Haaland: Uber & Other "Gig Economy" Multi-National Corporations Must Pay Their Fair Share.

May 8, 2019
Press Release

WASHINGTON, D.C. – Today, Congresswoman Deb Haaland (NM-01), Vice Chair of the Task Force on Poverty and Opportunity, released the following statement in solidarity with the Uber and Lyft drivers planning to strike on Wednesday to demand fair working conditions ahead of Uber's estimated $90 billion IPO:

"This is about fairness. Uber and other billion dollar multi-national corporations are not paying their fair share. Instead, they are passing the buck to their workers, increasing financial insecurity for folks who are working hard to put food on the table and keep a roof over their heads. The gig is up. 

“Large companies have found a loophole to dodge standard labor practices and employer contributions to Social Security and Medicare, thereby denying workers a variety of protections and benefits accorded to traditional workers, including a guaranteed minimum wage and retirement security.

 “Though ride sharing has improved access to transportation and provides an alternative to drunk driving in New Mexico, there is no excuse for dodging your responsibility to ensure workers are paid fairly.

“This exploitation of workers must end. That is why I intend to introduce legislation that would require Uber, Lyft and similar multi-national corporations to pay both the employer and employee portion of payroll contributions for their independent contractors. This will strengthen Social Security, protect workers' retirement and disability protections, while providing a strong deterrent against misclassifying workers."

Social Security Works, Alliance for Retired Americans  CREDO applauded Congresswoman Haaland for working to develop fair policies for workers in the gig economy.

"Social Security Works applauds Congresswoman Haaland for fighting so diligently, effectively, and innovatively for workers. Her plan to require Uber and other large "gig economy" corporations to pay the full 15.3 percent Social Security and Medicare contribution would release workers who have been misclassified as independent contractors from an unfair burden. Furthermore, it would be great for workers' economic security and for our Social Security and Medicare systems,” said Nancy Altman, President of Social Security Works.

"All workers deserve a secure retirement after a lifetime of hard work. Rep. Haaland's legislation sends a message to corporations that mis-classifying employees as contractors is not a way to escape their responsibility to contribute to Social Security and Medicare on their behalf," said Rich Fiesta, executive director of the Alliance for Retired Americans

"Massive corporations like Uber want people to think that the gig economy is about worker empowerment, but it's really just another path for profits for the few," said Heidi Hess, co-director of CREDO Action. "Uber's business model shifts all of the burden an employer should bear -- including basic health insurance -- onto its employees, allowing the company's executives to pocket more. Rep. Haaland's bill will be a welcome first step in fixing that by requiring corporations like Uber to foot the bill for payroll taxes, instead of their drivers, many of whom are struggling to make ends meet."

Background:

For traditional workers (W-2 employees), employers pay half of Social Security and Medicare contributions. In contrast, independent contractors (1099 employees) are fully responsible for the entire 15.3 percent contribution - both the employer and employee portion. 

A large and growing number of American workers are employed as independent contractors (1099 workers). Best estimates are that Uber alone has over a million active drivers in the United States. In 2015, most Uber drivers in the United States were non-white, 26 percent were between the ages of 40 and 49, and 24 percent were aged 50 or older. A 2018 MIT study found that the median hourly income of Uber drivers is between $8 and $10, with a substantial percentage of drivers earning less than the minimum wage in their states.

Those workers lack a variety of protections and benefits accorded to traditional workers (W-2 employees). In that regard, employers contribute to Social Security and Medicare with respect to their W-2 employees; in contrast, 1099 workers are required to pay both the employer and employee portion themselves.

Millions of 1099 workers are misclassified as independent contractors, when they are, in fact, W-2 employees, according to a recent report by the Treasury Inspector General for Tax Administration. Moreover, many may be accurately classified as independent contractors, but are much less able to afford Social Security contributions than the large multinational corporations which employ them. While around half of Uber drivers in the United States make less than the minimum wage, for example, their employer Uber had gross revenue of around $22 billion in just the first two quarters of 2018. Uber’s CEO Dara Khosrowshahi was paid $45 million in 2018, and Uber paid its top five executives $143 million in total compensation last year.

The proposed reform would require Uber, Lyft and other multinational corporations that employ large numbers of independent contractors to pay both the employer and employee portion of the 1099 earnings of those independent contractors. Obviously, this is more than employers of W-2 employees are required to pay.

That is intentional. If the 1099 employees are accurately classified, their multinational corporate employers will still escape paying minimum wage and most of the other employer costs associated with the economic security of W-2 employees. If the 1099 workers have been misclassified and are, in reality, W-2 employees, the companies can escape the additional cost by accurately classifying them. If they do that, of course, they must extend the other protections that W-2 workers have. 

In either event, the economic security of workers will be increased. If they have been misclassified and are reclassified as a result of the proposal, they will be relieved of the employer share of their Social Security contributions and gain other important protections. If they remain as 1099 workers, they will be relieved of the expense of both the employer and employee Social Security and Medicare contributions. 

Issues: