Biden’s Gig Worker Labor Rule: Effects on Last-Mile Delivery Businesses
The Biden administration recently announced a plan to redefine gig workers as employees under federal law. This has many in the last-mile industry asking, “what does this mean for me?”.
While headlines might suggest a seismic shift in how you run your business, there’s no need for immediate worry – it won’t affect everyone. However, the gig worker versus employee conversation is under the spotlight for a reason. It’s a system built on a loose foundation.
What’s the new gig worker rule?
The new regulation revises the definition of an “employee” under the Fair Labor Standards Act. The redefinition tightens the criteria for independent contractor (IC) classification. This could grant employee status to some who were previously excluded as gig workers.
The shift could lead to:
Increased costs
If the rule reclassifies your ICs as employees, you would be responsible for providing benefits like minimum wage, overtime pay, and healthcare benefits.
Operational changes
You might need to adjust your work model to ensure employees have more control over their schedules and tasks, potentially impacting efficiency.
Compliance challenges
Navigating the complexities of the new rule and ensuring proper worker classification could pose compliance issues, potentially requiring legal and administrative adjustments.
Shifting business models
You would have to re-evaluate your reliance on independent contractors and potentially explore alternative models, such as hiring full-time employees or partnering with different types of shipping logistics service providers.
New rule limitations
While it sounds scary, the rule has its limitations. It will only apply to some workers, hinging on a multi-pronged test that looks at factors including:
Control
How does the company exert power over the worker’s daily activity?
Job performance
How long has the worker been performing duties for the business?
Investment
How much of the worker’s resources are they putting into the job?
This means many platform-based gigs like Uber or DoorDash, characterized by flexible schedules and minimal direct supervision, may still fall outside the “employee” classification. While some workers might see a shift in their status, the rest will likely remain unaffected.
A system on red alert
Despite the new rule’s exclusions, its very existence carries some weight. It represents explicit acknowledgment on the federal level of the mounting concerns surrounding the so-called “gig economy.” Once heralded for its flexibility and entrepreneurial spirit, the IC system now faces increased scrutiny. Gig workers often have precarious incomes, no benefits, and very little power to take legal action against the corporations with which they contract.
Escalating insurance premiums caused by frequent claims within the sector, as well as legislative initiatives for redefining ICs as employees bubbling up at the state level, paints a picture of a system likely to face ongoing pressure for reform.
Importance of risk management
This new rule underscores the need for a last-mile framework that safeguards worker wellbeing.
Many businesses hire ICs to save money, which can only get you so far in last-mile. Increased claim frequency and severity, compounded with nuclear verdicts, make skimping on safety and driver experience hazardous. Regardless of worker classification, there are things you can do now to mitigate risk and avoid costly accidents:
Implement robust safety procedures
Operational policies and procedures that enforce safety regulations are necessary. Follow up-to-date procedures to prepare drivers for all common challenges like route management and vehicle maintenance thoroughly.
Hire good drivers
Carefully assess the skills and experience of new hires, adhering to strict guidelines without exceptions. This ensures that unforeseen issues don’t appear during claims discovery by insurance adjusters. Additionally, offer competitive pay and benefits to retain top-tier drivers.
Invest in technology
Mandate four-way directional cameras and telematics to enhance driver performance. Utilize GPS for route optimization. It will boost operational efficiency and provide crucial data for overall improvement. This technology monitors driver behavior and safeguards against potential claims.
Stay current with an insurance broker
The new regulatory measures are only a modest step toward addressing systemic issues within the gig worker industry. While it may not trigger immediate changes for your business and labor force, it reveals cracks in the foundation.
Work with your broker to stay current regarding the latest last-mile regulations and to ensure you’re ready for anything around the bend.
Want to learn more? Connect with the Risk Strategies Transportation team at transportation@risk‐strategies.com.
About the author
Bryan Paulozzi specializes in insurance and risk management for courier, last mile delivery, expediting, freight forwarding, and brokering businesses. He and his team help transportation companies identify and mitigate safety risks, including those related to winter weather driving.
