State and Local Laws Require Greater Protections for Gig Workers: What Employers Need to Know

Q: What do employers need to know about recent state and local laws providing for protections for gig workers?

A: Employers and businesses are likely familiar with recent changes to rescind more employer-friendly, Trump-era FLSA regulations governing independent contractor classification and joint employment status, which we previously covered. However, employers may be less familiar with various new laws being passed or considered by cities and states that provide additional protections specific to "gig" workers - i.e., those independent contractors who perform "on-demand" services.

For instance, in March, Philadelphia passed a law extending the city's COVID-19 paid sick leave to cover more workers, including low-wage earners and gig workers. Seattle established an emergency minimum wage standard for delivery workers during the COVID-19 pandemic. Commentators suggest that supporters of the Seattle measure may soon push to apply the law permanently.

But the legal trend to provide greater protections is not limited to those related to the COVID-19 pandemic. For example, New York City recently announced a series of laws establishing protections for third-party food delivery and courier service workers. Among other things, these laws would set minimum per-trip payments; guarantee that workers receive the full amount of consumer-provided tips; allow workers to set distance limits for travel requirements; require delivery companies to pay the workers at least once a week; and require services to add a contractual provision with restaurants to allow workers to use their restroom if the worker is picking up a delivery.

Similarly, in California, lawmakers recently passed a bill requiring meal delivery companies to disclose to customers third-party fees and commissions and how much restaurants make on their order. Through voter initiative Proposition 22, California voters previously approved giving gig workers access to certain benefits, such as a health care stipend and a minimum wage floor. Although a California superior court judge has since declared Prop 22 unconstitutional, it represents a potential trend. Indeed, Massachusetts voters will soon have the chance to consider a similar proposition that would formally classify such workers as contractors, rather than as full-time employees, while also establishing alternative minimum compensation and benefits more generous than those typically available to independent contractors.

These measures come at a time when the gig economy and on-demand workforce is experiencing significant growth. In 2018, Gallup released a study indicating that 36% of the U.S. workforce had a gig work arrangement in some capacity. Even as far back as 2016, the Bureau of Labor Statistics found that one-third of U.S. companies used gig workers extensively. The popularity of these positions is increasing, with some studies estimating that the gig economy experienced over 30% growth in 2020. The gig economy isn't limited to individuals not working full time. The Federal Reserve noted in a recent study that nearly half (47%) of gig workers also had full-time jobs, with 22% holding part-time jobs.

As we discussed in a recent webinar, gig, on-demand, and other forms of contingent labor are poised to become a permanent feature in the post-pandemic workplace. Thus, employers who use or may consider using gig labor in the future should take note of the growing list of cities and states considering or have passed laws providing additional protections for this category of workers. If you would like assistance navigating these and other protections for gig or contingent workers, please reach out to any member of the Troutman Pepper Labor and Employment team for guidance specific to your workplace and workforce.