Worker Classification, Amendment 1 and the Biden Administration Rule Change to the Fair Labor Standards Act Administration

Written by John Lopez

This article continues addressing a ballot measure that Illinois voters must vote on this election cycle.
We urge voters to reject Amendment 1, a constitutional amendment that
would elevate collective bargaining rights in the Illinois Constitution,
allowing government union contracts to override state law.

“What if I told you there was a way you could earn real money without being scammed and without a tie…I’m talking about the gig economy…ride shares, food delivery…”

— Johnny Lawrence learning about the gig economy, Cobra Kai, “Downward Spiral”, Sony Pictures Television Studios, Netflix, 9/9/22

As shared recently on Illinois Family Action, the forced unionization of 1099 independent contractors is the hidden agenda now openly public for the proponent of Amendment 1.

The counsel for the proponents’ political committee, Marc Poulos, told the Chicago Tribune on Sunday, Sept 25, the Amendment 1 could, with emphasis added:

“It was intentionally drafted to apply to all workers, Poulos said, adding it will cover ‘droves’ of workers not yet protected by federal or state law, such as agricultural workers and independent contractors…”

But since Amendment 1 begins with the word “Employees”, and Poulos claims Amendment 1 targets “droves” of workers not covered by federal or state law, the only way a worker can be protected under Amendment 1 would be for the Illinois General Assembly to implement a Worker Classification law, similar to California’s Assembly Bill 5 (AB5) law implemented at the beginning of 2020.

As previously discussed, federal law, the National Labor Relations Act (NLRA) regulates union organizing.  The other federal law cited in recent articles, the Fair Labor Standards Act (FLSA) of 1938, as amended, regulates employment including minimum wage, and employment within interstate commerce.

The FLSA is the main subject of today’s article, because the Biden Administration, through the Department of Labor, is planning a rules change directly targeting independent contracting and worker classification.

This complements Amendment 1 because if the Biden Administration recommends a simple rules change, possibly using the ABC test for classification within the FLSA, then Illinois lawmakers will be off-the-hook, and Amendment 1 will absorb all workers utilizing the ABC test, depending when the more stringent employment definition is implemented.

To be clear, the Biden Administration, since the U.S. House-passed Protecting the Right to Organize (PRO) Act which would amend the NLRA with the ABC test for Worker Classification in the context of union organizing stays stalled in the U.S. Senate due to three Democratic holdouts, is attempting an executive work-around to possibly implement the ABC test nationwide in order to make more workers eligible for collective bargaining, and that means eligible for union organizaing under the existing NLRA.

Think of a Department of Labor rules change to administer the FLSA without an act of Congress as a presidential “executive order on steroids”.

Veena Dubal

Leftists/progressives have advocated an executive fiat to administer the FLSA since right before the Biden Administration was sworn-in on January 20, 2021.

For example Veena Dubal, professor of law at the University of California Hastings School of Law in San Francisco, co-wrote an op-ed in The New York Times on January 18, 2021, titled “Gig Workers Are Employees. Start Treating Them That Way”.  Dubal was the academic braintrust behind the California AB5 law passed in 2019.

She ended the op-ed with the following:

“The Biden administration can end the state-by-state, sector-by-sector battle over basic workers’ rights.  It can clarify that exemptions from employment and labor laws violate the Fair Labor Standards Act…”

Clearly, Dubal shows complete contempt for the 10th Amendment of the U.S. Constitution.  The context Dubal, and co-author Juliet B. Schor, a sociology professor from Boston College, was the gig economy in general and app-based businesses in particular, like Uber, Lyft, Uber Eats and Doordash among others.

Ride-hailing companies work with independent contractors due to each driver being on call for multiple companies, giving the worker flexibility to respond to an Uber call, a Lyft call, and so forth.  Because drivers can choose their own hours, the drivers have added flexibility, and are not assigned to a particular shift or work schedule like a traditional W2 job.

Catalina Lauf

Catalina Lauf, who’s currently running for in the 11th Congressional District of Illinois, gave an outstanding response when Dubal was pushing to wreck the gig economy in January 18, 2021, before declaring her 2022 election plans:

“Once again —liberal academics somehow think they speak for the American worker and companies alike.  Contract workers LIKE being contract workers.  The gig economy is booming & another example of the free market at its best (which is why the left doesn’t like it).

