Georgia Set to Become the Seventh State With 'Gig Economy' Law

Tuesday, March 27, 2018 | 0

The state Senate as early as today could pass a bill that would make Georgia the seventh state this year to approve “gig economy” laws that classify thousands of workers as independent contractors — not employees — of online marketplace platforms.

Rep. Barry Fleming

The Georgia legislative session ends Thursday night, and supporters and opponents have been marshaling forces on both sides this week.

“We’re against it,” said Yvonne Robinson, secretary-treasurer of the Georgia AFL-CIO, which launched an email and social media campaign this week to urge members to contact their legislators. “This will further rig the economy against working families and favor the interests of millionaire and billionaire corporations.”

HB 789, which passed the House 102-66 last month, is similar to bills that easily have passed in Indiana, Utah, Kentucky, Tennessee, Florida and Iowa. They were all introduced at the request of Handy Technologies, which runs an online site and mobile app that connects workers with customers needing handyman, landscaping and housecleaning services.

“This is something to encourage these online companies to come and expand in Georgia to give our citizens more choices,” the bill’s sponsor, state Rep. Barry Fleming, R-Harlem, told WABE, the Atlanta public radio station.

Labor groups and some Democratic lawmakers have charged that the legislation could spark a rush by companies all over the country to set up similar platforms and re-label workers as independent contractors. That would exclude workers from traditional protections such as workers’ compensation and could undermine the system over time, critics said.

“This would mean that all these workers would have no safety net, no workers’ comp and no health insurance,” Robinson said.

With fewer companies paying into the workers’ compensation system every year, it could also spell trouble for insurance carriers down the line, some analysts have argued.

“We are still evaluating the possible impact on workers' compensation systems and whether there may be unintended consequences to the legislation,” said Trey Gillespie, assistant vice president at the Property Casualty Insurers Association of America.

Lawmakers have said the legislation was requested by Handy after several lawsuits against the platform, against the ride-service apps Uber and Lyft, and against the food-delivery platform Grubhub. The suits have argued that the companies misclassify workers as independent contractors and skirt insurance and tax requirements.

A California class-action suit, Robin Easton v. Handy Technologies, settled earlier this year, and Handy agreed to pay former workers, pay fines to the state and pay more than $400,000 in attorneys’ fees.

In Lawson v. Grubhub, a federal judge in the Northern District of California ruled in February that a delivery driver, an aspiring actor, was, in fact, an independent contractor. But Judge Jacqueline Corley also appeared to lament the fact that there was no third category, perhaps something between employee and contractor.

“With the advent of the gig economy, and the creation of a low-wage workforce performing low-skill but highly flexible episodic jobs, the Legislature may want to address this stark dichotomy,” the judge wrote in her ruling.

To help clear up the confusion and preclude further litigation, Handy targeted Republican-controlled legislatures in eight states and has had remarkable success in winning bills that clarify that on-demand platform workers are not employees.

Tennessee’s and Iowa’s bills are awaiting their governors’ signatures. A bill in Colorado passed the state Senate and is now in the House.

"What is ultimately a better business decision? To try to change the law in a way that you think works for your platform, or to make sure your platform fits into the existing law?” Bradley Tusk, whose firm represents Handy, told CNN earlier this month.

Georgia’s bill, like those in the other six states, states it plainly: “The marketplace contractors performing services arranged through the marketplace platform's digital network are independent contractors and are not agents or employees of the marketplace platform.”

The bill makes it clear that workers and the platform company would have to agree in writing that the worker is an independent contractor, that the platform could not unilaterally prescribe hours to be available for work and could not prohibit the worker from using other marketplace platforms.

The bill would not apply to workers for state or local government, nonprofit organizations or freight transportation companies.

“Legislators in Georgia and across the country are supporting legislation that focuses on creating a clear test for worker classification in the on-demand sector because this sector is not going away — it is the future,” Handy’s general counsel, Brian Miller, told WorkCompCentral. “By providing a clear, objective framework for everyone to follow, bills like this will bring much-needed clarity to the law and enable the on-demand economy to continue to grow, innovate and bring new income opportunities to millions of Americans.”

At least one analyst said any potential drain on the workers’ compensation system in Georgia and the other six states with similar laws may be short-lived.

“My sense is this is not going to last,” said Joe Paduda, co-owner of CompPharma, a consortium of pharmacy benefit managers. “From an insurance perspective, group health and individual health insurers are going to rebel and stop covering occupational injuries, placing these workers in some sort of limbo. Thus, while these workers may be ‘contractors,’ the entities they work for may have to figure out how to attract workers who are going to be completely at risk for any accidents.”

Ultimately, without workers’ compensation, many injured workers will be forced to the emergency room for more expensive care, Paduda said.

“So, someone is going to pay, and this is just cost-shifting to the taxpayer. Thus, I don’t see it as sustainable.”