Department of Consumer and Worker Protection
42 Broadway
New York, New York 10004

Dear members of the New York City Department of Consumer and Worker Protection:

The Economic Policy Institute (EPI) submits this comment in support of the New York City Department of Consumer and Worker Protection (DCWP) proposal to amend rules relating to contracted delivery workers, including to implement Local Law 124 of 2025, which establishes minimum pay protections for grocery delivery workers.

EPI is a nonprofit, nonpartisan think tank working for nearly 40 years to counter rising inequality, low wages and weak benefits for working people, slower economic growth, unacceptable employment conditions, and a widening racial wage gap. We intentionally center low- and middle-income working families in economic policy discussions at the federal, state, and local levels as we fight for a world where every worker has access to a good job with fair pay, affordable health care, retirement security, and a union. EPI has supported past development and implementation of New York City’s existing wage standard for app-based workers in close coordination with affiliates of our Economic Analysis and Research Network (EARN), including the NYC-based Immigration Research Initiative.

New York City has long been a national leader in setting wage and workplace protection standards for frontline service-sector workers who are critical to the city’s economy but often experience low pay, long hours, and unsafe working conditions while producing large profits for corporations or shareholders. This includes workplace protections for app-based ride-hail drivers in place since 2018, and for food delivery workers in place since 2021, when the Council acted on findings from DCWP and established wage standards for app-based delivery workers who are typically treated as “independent contractors” by platform companies and, thereby, denied coverage under most state or federal labor and employment laws. Such municipal policies have become critical to maintaining a consistent wage floor for essential workers in the expanding “gig economy,” since classifying app-based workers as “independent contractors” or applying other non-employee designations remains a key prong of platform companies’ agenda to exempt themselves from coverage under other existing state and federal labor standards.

The 2021 minimum pay standard represented huge progress for app-based delivery workers, the majority of whom are immigrants and people of color. A 2024 report by DCWP revealed a 64% increase in driver earnings alongside an 8% increase in deliveries and a 10% increase in consumer spending when compared with the same fiscal quarter a year prior, before DCWP’s enforcement of the new wage standard. In the first quarter of 2025, consumer spending on app-based delivery grew to an all-time high of $120.2 million, and workers’ total earnings per delivery increased by 21%. In direct contrast to industry claims, these basic workplace protections have benefitted both app-based workers and the platform companies that rely on them.

New York City laws have, however, so far excluded app-based grocery delivery workers, even though these workers face the same struggles that other app-based workers face. Now is the time to take the next step to ensure that all app-based workers are covered by minimum pay and other workplace protections, regardless of their employer.

App-based workers deserve the same protections and benefits as workers in any other industry, including minimum wage rights, unemployment insurance, workers’ compensation, health and safety protections, paid leave, nondiscrimination protections, safeguards against misclassification as independent contractors, and the right to unionize and collectively bargain. DCWP’s proposed rule takes an important step toward realizing that goal by limiting the scope of app-based workers who are excluded from existing minimum wage standards. Raising the minimum wage for app-based grocery delivery workers will have spillover effects that benefit workers in other low-wage jobs, and higher minimum wages benefit us all and make our economy healthier.

Sincerely,

Nina Mast

Policy and Economic Analyst

Economic Policy Institute

Independent Retirement Fairness Act

Senator Cassidy’s Independent Retirement Fairness Act amends the Employee Retirement Income Security Act of 1974 and the Internal Revenue Code of 1986. The bill would allow independent workers to participate in retirement savings plans reserved for employees—specifically, Pooled Employer Plans (PEPs) and Simplified Employee Pension (SEP) plans—without affecting their status as nonemployees. In effect, the bill would allow employers to offer limited, voluntary benefits on their own terms while avoiding obligations like the minimum wage, overtime pay, unemployment insurance, and collective bargaining rights.

Modern Worker Empowerment Act

Introduced by Senator Scott, the Modern Worker Empowerment Act establishes a single employment test under federal law for determining who is an employee versus an independent contractor. The bill amends the Fair Labor Standards Act of 1938 to change the definition of employee using the common-law test, which offers a loose and flexible definition of employee relationships that allows employers to more easily classify workers as contractors and avoid the obligation of providing their workers with employee benefits they deserve.

Unlocking Benefits for Independent Workers Act

The Unlocking Benefits for Independent Workers Act was introduced by Senate Health, Education, Labor, and Pensions (HELP) Committee Chair Cassidy to create a legal “safe harbor” for companies and platforms that provide portable benefits, protecting them from being sued for worker misclassification. The Act would help to cement independent contractor status for workers who, in many cases, should be entitled to employee status and the accompanying protections and benefits.

Work without stable benefits and misclassification should not be accepted as inherent to the modern workforce. The rise of the gig economy and nontraditional, independent work is not simply the natural result of a changing workforce but by the design of employers who seek to employ a labor force without the burden of providing the protections and benefits associated with employee-employer relationships. These arrangements should not be accepted as a new form of work that demands an upheaval of labor and employment laws; they must instead be recognized as an acceleration of worker misclassification.

The misclassification of workers as independent contractors is already a pervasive issue in the U.S. that affects millions of workers and costs government agencies billions of dollars each year. An analysis from the National Employment Law Project focusing on state-level reports on misclassification estimated that as many as 10–30% of employers misclassify their workers. An earlier study commissioned by the Department of Labor in 2000 found that as many as 30% of employers misclassified at least some workers.

EPI has estimated the cost of independent contractor status to workers in several commonly misclassified occupations. For example, as a W-2 employee, a truck driving job is worth $60,498, while an independent contractor receiving the same wage, but no supplemental pay or benefits earns $38,965—$21,533 less. Misclassification therefore not only has serious labor rights implications but also affects workers’ economic security.