The New York state Labor Department will start to monitor stronger protections for warehouse workers in the state, including mandates they quickly receive data about their work speed and company-set quotas after legislation took effect Monday.
Gov. Kathy Hochul signed the Warehouse Worker Protection Act in December, which requires distribution centers to disclose work performance data to current and former employees and to the state. The bill, passed during last year’s legislative session, also protects workers from being fired or disciplined for failing to meet required quotas, or performance rules including not allowing breaks mandated under state labor law or being forced to work through meals.
“New York’s warehouse workers deserve to be treated with fairness, dignity, and respect and we are making a significant stride toward achieving that,” Hochul said in a statement Monday. “I was proud to sign the Warehouse Worker Protection Act to address unreasonable work quotas and provide warehouse workers with protections from retaliation by their employers. With this legislation now in effect, we are holding firm to our commitment to ensure fairer and safer workplaces for all New Yorkers.”
Employees can request information about their personal performance and quota at any time under the new law, and must receive the information from their employer within 14 calendar days. The changes also protect against retaliation for requesting the information or a company limiting employees’ use of restroom facilities to make quota.
The bolstered protections apply to warehouse distribution centers, or a company classified as warehousing and storage, merchant wholesalres, electronic shopping and mail-order houses and couriers and express delivery services. It excludes farm product warehousing and storage, according to the governor’s office.
“Our warehouse workers play a significant role in keeping our supply chain moving, and they deserve to be treated fairly and equitably,” state Department of Labor Commissioner Roberta Reardon said in a statement. “I thank Gov. Hochul and the Legislature for putting the Warehouse Worker Protection Act in place to ensure these workers are not taken advantage of and are given the protections they deserve.”
Employees who suspect their employer is in violation of the new protections should request information about their required quota in writing and 90 days of data about their personal work speed, comparable aggregate work speed data for employees in similar positions, according to Hochul’s office.
“Warehouse workers suffer serious work-related injuries at a rate more than twice the average for all private industries,” said state AFL-CIO President Mario Cilento. “These workers routinely spend entire shifts speeding through tasks in an attempt to meet quotas mandated by their employers, all too often suffering musculoskeletal and repetitive stress injuries as a result. The Warehouse Worker Protection Act provides long overdue limits to protect warehouse workers from inhumane quotas, and to protect them from retaliation for asserting their rights under this law.”
New Jersey’s Mini-WARN Act Amendments, Including Mandatory Severance, Now in Effect
On Jan. 10, 2023, New Jersey Gov. Phil Murphy signed legislation (P.L. 2023 c.142) that implements the long-delayed 2020 amendments to New Jersey’s mini-WARN Act, the Millville Dallas Airmotive Plant Job Loss Notification Act (NJ WARN).
NJ WARN – like the federal WARN Act and other states’ mini-WARN Acts – requires larger employers to provide notice to employees in advance of a mass layoff, plant closing, or reduction-in-force. Failure to give advance notice typically results in the employer having to pay additional wages to the impacted employees.
The amendments to NJ WARN are unique in that they require employers to pay mandatory severance to employees terminated in a qualifying layoff, even if the employer provides timely notice to the employees. The amendments are in effect as of April 10, 2023. As a result, New Jersey employers planning layoffs must now comply with NJ WARN’s costly new requirements:
These changes to NJ WARN were originally passed on Jan. 21, 2020 (P.L. 2019 C.423). However, on April 14, 2020, the New Jersey legislature delayed the effective date of the NJ WARN amendments until 90 days after the end of the pandemic-related state of emergency announced by Gov. Murphy in Executive Order 103. Executive Order 103 has never been lifted, and the state of emergency remains in effect in New Jersey. However, on Jan. 10, 2023, Gov. Murphy signed separate legislation (P.L. 2022 c.142) allowing the NJ WARN amendments to take effect despite the ongoing state of emergency.