“Many Uber drivers for example work for Uber on their own time while they’re building other businesses, in retirement, raising kids (etc).  It allows a flexibility that being a W2 cannot match.  They are not victims — the left should stop interfering!

“Also — I love when professors comment.  It’s like teaching entrepreneurship class at a University without having ever built a company / be an entrepreneur.”

Lauf speaks from experience, since she worked for Uber Chicago in partnerships and community affairs from 2016 through 2017.

Four months after the Dubal op-ed and Lauf’s response, empirical data emerged from Joe Biden’s pollster, ALG Research backing up Lauf’s claims.

From ALG Research’s executive summary published by POLITICO 5/25/21, with emphasis added:

ALG Research’s recent survey of registered voters and app-based drivers in Illinois shows that drivers are overwhelmingly satisfied with app-based work and, by a significant margin, want policymakers to protect their flexibility and independence while providing new benefits. Most drivers report using app-based work to generate supplemental income, working just a few hours a week and many already have benefits through another job.

Drivers and Voters Support a Third Way:

The survey found overwhelming support for a “third way,” meaning a new approach and policies that would allow workers to remain independent contractors while receiving access to new benefits and protections. The new benefits would be funded by app-based companies and could provide drivers with access to health care, retirement, and paid leave.

Among the findings:

● App-based drivers support a third way by a 43-point margin with 64% in support
● 72% of Democrats support a third way
● This concept also polls particularly well among Black and Latino voters, 71% – 81% respectively
● Union households also prefer a third way over a move to employment classification, with 63% in support
● 70% of current union members are also in support of a third way that offers both flexibility and benefits

Drivers Are Satisfied with Flexible Hours and Their Earnings:

● The vast majority of app-based drivers are only working part-time with 49% working less than 9 hours per week and another 38% working less than 29 hours per week.
● Most drivers use the work as supplemental income and have other jobs. 86% of drivers report they do not rely on driving as their primary source of income.
● Three-quarters of drivers (75%) report being satisfied with app-based work and their financial situation. Drivers are also just as positive about their personal finances (75% positive) as the voting population as a whole (75%). One notable exception is that drivers of color are more positive about their personal finances (+45 net positive) than people of color overall in Illinois (+36).
● A majority of drivers have another job, and among those nearly 2-in-3 (64%) receive benefits through that job. Just 5% of drivers are currently without health insurance compared to 3% in Illinois overall.

Additional findings of the ALG Research, as summarized by POLITICO on May 25, 2021:

A new poll shows support in Illinois for allowing gig drivers to keep their independence while also getting access to a portable benefits fund.

“The issue has rankled lawmakers across the country as unions have pushed for drivers to choose collective bargaining over flexibility to drive when they want.

“A union contract, for example, provides stable earnings, benefits and hours.

“The poll says a majority of independent or freelance drivers who work for ride-hailing companies like Uber or Lyft prefer the ability to pick up work when they want.

“The ALG Research poll commissioned by the Illinois Coalition for Independent Work shows support for a ‘third way’ solution that allows drivers to retain flexibility and independence while getting access to a portable benefits fund.

“The poll of 1,017 voters, including 200 drivers, shows 70 percent of current union members surveyed and 71 percent of Black voters support coverage that offers flexibility and benefits.”

The “third way solution” is NOT through traditional collective bargaining or forced Worker Classification into a W2 employee and a union contract.  Components of a potential third way solution will be covered in a later article.

A starting point could be legislation introduced in late July to amend the FLSA and the IRS code specified under H.R. 8442, the Worker Flexibility and Choice Act, sponsored by Congressman Henry Cuellar (D, TX-28) and cosponsored by Congresswomen Elise Stefanik (R, NY-21) and Michelle Steel (R, CA-48) to protect independent contractors.

Proponents of Amendment 1 want to eliminate the freedom of workers to market their labor as workers see fit by giving power and control to the government or union bosses.