Against this landscape, the portable benefits proposals led by Senators Cassidy and Scott ultimately serve as a veil for further misclassification by incentivizing employers to default workers to independent contractor status, denying them the rights and benefits offered to employees. By accepting portable benefits as a substitute for traditional employment protections, policymakers legitimize a second-tier employment status that lacks the benefits workers deserve under the law. This approach does not empower workers—it entrenches corporate efforts to cut costs by avoiding responsibility.

Justifications for portable benefits often rely on the claim that granting workers employee status with the accompanying benefits would strip them of the flexibility they value. This argument rests on a false dilemma that workers must choose between flexibility and employment protections. There is nothing in the Fair Labor Standards Act (FLSA) that prohibits flexible scheduling for employees. The FLSA guarantees minimum labor standards but does not dictate fixed hours or rigid nine-to-five schedules. In a Bureau of Labor Statistics 2019 survey, 57% of wage and salary workers had a flexible schedule with the ability to vary start and stop times. Of these workers, 35% could frequently change their schedule; 46% could occasionally change their schedule; and just 19% rarely had the opportunity to change their schedule. Flexibility is not inherently tied to independent contractor status; it is a feature of job design, not legal classification. By promoting the myth that flexibility and employee protections are mutually exclusive, employers and their advocates distract from the real issue: their refusal to grant workers the rights they may be legally owed.

While surveys show that workers value schedule flexibility, research demonstrates that workers overwhelmingly prefer stable, full-time employment with benefits. A report from the National Employment Law Project found that 79% of people surveyed said they would prefer to have one stable full-time job instead of having more than one job with schedule and location flexibility. Further, polling by the global management consultant firm McKinsey & Company found that contract, freelance, and temporary workers would overwhelmingly prefer to have permanent employment, with first-generation immigrant (76%), Latinx (72%), Asian American (71%), and Black (68%) respondents most strongly favoring permanent employment. While workers value flexibility, surveys consistently show that they prefer the benefits and stability that come with employment.

Senator Cassidy has suggested that legal and regulatory barriers are a reason that independent contractors are not offered employer-provided benefits. He also said that fear of lawsuits from workers over misclassification are supposedly intimidating gig companies into not providing benefits. However, if these employers truly wanted to offer benefits even to workers who regularly work as independent contractors or freelance on “gigs,” there are systems available to facilitate that. For instance, they could contribute to multiemployer benefit plans for their workers, especially for industries with high rates of freelance or contract work. Companies do not need “safe harbor” from employee classification enforcement in order to do the right thing.

All types of workers genuinely need more access to benefits. We should support gold standard proposals to achieve this, not riskier plans that primarily benefit employers. Taking the motivation behind these bills in good faith, they are responding to a dilemma: How can all workers receive the benefits they sorely need and deserve to have retirement security, health care, and other important safety nets? If members of the Senate HELP Committee are truly committed to worker flourishing, they would crack down on misclassification, strengthen collective bargaining, and pass pro-union legislation.

The United States continues to lag behind other industrialized democracies when it comes to a national paid leave law protecting workers. The U.S.’ lack of paid leave policies—family, medical, and sick leave—has a disproportionately harsh impact on low-wage workers, who are predominantly women, immigrants, and people of color. These workers are far less likely to receive paid time off or have flexibility in controlling their work schedules, even though their need for leave is every bit as acute.

Workers with a union are far more likely to have paid time off and schedule certainty. Unions have bargained for paid leave, scheduling flexibility, and other benefits important to workers—particularly workers with familial demands (EPI 2021). The reach of this union advantage is limited, however, given that only 6% of private-sector workers are covered by a collective bargaining agreement (Shierholz et al. 2024).

Policymakers have tried to enact various laws to address workers’ needs for paid time off and flexible and predictable work schedules. Particularly at the state level, policymakers have adopted paid time off requirements, and in a few places, ordinances requiring greater predictability around scheduling—an important reform that gives workers (and particularly low-wage workers) the certainty they need to be able to schedule appointments or even work another part-time job if they need to. However, progress has been slow, and these reforms still do not cover most workers. At the federal level, progress has been stalled as Congress has failed to act on paid leave or scheduling fairness legislation.

Some workers are doing gig or short-term work—including digital platform or app-based gig work—in an effort to have more flexibility and control over their work schedules.1 This is the case despite research showing that the majority of gig and other contingent workers would prefer permanent, full-time employment (NELP 2021).

Moreover, this flexibility is often illusory, given the degree of control employers retain over workers and their schedules. Even more problematic is the effort by some companies, led by digital platform transportation companies like Uber and Lyft, to leverage the flexibility myth in attempts to defend their employment practices. These app-based companies misclassify their drivers as independent contractors, claiming that this is a necessary practice for meeting drivers’ demands for flexibility. However, this practice deprives drivers of crucial workplace protections, including guarantees for paid time off and scheduling certainty, where such laws exist. Moreover, experience has shown that companies can easily meet workers’ need for flexibility while maintaining their status as employees.

Policymakers should reject this Orwellian move by the app-based companies and others to use workers’ desire for flexibility to justify their employment practices. Allowing these practices for app-based workers will not be limited to drivers but will quickly spill over to health care, hospitality, and many other workers, given the growing use of app-based placement services in these industries (Gerstein 2024). Policymakers should focus on enacting legislation to provide workplace benefits and protections that offer employees real flexibility with real protections—including paid leave legislation; scheduling fairness legislation; and legislation to strengthen workers’ ability to form and join unions, so they can bargain collectively for these benefits and protections.