Following these amendments, NJ WARN’s reach is much broader than federal WARN:
– the closing of a single work site or facility, if it results in the termination of 50 or more employees in any 30-day period;
– the termination of 50 or more employees at a single work site or facility in any 30-day period, if they make up 1/3 or more of the employer’s work force; or
– the termination of 500 or more employees at a single work site or facility in any 30-day period;
– Like NJ WARN, multiple rounds of layoffs within a 90-day period will be aggregated to meet these employee thresholds.
In light of New Jersey’s more expansive requirements, employers conducting any layoffs impacting New Jersey employees should review their workforce reduction plans and policies to ensure they remain compliant.
New York City Council Bill Introduction
Our lobbyist has alerted us to the four bills below that the New York City Council has recently introduced. The Government Affairs Committee would like you to pay particular attention to Int 0824-2022.
Int 0819-2022 The bill would require all businesses that sell e-bikes, e-scooters and other
personal mobility devices powered by batteries, to post lithium-ion battery safety informational
aterials and guides. Such materials and guides would be required to be posted both in physical
stores and on online retail platforms. A violation would be subject to civil penalties ranging
from $150 to $350 per violation.
Int 0822-2022 This bill would require the commissioner of the Department of Consumer and
Worker Protection to establish and require a battery safety certification for mechanics of powered mobility devices, including e-bikes and e-scooters. The commissioner will establish the criteria
for this certification process, maintain and update a monthly list of all mechanics who are thereby certified and conduct outreach and education about this certification program.
Int 0826-2022 The use of non-compete agreements in contracts for freelance work, especially
in the fashion industry, can lead to unreasonable restrictions on freelancers being able to find
new work. This bill would prohibit persons from requiring freelance workers to enter into
non-compete agreements unless the hiring party agrees to compensate the freelance worker
during any period in which a non-compete agreement would restrict the freelancer from seeking
other work. This bill would also create a private right of action allowing freelancers to seek a declaratory judgment finding a non-compete agreement void and grant the Office of Labor Standards enforcement authority. The Corporation Counsel would also be able to investigate
and sue hiring parties who exhibit a pattern or practice of violations in this case.
Int 0824-2022 This bill would lower the monetary threshold for coverage under the Freelance
Isn’t Free Act from freelancers who provide services worth $800 or more in the immediately
preceding 120 days to those who provide services of $250 or more in the immediately preceding
120 days, and excepting certain licensed freelance workers from this lower threshold.
Today, the U.S. Department of Labor announced the publication of a notice of proposed rulemaking (NPRM), Employee or Independent Contractor Classification Under the Fair Labor Standards Act in the Federal Register.
Publication of the NPRM in the Federal Register starts the comment period that remains open for 45 days and closes on November 28, 2022. All comments submitted (including duplicate comments) become a matter of public record and will be posted without change to www.regulations.gov, including any personal information provided.
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This NPRM, Employee or Independent Contractor Classification Under the Fair Labor Standards Act, would:
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The Department invites comments from the public on the proposed rule. All comments must be received by 11:59 p.m. ET on November 28, 2022, to be considered in this rulemaking. Comments received after the comment period closes will not be considered. Comments and data may be submitted online or by mail.
Address written submissions to: Division of Regulations, Legislation, and Interpretation, Wage and Hour Division, U.S. Department of Labor, Room S-3502, 200 Constitution Avenue, N.W., Washington, DC 20210.
For more information on the Notice of Proposed Rulemaking, Employee or Independent Contractor Classification Under the Fair Labor Standards Act, contact the Wage and Hour Division or call toll-free 1-866-4US-WAGE.
On Tuesday, August 29, 2022, NYSMCA President Larry Zogby testied at the EA Central Business District Tolling Program Public Hearing. The video is below for viewing.
