The national debate over whether rideshare and delivery drivers should be classified as either independent contractors or employees arrived in Wisconsin this month and is now parked on the desk of Governor Tony Evers (D).
On June 19, the Republican-controlled Wisconsin legislature passed bills in both chambers (AB 269 and SB 256) — largely along party lines — that define gig drivers for app-based companies like Uber, Lyft, and DoorDash as independent contractors and therefore not entitled to the protections and benefits afforded employees, including unemployment compensation, workers compensation, and a minimum wage. Instead, the final bill authorizes these companies to offer their workers portable insurance and retirement benefits.
The bill now awaits the governor’s signature or veto.
Originally introduced in the Assembly by Representative Alex Dallman (R), one of three state chairs of the American Legislative Exchange Council (ALEC), the bill closely tracks the corporate bill mill’s position and model legislation on gig workers and other atypical employees. Two other sponsors, Representatives Robert Brooks (R) and Dan Knodl (R), are also ALEC members.
In an unusual break from ALEC orthodoxy, the lone Republican state senator to vote against the bill was also an ALEC state chair, Senator Steve Nass. The third ALEC state chair, Senate President Mary Fezlowski (R), moved the bill to the Senate floor and voted in favor of it.
ALEC brings together GOP state legislators and corporate lobbyists behind closed doors to vote on model legislation to push at the state level that typically weakens workers’ rights and promotes both business interests and a far-right agenda.
ALEC initially adopted a model Independent Contractors Definition Act in 1996 (reapproved in 2019) that distinguished between contractors and employees for the purpose of workers compensation. In 2021, the group adopted what it calls the Uniform Worker Classification Act geared more specifically to so-called gig workers, who book their work through online platforms.
AB 269 follows the ALEC model closely in terms of what makes independent contractors distinct from employees, including that app-based companies cannot prescribe work hours for independent contractors and cannot prevent them from taking other work.
Corporate representatives of Uber, DoorDash, and Instacart testified in favor of the bill, DoorDash ran digital ads supporting its passage, and Charles Koch’s astroturf group Americans for Prosperity (AFP) called on Evers to sign it into law. A Koch Inc. (formerly Koch Industries) lobbyist holds a seat on ALEC’s Private Enterprise Advisory Council alongside NetChoice, which represents Big Tech, including Lyft. The transportation companies are also pushing similar legislation to classify their workers as independent contractors in other states and at the federal level.
The Wisconsin AFL-CIO opposed the bill. In a June 26 press release, the labor federation said that it stands with Uber and Lyft drivers in Milwaukee who protested passage of the legislation and announced a work stoppage “for better working conditions.”
Portable Benefits
Rideshare and other app-based businesses see classifying workers as independent contractors and offering portable benefits as a way to discourage them from forming and joining unions.
ALEC foresaw the need to increase the benefits for rideshare drivers in 2021. In its Resolution in Support of Independent Contracting, ALEC states, “ICs [independent contractors] face government barriers in receiving benefits such as health care, training, equipment, and retirement benefits that many businesses would voluntarily provide if allowed to,” and called for “providing businesses more flexibility to offer ICs voluntary benefits.”
Testifying in support of the legislation he sponsored, Dallman said, “This bill will give these workers the opportunity to access and participate in portable benefits like health insurance, retirement savings, dental and vision insurance, replacement of lost income, and occupational accident insurance. Unfortunately, they currently don’t have access to [the] benefits that a traditional full-time employee has.”
The Wisconsin AFL-CIO sees this portable benefits package as an inadequate replacement for the benefits employers are required to provide their employees. “Our labor rights and employment protections are the product of many years of struggle by the labor movement and must not be stripped away simply because the modalities of doing business have changed,” the group argues.
States such as California, Massachusetts, and Utah already offer rideshare drivers portable benefits, and ALEC is signaling its support for similar measures in other states. A draft Statement of Principles on the Gig Economy, which will be taken up at its annual meeting in July, calls for states to adopt policies that “enable gig workers to thrive without unnecessary restrictions that hinder their flexibility or income opportunities” and declares that “recognizing and respecting [delivery and transportation services] as independent contractors is fundamental to the principles of limited government.”
Attaching portable benefits to AB 269 is clearly the lure for the bill’s main hook — formally classifying gig drivers as independent contractors. But providing portable benefits alone does not guarantee against union organizing drives. In Massachusetts, where Uber has reached an agreement with the attorney general to offer rideshare drivers one of the most comprehensive portable benefits packages in the country, the Service Employees International Union (SEIU) and the International Association of Machinists (IAM) are still leading a campaign to unionize drivers and bargain collectively for better wages and working conditions.
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