Research on workers’ demand for flexibility and related benefits

Flexibility is often cited as a core reason for individuals seeking app-based and gig work. In a survey conducted by the Pew Research Center, 49% of gig workers cited “being able to control their own schedule” as a reason why they enter the gig workforce (Anderson et al. 2021). The same survey found that flexibility is also highly valued among individuals in gig work: 53% of gig workers said being able to control their own schedule was “essential or important” to them. A survey conducted by Morning Consult for the Flex Association found that 42% of respondents said they chose app-based work for their “ability to choose when to work” (2022).2

Research shows that gig workers don’t always find the flexibility and earnings that they are seeking and are more likely to move to another job. A survey conducted by EPI and Harvard’s Shift Project found more than half (55%) of gig workers intended to find a new job in the next three months, compared with 36% of W-2 service-sector workers (Zipperer et al. 2022).

Research shows that in general, workers prefer flexibility in their work arrangements. A 2021 survey by Workable found that 58% of workers surveyed valued the ability to work flexible schedules (Mackenzie 2023). A survey by Future Forum found that 80% of knowledge workers surveyed want flexibility regarding where they work, whereas 94% want schedule flexibility (2022). According to a Morning Consult survey conducted for Zoom, 81% of U.S. respondents said that flexible hours and schedules were top priorities (2023). A Gallup survey of service facing workers found that 31% of respondents valued flextime and the ability to choose when they worked. Further, the survey found that 33% of respondents valued flexible start and end times (Pendell 2023).

Most recent survey data from the Department of Labor (DOL) shows that a significant portion of workers currently have some sort of flexible work arrangement. In a Bureau of Labor Statistics (BLS) survey, 57% of wage and salary workers had a flexible schedule with the ability to vary start and stop times. Of these workers, 35% of could frequently change their schedule; 46% could occasionally change their schedule; and only 19% rarely had the opportunity to change their schedule (2019). Data from DOL Women’s Bureau (n.d.) find that 57.2% of men have flexibility in the times they begin and end work, compared with 55.8% of women surveyed. Union workers have more input into the number of hours they work (Bivens et al. 2017).

Despite this research showing that workers would like flexibility in their schedules, many workers experience the opposite: a lack of stability and predictability in their schedules. For example, according to research by the Shift Project, the majority of retail and food service workers they surveyed have little advance notice of their schedules; two-thirds have less than two weeks’ notice, among which 50% get less than a week’s notice. Workers’ schedules are also often changed at the last minute, with 14% reporting at least one cancelled shift in the last month and 70% reporting at least one change to the timing of one of their shifts in the past month. Women workers and workers of color are particularly hard hit by these unpredictable scheduling practices. Significantly, 75% of workers in the Shift survey said they would like a more stable and predictable schedule (Schneider and Harknett 2019).

Other research similarly demonstrates that despite valuing flexibility, workers would prefer stable, full-time employment with benefits. According to a report by the National Employment Law Project (NELP), 79% of people surveyed said they would prefer having one stable full-time job instead of having more than one job with schedule and location flexibility—with a variation of only three percentage points across gender, age, and race (NELP 2021). In addition, NELP reported on polling by the global management consultant firm McKinsey & Company, who found that contract, freelance, and temporary workers would overwhelmingly prefer to have permanent employment, with first-generation immigrant (76%), Latinx (72%), Asian American (71%), and Black (68%) respondents most strongly favoring permanent employment. According to a survey of New York City residents, 57% of app-based workers said they would prefer to have an employer that provided benefits (NELP 2021). In the same vein, the majority of app-based workers surveyed by Veena Dubal said they would prefer to be classified as employees (2019).

It is important to point out that Black and Latinx workers provide a disproportionate share of digital labor platform work in the United States. BLS data show that Black and Latinx workers make up almost 42% of workers for Uber, Lyft, and other “electronically mediated work” companies, although they comprise less than 29% of the overall U.S. workforce (NELP 2021).

Moreover, the lack of paid sick time disproportionately harms low-wage workers. While access to paid sick time has grown from 63% to 78% of all private-sector workers since 2010, most low-wage workers—i.e., the workers who need it most and are most harmed by taking unpaid leave—still lack access to paid sick days. Among the 10% of private-sector workers with the highest wages, 96% have access to paid sick days (Table 1). By contrast, among the 10% of workers with the lowest wages, just 39% have access to paid sick days (Gould and Wething 2023).

Table 1

Finally, it is worth noting that paid leave requirements are extremely popular, with large majorities of both Democratic and Republican voters favoring paid family and medical leave policies and viewing them as important to improving workers’ lives (Todaro 2023).

Flexibility is often illusory

The argument that digital platform or app-based work provides drivers with flexibility overstates the amount of control drivers actually have over their work lives. In fact, Uber and Lyft exercise significant control over how drivers handle their work, and drivers are “deactivated”—i.e., fired—if they deviate from company policy. Thus, the so-called flexibility drivers seek is often illusory (Mishel and McNicholas 2019).

Uber advertises to drivers that they will work for themselves. On its website, the company claims that driving for Uber is flexible, with the driver in control. Interested drivers just download the driving app and complete a “sign-up” process, requiring only that drivers have a valid driver’s license and insurance and “complete a background screening.” The company states that drivers set their own hours and may “cash out” after each trip (up to five times per day on the app). Uber brands itself as merely a technology platform that allows drivers to find earning opportunities for their own entrepreneurial endeavors (2019).

However, in reality, Uber drivers’ experiences are a far cry from the company’s marketing narrative. Drivers have no say on setting fares, on what they are paid, or on the commissions the company takes. Drivers are not shown the passenger’s destination or how much they could earn on a fare before being asked to accept a ride request, and they have limited say on whom they choose to have as customers (Rosenblat 2018a). Drivers are not even able to choose the route to take—Uber reserves the right to retroactively adjust the fare if it decides that an inefficient route was taken (Rosenblat and Stark 2016; UK Judiciary 2016). And Uber also exerts control over drivers through an automated passenger rating system. Tools like the fare and rating systems serve as “algorithmic managers,” nudging drivers to act in certain ways and penalizing them when they don’t. For example, in certain services on Uber’s platform, drivers who fall below 4.6 stars on a five-star rating system may be “deactivated”—never “fired.” This pressures some drivers to tolerate bad passenger behavior rather than risk losing their livelihoods because of retaliatory reviews (Rosenblat 2018b). Given that a driver’s low rating (as unilaterally defined by Uber) may lead Uber to deactivate them from the app (i.e., fire them), drivers do not have the independent control typically associated with a small business owner.