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INDEPENDENT CONTRACTORS LAUNCH #WhatTheHellDOL
SOCIAL MEDIA CAMPAIGN
The campaign is a response to the U.S. Department of Labor’s plans to rewrite the rules for who can legally qualify as self-employed
WASHINGTON, D.C., June 13, 2022 — Several ad hoc groups of independent contractors nationwide have joined forces to launch WhatTheHellDOL, a social media campaign created in response to the U.S. Department of Labor’s announcement that it plans to rewrite the rules for who can legally qualify as self-employed.
Fight For Freelancers USA, a nonpartisan, grassroots, self-funded, ad hoc group of independent contractors and small-business owners; Freelancers Against AB5, which represents independent contractors in hundreds of professions, and includes seniors, people of color, people with disabilities, the chronically ill, and family caregivers; and California Freelance Writers United, a nonpartisan, ad hoc coalition created to undo the damage caused to independent contractor journalists and writers by California’s Assembly Bill 5, are working together to launch the #WhatTheHellDOL campaign.
“This move by the U.S. Labor Department is the latest attempt to limit the choice of self-employment that has existed since the founding of the United States,” said Kim Kavin, a freelance writer from New Jersey who co-founded Fight For Freelancers. “The same people behind this move supported California’s Assembly Bill 5, which was such a disaster that less than a year later, lawmakers had to pass a wide-reaching emergency measure. California citizens then overwhelmingly voted to undo even more of it. Next, these same anti-freelancer forces tried and failed to get copycat bills passed in other states and in Congress. Most recently, a federal court told the U.S. Labor Department to stop breaking the law when moving toward
regulatory workarounds. Now, they’re trying again to attack our livelihoods. Seriously, what the hell, DOL?”
President Biden campaigned on a plan to use the same anti-freelancer ABC Test that underpins the failed California law as the basis for all labor, employment and tax law nationwide. U.S. Labor Secretary Marty Walsh is now retweeting the same talking points that were used to pass California law back in 2019, and that have since proved to have little basis in fact or reality.
“To understand how destructive this anti-freelancer position is, people should read the Fight For Freelancers amicus brief that we recently co-signed, supporting a lawsuit that challenges California’s anti-freelancer law,” says Karen Anderson, founder of Freelancers Against AB5. “We continue to hope that the U.S. Supreme Court will step in and stop the catastrophe that happened in California from spreading nationwide.” The #WhatTheHellDOL campaign urges independent contractors from all walks of life to share stories on social media about why they choose self-employment. Some 70% to 85% of independent contractors prefer self-employment, according to government and private studies dating to 2015.
“The U.S. Labor Department is giving us only two minutes apiece to speak at its upcoming hearings about the independent contractor rulemaking,” says Maressa Brown, founder of California Freelance Writers United. “Not only do self-employed Americans deserve a real seat at the table, but lawmakers and regulators nationwide must stop threatening our chosen careers and livelihoods.”
#WhatTheHellDOL #FightForFreelancers
Media contact for Fight For Freelancers: Kim Kavin, ki*@ki******.com, 908-975-3031 @thekimkavin / FightForFreelancersUSA.com @Freelancers_USA
Media contact for Freelancers Against AB5: Karen Anderson, 808-936-2668, 12******@ea*******.net
Media contact for California Freelance Writers United: Maressa Brown, ma***********@gm***.com
We wanted to remind you that in New York State, COVID Paid Sick Leave is still
in effect for employees who are ordered to quarantine or isolate due to
COVID-19 and are unable to work while in quarantine or isolation. Depending
on the size of the business, employers may be required to provide COVID Paid
Sick Leave to employees without requiring employees to first use accrued paid
time off.
All employees, regardless of the size of the business they work for, are entitled
to job protection upon returning to work from COVID Sick Leave. Employees
exercising these rights are protected under New York’s anti-retaliation laws.
To learn about what you can do if you were exposed, have symptoms, or test
positive for COVID, please click here.
To find out more about your rights about COVID Sick Leave or to file a complaint, visit paidfamilyleave.ny.gov/COVID19.