The Left and Lies about Misclassification and the Rule Change to FLSA

In the previous article, a Department of Labor (DOL) announcement was shared from June 3, 2022, describing “misclassification”.

The announcement also served as notification to begin collecting input from interested parties, and the days the DOL would accept testimony from interested parties, both employers, and employees.

Since most legitimate independent contractors are both employer and employee, many participated in both hearing dates in late June, and a 3rd date had to be held in early July due to the many freelancers who would be impacted detrimentally with implementing the ABC test as part of the administration of the FLSA.

In July, a recommended rules change was sent to the White House, through the Office of Information and Regulatory Affairs (OIRA).  The proposed rule change has not been made public, but news sources say an announcement is imminent.

Once OIRA announces the proposed rule change, there will be time for feedback to be collected.  Most observers believe any rules change would be implemented by mid 2023, and will likely be delayed further due to expected court challenges.

Additional details, including the lobbying by firms like Uber, Lyft and Amazon, can be found in a Reuters article published on September 27.

The yet-to-be-released rule change hasn’t stopped the lie of “misclassification” being spread, most notably on Monday, September 26, by Senator Elizabeth Warren (D, MA) via Twitter:

“Big corporations promised to help employees access abortion care after Roe—but they exclude huge groups of workers from benefits by continuing to misclassify them as independent contractors.

“We can’t let them get away with exploiting this loophole.”

Wow, with the abortion debate, and Warren sounds like she’d be an Amendment 1 supporter if she lived in Illinois.

Reaction from legitimate independent contractors whose livelihoods hang in the balance of the DOL rule change to the FLSA administration were quick to respond in Twitter, including Janet Wagner, freelance writer from Toledo, OH (transcribed for ease of reading):

“Independent contracting is NOT a loophole.

“It’s a flexible, profitable constitutional work arrangement 59M+ Americans WANT.

“It allows people to create small businesses and be their own bosses.

“STOP spreading unions’ false narratives. WE ARE NOT MISCLASSIFIED AND WE VOTE!

“No ABC test for USA!”

Wagner refers to the Upwork research shared previously, including this summary graphic how independent contractors made up 36% of the U.S. work force, and contributed $1.3 trillion to the U.S. economy.

Highlights of Freelancing/Independent Contracting from Edelman Intelligence

Kim Kavin

Freelancers USA co-leader Kim Kavin of New Jersey did not mince words:

My chosen career as a self-employed woman is not a ‘loophole.’

“It’s a choice that has been legal since the very founding of the United States of America.

“You keep lying and trying to destroy us independent contractors, Senator Warren.

“Nevertheless, we persist!

“Fight for Freelancers!”

Freelance writers make for colorful language in Twitter.

Karon Warren (no relation to Senator Warren), Georgia-based freelancer added:

Hey, Senators Jon Ossoff and Raphael Warnock!

“My freelance, independent contractor career is not a loophole.

“I’ve spent more than two decades building the business I want.

“How dare you & the Democrats attack my chosen way to earn a living?

“Fight for Freelancers!”

The last portion about the Democrats attacking freelancers’ chosen way to earn a living goes for proponents of Amendment 1 as well.

Robbing Illinoisans of their freedom for the union bosses’ agenda to boost their union membership at the expense of established careers and lives reason enough for mainstream voters to REJECT and vote NO on Amendment 1.

Note from John Lopez:  The Illinois Economic Policy Institute tweeted a reply to me labeling my linkage of Amendment 1 to Worker Classification as “Misinformation”.  After support from friends and fellow freelancers, the ILEPI deleted their tweet, but enough people saw it, and moving forward, I will be screen capturing all hostile tweets on this topic.

John Lopez has written about policy and elections through the McHenry County Blog since 2019 through July 2021.  He is now semi-retired, and does freelance work with analytics, as well as political candidates, emphasizing policy as the means to advance the conservative message, by engaging through policy “dog fighting”, applying discernment for winning and advancing God’s Kingdom agenda.

John’s known for getting past the talking points, the narratives, the abstracts, the platitudes and the bromides in order to discuss policy and apply Scripture to overcome unholy divisions in the local community, our state, and nation.  John has been married for over 17 years.

Follow John on Twitter: @MarcVAvelar