Drivers cannot readily turn down short rides; rides that are not close by (note that the time between dispatch and rider pickup costs time and vehicle expense and provides no revenue to the driver); or rides that go to destinations that will make it difficult to obtain a follow-up ride. When the app alerts a driver to a potential ride, the driver has a very short time—about 15 seconds—to respond as to whether they will accept the rider (Rosenblat and Stark 2016; Rosenblat 2018a). There is no other way to provide a ride through Uber (such as picking up someone hailing you on a street corner) other than this process that is governed by the algorithms and the app (Rosenblat and Stark 2016).3

Like digital platform or app-based drivers, workers with flexible or part-time schedules also lack real control over their schedules, with employers making last-minute changes to their schedule, which wreaks havoc with child care, medical appointments, transportation, and other needs (Schneider and Harknett 2019; Waldman 2024). Unless they are protected by a union contract or a local fair scheduling ordinance, workers do not control their schedule or work hours; these decisions rest with their employers. Employers typically use their power to shift schedules and work hours based on production needs—or for less legitimate reasons, such as retaliation for union organizing (Greenhouse 2023). Adjusting workers’ hours according to “just-in-time” scheduling is common in (but not unique to) app-based work and undermines workers’ actual control over their schedules and their scheduling flexibility.

The importance of employee status

The problem of employers misclassifying workers as independent contractors is pervasive and widespread. Employers in the construction industry, building services, and homecare, among other sectors, have misclassified workers as independent contractors to gain a cost advantage over law-abiding employers, which has resulted in the loss of important workplace benefits and protections for workers (Rhinehart et al. 2021). This problem has become even more widespread with the growth of app-based services such as Uber and Lyft, who misclassify their drivers as independent contractors. Other app-based staffing services such as Instawork and Gigpro follow this same practice, often treating hotel, health care, and other workers as independent contractors instead of employees (Gerstein 2024).

Misclassification has significant negative implications for worker protections. Most federal and state labor and employment protections are granted only to those classified as employees—and not to those classified as independent contractors. This includes basic protections such as minimum wage, overtime pay, unemployment insurance, and workers’ compensation, as well as health and safety protections, nondiscrimination protections, paid sick or medical and family leave, and rights to organize and collectively bargain (Table 2).

Table 2

Misclassification robs workers of income and employment-based benefits because it shifts financial responsibilities for Social Security tax onto workers and deprives them of coverage under labor and employment laws. This is very costly, resulting in lost annual income and benefits of over $10,000 for a typical construction worker and over $6,000 annually for a home health aide (Schmitt et al. 2023).

In addition, misclassification deprives the federal, state, and local governments of important tax revenue and contributions to social insurance programs such as workers compensation and Social Security. These lost revenues amount to billions of dollars each year (NELP 2020). EPI research estimates suggest social insurance programs losses per worker range between $585 per year (security guards) and $1,781 per year (construction workers). Higher estimates put the range of annual per-worker revenue losses between $1,101 (security guards) and $3,031 (truck drivers) (Schmitt et al. 2023).

Not only are these costs shifted onto workers, but they have been shifted onto other taxpayers as well. Because they are (mis)classified as independent contractors, Uber and Lyft drivers are not generally covered by unemployment insurance.4 When demand dropped dramatically at the start of the COVID-19 pandemic, drivers were unable to draw on unemployment benefits from the state unemployment insurance system. Congress enacted legislation to provide unemployment benefits to independent contractors, and one in five Uber and Lyft drivers applied for and received these benefits, at taxpayer expense (Iacurci 2021).

The Fair Labor Standards Act does not prevent flexible schedules

One of the myths perpetuated by digital platform or app-based companies and other employers is that workers need to be classified as independent contractors in order to have flexibility in their hours because of the federal Fair Labor Standards Act (FLSA). This is incorrect and sets up a false choice.

Enacted in 1935, the Fair Labor Standards Act, is the primary federal law establishing minimum wage and overtime protections. The FLSA requires employers to pay workers at least an established hourly minimum wage—currently stuck at $7.25 per hour due to Congress’ failure to raise the minimum wage for 15 years. The FLSA also requires employers to pay employees overtime at the rate of 1.5 times their regular rate of pay for hours worked in excess of 40 in any given week. Employers must keep records documenting an employees’ work hours to help ensure compliance with the law.

Not all employees are covered by the FLSA’s overtime protections. For example, among others, administrative, executive, and professional employees are excluded from the FLSA’s overtime requirements.5 Still, roughly 140 million workers are covered by the FLSA’s overtime protections.6

Companies and employers incorrectly claim that the FLSA prevents flexible scheduling, but employers control scheduling decisions and can organize work schedules to meet FLSA’s requirements. Employers have long been able to provide flexible schedules and comply with wage and hour laws, and flexible schedules have been negotiated by employers and unions in compliance with the law. Scheduling decisions are the employer’s prerogative (in negotiation with their workers’ union, if there is one), and they can and do set and change schedules in accordance with production demands.

As the Department of Labor states, “The Fair Labor Standards Act (FLSA) does not address flexible work schedules. Alternative work arrangements such as flexible work schedules are a matter of agreement between the employer and the employee (or the employee’s representative)” (DOL Wage and Hour Division 2024a; 2024b).

