Thanks to powerful lobbying, last week the House of Representatives introduced a new bipartisan bill, the Worker Flexibility and Choice Act (the “Act”). This bill provides for a new classification of workers in between employee and independent contractor. The classification would allow businesses to continue treating certain workers as independent contractors, while also providing some benefits typically provided to employees. The Act is backed by major app-based and gig economy companies, including Uber, Lyft, DoorDash, as well as trucking and construction associations.

Summary of the Act

The Act combines the flexibility of independent gig work with certain workplace protections. Under the provisions of the Act, employers and employees may voluntarily enter into a “worker flexibility agreement” that clearly defines the work relationship. According to a summary from the lawmakers’ office, the agreement would:

• Ensure the worker retains the freedom and flexibility to accept or reject offers to provide their services, giving them control over when, where, and how much they wish to work, as many gig economy workers desire.
• Promote worker freedom without infringing on certain workplace rights, including protections against discrimination, retaliation, and harassment.
• Allow the worker to engage with and provide services for multiple entities at any given time.
• Provide the worker a written summary of any health, pension, training, or other benefits they may be eligible to receive. 

Although such “flexibility agreements” would grant workers the rights provided to employees under privacy, anti-discrimination, anti-harassment, anti-retaliation, safety, and family and medical leave laws, these arrangements would not grant workers the same wage and hour protections. Workers would not be treated as employees for federal tax purposes. 

Potential Implications

The legislators recognize that the gig economy has grown exponentially in the recent decade as many prefer the autonomy, flexibility, and entrepreneurial opportunities available to gig workers. This legislation appears to be a creative compromise tailored to address issues unique to the modern economy by providing new job classifications that provide workers with the flexibility they desire but increases their level of protection beyond that of a traditional independent contractor. If passed, this Act will supersede state law in many aspects and interested employers will need to update their practice and policy. For California employers, this Act and its provisions that call for it to preempt/supersede state law provides a beacon of hope after AB 5 made it difficult for employers to classify workers as independent contractors under the ABC test. However, if this Act passes, it could also encourage litigious behavior as independent contractors potentially have standing to bring federal discrimination and other workplace claims (although California’s Unruh Act already allows for independent contractors to bring such claims under state law).

Likelihood of Enactment  

The fate of this Act is uncertain at this time. It was introduced as a bipartisan piece of legislation by Representatives from both parties. However, it is doubtful that the labor unions will throw their support behind this Act, as the union movement previously voiced objections over a similar law proposed in Washington state. If the unions aggressively campaign against the bill, many Democratic legislators and senators are unlikely to back it and that could hold up its passage.  

Even if it gets out of Congress, employers should not hold their breath for President Biden to sign this Act into law if the unions are not behind it. Biden is probably the most pro-union president since Franklin D. Roosevelt and his administration’s position on labor issues thus far has paralleled that of the union agenda.  

California Employers Need to Stay Alert

However, even if this legislation does not pass, it is still a great starting point for future conversations and lawmaking. It provides a good starting framework for exactly what the California workplace needs: a third category of workers that have basic minimum protections that the employer-employee relationship provides, without the stringent wage and hour and other restrictions that California’s wage and hour laws require, and which result in a denial of the scheduling and other flexibility and freedoms that many California workers desire.

Interested employers should follow the progress of this bill and consider reaching out to Senator Feinstein and Senator Padilla’s offices as well as your local Representatives to communicate your support.  

CDF Labor Law will monitor the progress of this legislation and keep you informed on this topic.