NYC Amenda (and Delays Effective Date of)
Salary Disclosure Law for Job, Promotion, and Transfer Advertisements
Late last year, the New York City Council passed Int. No. 1208-B, now Local Law 32 of 2022,
which amended the City Human Rights Law (“HRL”) to require City employers with four or
more employees to include in job postings – including those for promotion or transfer
opportunities – the minimum and maximum salary offered for any position located within
New York City (“Law”). Failure to comply with the pay transparency requirements would
constitute an unlawful discriminatory practice under the HRL. As enacted, the Law was
scheduled to take effect on May 15, 2022, but that, and other provisions, have just been
amended. Yesterday, the City Council’s Committee on Civil and Human Rights passed
Int. No. 134-A, which implements several significant amendments to the Law, and this
afternoon the City Council passed the same (“Amendments”).
Specifically, the Amendments:
The Amendments seek to balance the Law’s main purpose of helping to prevent
pay discrimination against women and minorities, while answering some of the
business community’s most urgent concerns. If you have any questions in
navigating this delicate balance, please feel free to contact the Pitta LLP
attorney with whom you work, or any of our other dedicated attorneys.
The New York’s Whistleblower Law was expanded on January 22, 2022.
NYSDOL released a new notice that every workplace must post in a place frequented by employees.
To All Members,
Please see the link below for your business certificate posted by NYC Businesses to affirm adherence to the new law.
As you may have heard, Mayor de Blasio announced this morning an expansion of the NYC vaccine mandate. Details are still sketchy and I’ve not seen a new executive order issued as of yet, but here’s what we know so far.
Employers Subject to Current “Key to NYC” Mandate
Other Private Employers To Which “Key to NYC” Does Not Apply
Adult Use Cannabis and the Workplace
This document is intended to address some of the most common situations or questions in the workplace related to adult-use cannabis and the Marijuana Regulation and Taxation Act (“MRTA”). This document does not address the medical use of cannabis. For further assistance with New York Labor Law and the MRTA, please visit New York State’s Office of Cannabis Management’s website at cannabis.ny.gov or consult with an appropriate professional.
S3920—Does NOT change the current “ABC “ Test in NJ but does contain new enforcement tools that the NJDOL deems necessary due to a past history of out of State employers, mainly construction subcontractors, who continue to ignore current laws and compliance efforts by NJDOL. The proposed changes include: expansion of NJDOL “Stop Work” orders to affect ALL work sites used by an employer rather than just the site where an alleged violation was found, would require payment of wages to workers affected by the “Stop Work “order for up to 10 days of the duration of the Order, increases fines for ignoring a “Stop Work “ order to $5K per day and empowers the Attorney General to seek injunctive relief in the courts against employers who continue to ignore compliance efforts by NJDOL. If passed NJDOL has NO plans to hire additional staff for enforcement other than State employees from other agencies or departments if the need arises in the future,
S3921—Creates an Office of Strategic Compliance with a $1M budget to coordinate all enforcement activities , including alleged misclassification, between various State/Federal agencies. They would also be empowered to review ALL applications to the State for any “direst business/financial/economic development assistance including job training grants, with the ability to deny access to those program when a passed history of alleged misclassification has been reported.
S3922—Legislation would empower the NJ Dept of Banking & Insurance to use the existing NJ Insurance Fraud Prevention Act to investigate employers who allegedly deny workers access to company benefits such as health or dental insurance as well as Workers Compensation coverage by misclassifying workers as independent contractors.
All three bills, may appear on the current legislative calendar which is schedule to end on June 30th, NYCMCA will provide additional information and details in the event that any of the measure outlined above make to a floor vote.
After passing the New York Health and Essential Rights Act (NY HERO ACT), the New York State Department of Labor (DOL) issued its “Model Airborne Infectious Disease Exposure Prevention Plan.” The NY HERO ACT mandates that employers adopt the DOL’s model plan or establish an alternative plan that at least meets the DOL’s minimum requirements by August 5, 2021. What does this mean for your company?
Businesses Need to Act Now
For more resources from the NYS DOL, visit their NY HERO ACT webpage.