standards Act requirements for minimum wage or unemployment insurance, or provide benefits. This is appealing to employers — benefits account for up to 30 percent of a worker’s salary, so employers can cut costs by reclassifying their workers as independent contractors. Offloading payroll taxes, which employers aren’t required to pay on behalf of contractors, save employers an additional 8 percent.

In theory, an independent contractor is paid for performing a specific role or completing a project. The payer can only determine the result of the project, not when or how a contractor completes the work. But because labelling workers as independent contractors saves employers so much money, workers are occasionally “misclassified,” or classified as independent contractors when they should be an employee.

While exact numbers of how many workers are misclassified are difficult to obtain, studies are very clear about misclassification’s results: Contractors in several low-wage industries earn less than their salaried peers. In construction, a field particularly prone to misclassification, independent contractors can make half as much as their counterparts on payroll.

Floridians are uniquely vulnerable to employment misclassification. Florida’s service-dependent economy has made it a particularly easy target for gig work companies, according to Alexis Davis, an analyst at the Florida Policy Institute. Roughly 1.3 million of Florida’s independent contractors are “employed” by gig work companies. Gig workers in Florida also belong to some of the state’s most at-risk groups. These workers are disproportionately people of color and 1 out of every 3 is an immigrant. Seniors, attracted by the flexibility and the need to augment their Social Security payments, also make up a large part of the state’s gig workers.

Sherri Wheeler Cliburn, 56, has been driving for Instacart since the delivery app launched in Sarasota four years ago. Like many gig workers, she was attracted to the flexible schedule and good pay that the app initially offered, which allowed her to spend time on tour with her son, who is a musician. But as the app grew in popularity, Instacart began to lower payouts across the board, forcing workers to rely on customers’ tips. And although Instacart sets a default tip for orders, Cliburn says customers will often file fake complaints to get out of paying tips, or even paying for the order at all. This leads to workers getting deactivated from the platform while the company sorts out the case.

“It could take anywhere from five to eight weeks for somebody from Instacart to get back with you,” says Cliburn. “Meanwhile, you’re deactivated. You’ve lost your income.”

I just said, screw it, because they don't care here.

Several other workers gave similar accounts to TalkPoverty from working with Uber, Lyft, and other gig platforms. While they appreciate the autonomy that the independent contractor framework grants them, when pay disputes emerge, they find themselves powerless in the face of the companies they work for. Ben E., who drives for Uber in the Tampa area, says that there were multiple occasions where Uber docked his pay without explanation, leading to a long process of negotiations with the company. Uber has not responded to a request for comment as of publication.

State law makes these abuses particularly hard to fight. Normally, a state’s Department of Labor would provide protection from misclassification and other labor abuses for workers, and handle concerns like minimum wage complaints. However, Florida’s Department of Labor was dismantled in the early 2000s by then-Governor Jeb Bush. Today, Florida is one of seven states with no minimum wage investigators.

In 2017, following a $750,000 lobbying campaign by Uber, the state legislature passed a bill that set a statewide regulations for ride-hailing apps. While the bill included limited regulations on insurance, its main goal was to preempt local legislation in Miami-Dade that would have put rideshare apps on the same regulatory field as taxi services. The bill also included provisions that doubled down on classifying drivers as independent contractors.

Cliburn felt this first-hand when she tried to file a complaint about Instacart’s delays and pay reductions, though she didn’t have misclassification in mind. She contacted the state, which told her that she would have to provide a slew of paperwork that proved her case. As Cliburn struggled to navigate through the process, it became apparent that the state had little incentive to assist her and that they viewed her complaint as a burden to be avoided. Cliburn says she struggled to get in contact with the state and that, when she did, they provided little-to-no support for filing her request. “Eventually I just said, screw it, because they don’t care here. I know other states do care about their workers but in Florida, they just don’t care,” Cliburn says.

While the future of federal minimum wage legislation remains uncertain, it’s clear that the current framework fails to address the needs of the large and growing gig worker contingent. That’s not to say there isn’t hope for this next challenge in worker rights. Several states and cities, including New York and Illinois, have passed additional protections for gig workers. In Seattle, drivers working for ride-hailing apps are now eligible for the city’s minimum wage and dispute resolution protections. And California’s landmark AB 5 would have reclassified many of the state’s gig workers as employees, giving them access to minimum wage regulations and unemployment. While the gains made by the law were undone by a ballot measure funded by Uber and other gig apps, the framework created by the bill could serve as a basis for similar legislation on a federal level.

What’s more, the Biden administration has also signaled that it is willing to take a tougher stance on misclassification, suggesting that meaningful change may be within sight.

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