Nor does the FLSA restrict an employer’s ability to change workers’ schedules according to the employer’s needs. According to DOL, “The Fair Labor Standards Act (FLSA) has no provisions regarding the scheduling of employees, with the exception of certain child labor provisions. An employer may therefore change an employee’s work hours without giving prior notice or obtaining the employee’s consent (unless otherwise subject to a prior agreement between the employer and employee or the employee’s representative)” (DOL 2024). Moreover, FLSA’s requirements are employer specific. If an employee works 20 hours each week for one employer and 25 hours for a second employer, the employee is not entitled to overtime from either employer (unless there is a joint-employer relationship between them).

Thus, as long as the employer retains sufficient records documenting an employee’s work hours; pays employees at least the hourly minimum wage; compensates the employee at the overtime rate for hours worked over 40; and meets any applicable obligations to bargain with the employees’ union, the employer may set and implement flexible scheduling policies without running afoul of the FLSA. The idea that the FLSA prevents flexible scheduling—and that independent contractor status is needed to allow flexibility—is false.

Collective bargaining can yield paid leave benefits and schedule flexibility and predictability

Unionized workers are far more likely to receive various workplace benefits compared with nonunion workers. These benefits include paid leave of various types (sick, family, vacation, personal), employer-provided health care, retirement benefits, and more. Establishing these benefits as part of collective bargaining and including them in a collective bargaining agreement gives unionized workers confidence and security that these benefits will be there when they need them, because a collective bargaining agreement is a legally binding contract (Bivens et al. 2017; Shierholz et al. 2024).

For example, 86% of unionized workers have paid sick time at work, compared with 72% of workers without a union (Gould 2020). Unionized workers have more input into the number of hours they work each week. Unionized workers are far more likely to know their work schedules four weeks or more in advance compared with nonunion workers (Figure A). Thus, unionized workers are far more likely to have the stable jobs with good wages and benefits that workers seek.

Figure A

In addition to providing paid leave and other benefits, unions and employers have created mechanisms through collective bargaining for workers to have part-time, flexible schedules, along with scheduling predictability and certainty that allows workers time to meet their other needs.

For example, the United Food and Commercial Workers (UFCW) International Union’s St. Louis area local unions, Locals 655 and 88 and Schnuck’s grocery recently negotiated a new “Flexforce” program through which workers use an app to create their own schedule from available shifts. Flexforce workers receive the same benefits as other union members. UFCW represents thousands of Schnucks employees in the greater St. Louis area (Schnucks 2024). The program was recently expanded to cover more stores and workers.

Similarly, UNITE HERE has bargained provisions allowing certain hotel and casino employees to bid for shifts and create a schedule that meets their needs. These employees receive employer-paid health insurance, retirement contributions, and other important benefits, in addition to scheduling predictability.7

The Teamsters have tens of thousands of UPS drivers who have a set part-time schedule—leaving time for personal needs—and still receive health care, retirement, and other important benefits (UPS 2023).8 The Teamsters negotiated historic raises for part-time drivers in the most recent negotiations (Teamsters 2023).

These are just a few examples of the collectively bargained approaches to providing schedule flexibility and part-time arrangements that provide workers with the flexibility they need but also with scheduling predictability and certainty and benefits. Strengthening the law to enable more workers to form and join unions and bargain such benefits with their employers would be an important step in addressing workers’ need for flexibility and paid leave.

Policy reforms to support paid leave and scheduling flexibility and predictability

As the research summarized above shows, most workers want stable employment with predictable schedules and wages and benefits that allow them to meet their family’s needs. These needs can be met through promoting various reforms that empower workers and protect flexible work without exploitation and include:

• strengthening workers’ ability to form and join unions;
• preventing misclassification of workers as independent contractors; and
• establishing minimum standards around paid leave and scheduling fairness.

These reforms can be—and have been—pursued at the federal, state and local levels. A brief description of these reforms follows.

Federal reforms

Pass the Protecting the Right to Organize (PRO) Act. As explained above, workers with a union are in a much stronger position to negotiate with their employers for paid time off, predictable work schedules, and other important protections. Workers covered by a collective bargaining agreement also have “just cause” protection, meaning that the employer cannot retaliate against them or fire them without a valid reason. This gives workers more confidence to access and use the benefits they have earned, because they have less fear of employer retribution when they do so. Strengthening the ability of workers to form and join unions, as the PRO Act would do, would provide a mechanism for workers to organize and bargain for flexibility, fairness, and related workplace benefits. Current law is too weak to meaningfully assure workers these rights, given employer ability to interfere and the absence of any financial penalties for violating the law. The PRO Act also adopts the ABC test to prevent misclassification of workers as independent contractors. Particularly given the record-high levels of demand for unions among nonunion workers, and especially young workers and workers of color, passage of the PRO Act should be a top priority for lawmakers.

Pass the Healthy Families Act to provide earned sick leave. The Healthy Families Act, first introduced in 2004, includes provisions that would allow workers in workplaces with 15 or more employees to earn at least one hour of paid sick time per 30 hours worked, up to 56 hours or seven days of paid sick time per year. Despite repeated introductions of the Healthy Families Act (most recently in May 2023) federal policymakers have so far not been successful in passing it. The lack of a national standard for paid sick leave places the United States behind its international peers. Passage of the Healthy Families Act is particularly important for low-wage workers, who disproportionately lack paid leave.

It should be noted that the Biden Administration’s proposed budget for 2024–2025 includes paid family, medical, and sick leave (White House 2023).

Pass the Schedules that Work Act to provide scheduling stability and fairness. The Schedules that Work Act would require that workers in designated occupations—including retail, food service, cleaning, and others—be given a minimum of two weeks’ advance notice of their schedules, with pay premiums for late changes (Rep. DeLauro 2023).

