The 1099 Self-Organizing Act: Well done, sharing economy startups
As if rising rents weren’t enough, non-techies in California have a new reason to hate startups: The 1099 Self-Organizing Act.
It was introduced yesterday by Assemblywoman Lorena Gonzales of San Diego, and threatens to dramatically change how labor law has worked in the state, a reaction to the “gig” economy which we wrote yesterday shows no signs of abating despite so many calls for a market correction.
Unlike, other efforts to reclassify, say, Uber drivers so that they can organize and bargain collectively, this is a broad bill that affects any businesses relying on contract workers. To listen to opponents, the bill doesn’t just threaten internet giants of the on demand economy, it threatens, say, winegrowers in the central valley.
The 1099 Self-Organizing Act, however, applies to people not just working for tech companies. The legislation would allow a seemingly broad spectrum of independent contractors to unionize, and not in the kind of unions familiar to most Americans.
Currently, U.S. federal labor law only grants the collective bargaining privilege to workers who are classified as employees. And it only compels employers to bargain with an employee group if a majority of the workers in a workplace want to be represented by that union.
“It is a dramatic departure from traditional labor law,” said Seth Harris, a distinguished scholar at Cornell University’s School of Industrial and Labor Relations, and the former deputy secretary of the U.S. Department of Labor.
“(The 1099 Self-Organizing Act) would create what some people call a ‘members-only’ or ‘minority’ union bargaining relationship wherein the workers don’t have to get a majority of all of the workers in the workplace to agree to join the union. Instead you just need to get 10 or more people working for the online gig economy company to say they want to bargain together with the employer. And that’s enough. That does not exist in U.S. federal, private sector labor law.”
The bill is a strange-half measure, requiring collective bargaining among employees, without a union. Gonzales even tosses the word “free market” into her description of it, presumably to soften the blow. She told the Union Tribune:
“It’s really a free market approach to an innovative economy,” Gonzalez said of her bill. “We can start to regulate this activity. ... But as a former regulator, I just think it’s better to allow the workers and the employers to get together and negotiate something that works for both of them.”
Similarly, the bill wouldn’t go so far as “reclassifying” these workers as employees, but as a separate third thing.
But make no mistake: It’s a slippery slope at a time of class action lawsuits that threaten multi-billion valuations. Classify them in whatever new bucket you can dream up: The bill still seeks to give small groups of contractors any rights that historically have only been given to employees. That means this well-meaning, but half-measure bill could cause big problems for some of the biggest and most highly valued names in tech.
The biggest problem for tech giants isn’t the bill itself which could be a year or more away from becoming law, and legally contested after that. The problem is the growing public consciousness that the “gig” economy has pushed its advantage too far.
Sadly, a lot of the company responsible will likely be busted or public by the time any bills like these become laws. With or without this law, companies like Uber (who got us into this mess) are likely to find themselves forced by courts to accept that their army of workers really are employees. In many cases, it'll be the rest of the state’s businesses that relied on contract labor, but didn’t exploit it, who will be stuck paying the price.