The classification of gig workers for companies like Uber, Lyft, Instacart, DoorDash and Postmates has long been a topic of debate.
Since California worker-protection bill AB 5 became law, some companies have gone to great lengths to continue classifying workers as independent contractors.
Uber and Postmates, for example, unsuccessfully sued to try to prevent the law from being enforced. Meanwhile, Uber, DoorDash, Lyft and Instacart are pushing a ballot initiative that would ensure drivers and couriers remain independent contractors.
Behind the scenes, an idea for an alternative approach has been picking up steam. Called the Cooperative Economy Act (CEA), the draft legislation is designed to accomplish much of what AB 5 aims to achieve, such as worker protections and benefits. But it also brings unions and co-ops into the mix, which means workers would have a literal stake in the profits created by their labor. Meanwhile, the act would also relieve companies of their direct employment responsibilities while still allowing them to comply with AB 5.
The CEA would achieve this through an intermediary called the Cooperative Labor Contractor (CLC). That intermediary, which you can think of as a staffing firm, would offer workers employment security and protections, collective bargaining and control over their work, and enable them to get a cut of the profits their work creates. For gig companies that want labor, the CLC would contract directly with them.
“These platform companies do not want to employ people,” Ra Criscitiello, creator of the CEA and deputy director of research at SEIU United Healthcare Workers West, tells TechCrunch. “And we think that it’s inevitable that some kind of intermediary is going to show up, and it’s very possible the intermediary that shows up is not going to be very worker-friendly.”
Criscitiello says she’s concerned that employers will promote models that are mediocre or damaging to workers; one of those models is the Protect App-based Drivers and Services Act, a ballot initiative backed by gig economy companies.
“I think that giving rideshare companies an exemption from AB 5 would be very damaging to the workforce that does the labor those companies rely on,” she says. “AB 5 will restore to gig economy workers basic labor rights that they have been denied through misclassification. This ballot initiative would allow gig companies to continue to deny workers those rights and continue to misclassify them, all in exchange for very little.”
In a follow-up email, Criscitiello said gig workers might receive “small stipends to help cover some health care costs which amount to far less than the benefits and rights that drivers would get as employees,” and suggested that “companies are pretending that continued misclassification is the only way to maintain flexibility, and that is clearly not true.”
She says this is partly why she is a proponent of the CEA, though she began drafting it before AB 5 passed.
“This legislation is totally blue sky,” Criscitiello says. “We wrote it with that in mind. We just wanted to put something out there that people could start hacking away at and criticizing. We actually really welcome that. We just want a model out there that is truly worker-centered but also recognizes the need of these companies for legal certainty and for flexibility. I think we strike that balance pretty well.”
The CEA has three major elements. The first is a worker cooperative, where an entity is owned and controlled by its members (i.e. gig workers). That means each member would have one vote on the board level. The second is a support network via a federation that would provide management and business support services. In the CEA’s grand vision, the federation would be funded by the state of California via a zero-interest, $25 million loan. Last, but not least, is labor representation via unions.
“There are enormous benefits that unions can bring to co-ops,” Criscitiello says. “For example, most co-ops are pretty small and disaggregated, and unions can be enormous and powerful benefit pools. In this model, for example, if you imagine industries having different co-ops, if there were a union collective bargaining agreement tying them together, they could have access to much, much better retirement and health insurance benefits.”
The next steps entail continuing to have conversations with various stakeholders and then finding an official author for the legislation. Criscitiello says the legislation could be introduced as early as this legislative cycle, but it could be pushed to the following legislative cycle. For this to go into effect, however, there will need to be industry-wide consensus, Criscitiello says, meaning buy-in from worker-advocates, platform companies and state legislators.
“I think a lot of this is going to come down to the details,” she says. “There will need to be an openness on the part of worker-advocates and platform companies and other large employers…It will be like a grand negotiation.”
Already, Criscitiello says the idea has gotten more traction than she expected. That’s why she says she feels relatively optimistic, but also believes the way it’s written now won’t become law.
“But I do think it’s reasonable that something resembling this concept does end up happening,” she says. “There’s also no real alternative out there.”
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