State and local reforms

Because of the lack of national standards for paid sick leave and scheduling fairness, several states and localities have adopted laws to provide these benefits. At the same time, rideshare companies and other app-based employers have lobbied state legislatures to classify app-based workers as independent contractors and deprive them of the protections of workplace laws. Reforms to expand protections for workers and prevent erosion of their rights should be prioritized by state lawmakers. These reforms include:

• Repeal state preemption of local labor standards that prohibit localities from developing and implementing policies to raise standards for working people. Over 44 states have preemption laws that prohibit localities from improving labor standards for workers, including minimum wage, paid sick leave, and fair scheduling laws (Sherer and Poydock 2023; EPI 2024).

• Resist or repeal language that excludes app-based workers from coverage under state employment laws or that defines “Transportation Network Company (TNC) drivers,” “marketplace contractors,” or other app-based workers as nonemployees or independent contractors (Sherer and Poydock 2023).

• Adopt strong, protective legal tests, such as the ABC test, for establishing employee status and preventing the misclassification of workers as independent contractors. Strong ABC tests are those that establish a presumption that an individual performing service for an employer is an employee, not an independent contractor, unless the employer can establish three factors: A) The work is done without the direction and control of the employer; B) The work is performed outside the usual course of the employer’s business; and C) The work is done by someone who has their own independent business or trade performing that kind of work (Rhinehart et al. 2021).

• Strengthen enforcement and increase penalties to deter the misclassification of workers as independent contractors. This includes adequately funding and staffing state agencies to strategically enforce the law and crack down on worker misclassification. In addition, states should increase penalties for employers who violate labor law to deter worker misclassification (Sherer and Poydock 2023).

• Pass earned sick time laws. There is no federal law that allows workers the ability to earn paid sick leave. Over the last decade, 15 states and the District of Columbia have adopted earned paid sick time laws. However, millions of workers—especially low-wage workers—lack access to paid leave (Gould and Wething 2023).

• Pass state or local fair scheduling laws. Several cities and more recently the state of Oregon have passed fair workweek laws to give workers more advance notice of their schedules. Some of the laws also require employers to make more hours available to part-time workers before hiring more full-time employees (Wolfe, Jones, and Cooper 2018).

Conclusion

Workers have consistently expressed their desire for good-paying, permanent jobs with scheduling predictability and benefits like paid leave, health insurance, and more. These types of jobs can be (and are being) provided for both full-time and part-time employees through collective bargaining and state and local policy reforms. Nothing in the current law requires workers to give up their rights as employees and be classified—or misclassified—as an independent contractor to enjoy flexibility in their work schedule. Policymakers should reject these arguments and prioritize passage of policies that empower workers and provide the benefits they want and deserve.

Notes

1. In the most basic terms, gig work can be defined as work done by individuals who are classified as self-employed, freelancers, or independent contractors. However, in recent years the term “gig work” has become synonymous with working for digital platform companies, including driving for rideshare apps, making deliveries for restaurants, shopping or delivering groceries, and performing errands or household tasks. 

2. The Flex Association represents app-based and digital platform companies such as DoorDash, Uber, Lyft, and Instacart.

3. Several states have recently enacted legislation or won provisions in legal settlements that provide rideshare drivers with appeal rights when they are deactivated. However, most rideshare drivers currently have no appeal rights from deactivation by the companies.

4. Drivers are covered in Washington State through a new statute, and several states have sought to recover payments for unemployment insurance premiums from the rideshare companies, indicating that they believe drivers are covered by their state’s unemployment law.

5. The Trump administration tried to roll back these protections and the Biden Administration has since finalized a rule that strengthens overtime protections for workers.

6. Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales, and Computer Employees, 89 Fed. Reg. 32842-32973 (April 26, 2024).

7. Interview with Susan Valentine, UNITE- HERE, Feb. 22, 2024.

8. See National Bargaining Agreement Between the International Brotherhood of Teamsters and United Parcel Service Inc. (2023).

References

Anderson, Monica, Colleen McClain, Michelle Faverio, and Risa Gelles-Watnick. 2021. The State of Gig Work in 2021. Pew Research Center, December 2021.

Bivens, Josh, Lora Engdahl, Elise Gould, Teresa Kroeger, Celine McNicholas, Lawrence Mishel, Zane Mokhiber, Heidi Shierholz, Marni von Wilpert, Valerie Wilson, and Ben Zipperer. 2017. How Today’s Unions Help Working People: Giving Workers the Power to Improve Their Jobs and Unrig the Economy. Economic Policy Institute, August 2017.

Bureau of Labor Statistics (BLS). 2019. “Job Flexibilities and Work Schedules Summary” (news release). September 24, 2019.

Bureau of Labor Statistics (BLS). 2023. ”Employee Benefits in the United States Summary” (news release). September 21, 2023. 

U.S. Department of Labor (DOL). 2024. “Fair Labor Standards Act Advisor” (web page). Accessed June 6, 2024.

Department of Labor, Wage and Hour Division (DOL Wage and Hour Division). 2024a. “Wages and the Fair Labor Standards Act” (web page). Accessed June 6, 2024.

Department of Labor, Wage and Hour Division (DOL Wage and Hour Division). 2024b. “Flexible Schedules” (web page). Accessed June 6, 2024.

Department of Labor, Women’s Bureau (DOL Women’s Bureau). n.d. 2017–2018 Leave and Job Flexibilities Module. Accessed June 20, 2024.

Dubal, Veena. 2019. “An Uber Ambivalence: Employee Status, Worker Perspectives, & Regulation in the Gig Economy.” UC Hastings Research Paper no. 381, November 2019. https://dx.doi.org/10.2139/ssrn.3488009.

Economic Policy Institute (EPI). 2021. Unions Help Reduce Disparities and Strengthen Our Democracy (fact sheet). April 23, 2021.

Economic Policy Institute (EPI). 2024. “Workers’ Rights Preemption in the U.S.” (web page). Last updated February 2024.

Future Forum. 2022. Pulse Summer Snapshot, July 2022.

Gerstein, Terri. 2024. “More People Are Being Classified as Gig Workers. That’s Bad for Everyone.” New York Times, January 28, 2024.

Golden, Lonnie. 2015. Irregular Work Scheduling and Its Consequences, Economic Policy Institute, April 2015.

Gould, Elise. 2020. “Union Workers Are More Likely to Have Paid Sick Days and Health Insurance.” Working Economics Blog (Economic Policy Institute), March 12, 2020.

Gould, Elise, and Hilary Wething. 2023. Paid Sick Leave Access Expands with Widespread State Action. Economic Policy Institute, November 2023.

Greenhouse, Steven. 2023. “Will Starbucks’ Union-Busting Stifle a Union Rebirth in the US?” Guardian, August 28, 2023.

Iacurci, Greg. 2021. “1 in 5 Gig Drivers Got Unemployment Benefits at Pandemic Peak.” CNBC, October 21, 2021.

MacKenzie, Keith. 2023. “Flexible Work Hours: It’s Important for 58% of US Workers, Survey Finds.” Workable, September 2023.

Mishel, Lawrence, and Celine McNicholas. 2019. Uber Drivers Are Not Entrepreneurs: NLRB General Counsel Ignores the Realities of Driving for Uber. Economic Policy Institute, September 2019.

Morning Consult, in partnership with Flex Association. 2022. Attitudes of App-Based Workers. September 2022.

National Employment Law Project (NELP). 2020. Independent Contractor Misclassification Imposes Huge Costs on Workers and Federal and State Treasuries. October 2020.

National Employment Law Project (NELP). 2021. App-Based Workers Speak: Studies Reveal Anxiety, Frustration, and a Desire for Good Jobs. October 2021.

Office of U.S. Rep. Rosa DeLauro (Rep. DeLauro). 2023. “DeLauro, Warren Reintroduce Schedules That Work Act” (press release). September 19, 2023.

Pendell, Ryan. 2023. “Frontline Workers Want Flexibility Too.” Gallup, December 4, 2023.

Rhinehart, Lynn, Celine McNicholas, Margaret Poydock, and Ihna Mangundayao. 2021. Misclassification, the ABC Test, and Employee Status. Economic Policy Institute, June 2021.

Rosenblat, Alex. 2018a. Uberland: How Algorithms Are Rewriting the Rules of Work. Oakland, CA: Univ. of California Press.

Rosenblat, Alex. 2018b. “When Your Boss Is an Algorithm.” New York Times, October 12, 2018.

Rosenblat, Alex, and Luke Stark. 2016. “Algorithmic Labor and Information Asymmetries: A Case Study of Uber’s Drivers.” International Journal of Communication 10 (2016): 3758–3784.

Schmitt, John, Heidi Shierholz, Margaret Poydock, and Samantha Sanders. 2023. The Economic Costs of Worker Misclassification (fact sheet). Economic Policy Institute, January 25, 2023.

Schneider, Daniel, and Kristen Harknett. 2019. It’s About Time: How Work Schedule Instability Matters for Workers, Families, and Racial Inequality. The Shift Project, October 2019.

Schnucks. 2024. “Schnucks Flexforce” (web page). Accessed June 6, 2024.

Sherer, Jennifer, and Margaret Poydock. 2023. Flexible Work Without Exploitation. Economic Policy Institute, February 23, 2023.

Shierholz, Heidi, Celine McNicholas, Margaret Poydock, and Jennifer Sherer. 2024. Workers Want Unions, but the Latest Data Point to Obstacles in Their Path. Economic Policy Institute, January 2024.

Teamsters. 2023. “We’ve Changed the Game: Teamsters Win Historic UPS Agreement” (press release). July 25, 2023.

Todaro, Rob. 2023. Labor Reforms Proposed by Senate HELP Committee Command Broad Popular Support. Data for Progress, July 2023.

Uber. 2019. “Become an Uber Driver—3 Things to Know About Driving” (web page). Accessed August 6, 2019.

UK Courts and Tribunals Judiciary (UK Judiciary). 2016. Employment Tribunals Between Aslam, Farrar et al. and Uber B.V. et al. (Case No. 2202550/2015 et al.): Reasons for the Reserved Judgment on Preliminary Hearing Sent to the Parties on 28 October 2016. October 28, 2016.

United Parcel Service (UPS). 2023. “Top 5 Things to Know About Working a Part-Time Job at UPS” (web page). September 29, 2023.

Waldman, Adelle. 2024. “It’s Not Just Wages. Retailers Are Mistreating Workers in a More Insidious Way.” New York Times, February 19, 2024.

The White House. 2023. The President’s Budget for Fiscal Year 2024 (fact sheet). March 9, 2023.

Wolfe, Julia, Janelle Jones, and David Cooper. 2018. “Fair Workweek” Laws Help More Than 1.8 Million Workers. Economic Policy Institute, July 2018.

Zipperer, Ben, Celine McNicholas, Margaret Poydock, Daniel Schneider, and Kristen Harknett. 2022. National Survey of Gig Workers Paints a Picture of Poor Working Conditions, Low Pay. Economic Policy Institute, June 2022.

Zoom, in partnership with Morning Consult. 2023. Survey: Flexible Work Rises as Top Perk. November 2023.

Economic Policy Institute researchers tracked the growing list of states moving to weaken child labor laws, and readers flocked to our research on the topic, making it the most read EPI report published this year.

The economics of abortion bans, teacher pay, and a host of other issues were also among the most read content on our website.

Here are the top five reports and the top five blog posts published this year.

Reports

Blogs

Now, more than six months after DCWP released its initial findings, the city is following through on its promise to raise wages for delivery workers on apps like DoorDash, Grubhub, and Uber Eats. The new pay scale in New York City starts at $17.96 per hour on July 12, and will increase to $19.96 per hour by April 2025. That’s a big step forward from the $7.09 per hour delivery service workers are currently paid before tips, according to DCWP’s findings.

It is a huge milestone after years of work by the Worker’s Justice Project, Los Deliveristas Unidos, and their allies to improve working conditions for a workforce that helped keep New York afloat through the pandemic. Thanks to the detailed DCWP analysis of confidential data provided by Grubhub, Uber Eats, and DoorDash, we finally have an accurate accounting of the number of workers in this industry, their wages, and expenses and risks they incur on the job. Los Deliveristas are rightly celebrating a victory.

At the same time, there is a long way to go to really get this right. After accounting for expenses that DCWP estimates at $2.82 per hour, $17.96 is just higher than New York’s minimum wage (currently $15 per hour, rising to $17 per hour by 2026). It’s a lot less than the $23.82 per hour that DCWP recommended in November. And now, DoorDash and others have sued the City of New York in an attempt to avoid paying these fairer wages.

After heavy lobbying by app companies, the new city standard will also allow companies to opt out of a requirement to pay for total hours worked, and instead companies can pay only for the time workers have an order in hand. This loophole leaves the worst actors in this industry free to continue using a predatory pay model that makes it impossible for workers to earn a decent wage unless they go out under the most dangerous conditions like heat waves, flash floods, and cold snaps.

Pay ordinance sets a new model for states and cities, but improvements are needed

The congruence of low pay, long hours, and increasingly unsafe working conditions led many delivery workers to begin organizing for better pay and working conditions in 2020. Los Deliveristas Unidos (LDU) emerged as a worker-led coalition that—in partnership with the Worker’s Justice Project—began lobbying city officials to pass legislation to make life just a bit easier for a workforce made up largely of young, working-class immigrants looking to make a living in one of the most expensive cities in the United States.

LDU experienced considerable early success and won key allies in City Hall, which passed a set of laws in 2021 aimed at increasing workers’ access to bathrooms and rest areas throughout the city and informing workers of their rights. Among this set of bills was a resolution that triggered a formal study by the DCWP into what a fair pay scale would be for app-based delivery workers.

In November 2022, DCWP released the findings of its report and proposed a minimum wage of $23.82 per hour that would have been one of the most significant victories for app-based workers in years. The other major city working to improve conditions for deliveristas is Seattle, where legislators have instituted their own wage standards, though Seattle’s is closer to a modification of the pay structure apps already employ.

If implemented, DCWP’s recommended New York standard would have been the first in the country to establish an hourly wage that includes all time spent working—not just time from pick-up to drop-off—for gig workers on apps like DoorDash, Grubhub, and Uber Eats. Changing the way workers are paid would not only result in better take-home pay, but also incentivize companies to minimize time delivery workers sit waiting for the next assignment.

While the new standard enacted by the New York City Council does have an hourly wage, it includes a glaring loophole. New York’s “alternate method” gives companies the option to keep paying workers by the order, with a premium designed to make up for not paying them hourly. In the existing model, companies pay workers a flat rate per minute workers have orders in their hands combined with another rate that pays them per mile traveled. The alternative method lets companies keep paying only for the time workers have deliveries in hand but raises the per minute rate so that it is—in theory—comparable to what they would make if they were paid a true hourly wage.

The problem here is that just three companies—DoorDash, Grubhub, and Uber Eats—employ more than 90% of delivery workers in New York. They will almost certainly opt for the alternate method, which relies on virtually the same pay structure they already employ.

Even after the city acquiesced to many of these corporations’ demands, however, DoorDash, Grubhub, and Uber Eats have filed a lawsuit against the City of New York to avoid paying workers fairly. It’s a sign that these companies recognize just how much this new pay structure could impact how they do business.

The truth is that these companies have produced billions of dollars in market value for stockholders off the backs of a workforce made up largely of immigrants and people of color who can hardly make ends meet. The predatory pricing model these app companies use forces workers to absorb not just economic risk but also risk to life and limb. Rushing to squeeze out a living from desperately low wages has made delivery work in New York one of the most dangerous jobs in the nation. In all, 33 delivery workers have died on the job in New York since 2020, including 16 who died in 2021 alone. The DCWP calculated the number of on-the-job fatalities at 19 per 100,000 delivery workers. By comparison, construction workers in New York—generally considered the most dangerous job in the United States—had an on-the-job fatality rate of 13 per 100,000 workers.

A new standard for a national problem

The efforts of LDU and their partners have helped pave the way for a new approach to building worker power in the so-called gig economy. In the platform-based labor market, companies—specifically Uber and Lyft—have consistently sought to deny employee status to drivers or other app-based workers, instead designating them as independent contractors. Reclassification of app-based workers as employees, as EPI has noted in numerous reports on this issue, would provide many workers with basic benefits and protections from which they have been excluded, including the right to organize a union, benefits such as unemployment insurance, and more. LDU’s strategy of starting with a wage standard sidesteps the larger question of employee status for the moment while winning a big and immediate wage improvement.

So far, Los Deliveristas Unidos and the Worker’s Justice Project have focused on building social and political power in New York and using legislative policies to reshape the state of platform-based delivery work in the city. Back in 2022, when the city held a public hearing on a suitable wage standard for delivery workers (to which we at IRI contributed oral and written testimony), allies were instructed to focus mainly on setting a strong minimum wage through the law, rather than employee status.

LDU’s achievements are especially valuable models for delivery drivers to consider in the 44 states where Uber and Lyft have succeeded in passing state laws preempting local pay standards for rideshare drivers, but where local standards for delivery workers are still a fully legal option.

Overcoming company threats and scare tactics

DoorDash, Uber Eats, and Grubhub are powerful economic and political players, and when they are challenged, they seem to trot out the same tired arguments and divisive strategies. In New York, company tactics to resist passage of the new pay standard included messages directly to workers with misinformation about impacts of the DCWP-recommended pay scale.

The main company claim in these messages was a disingenuous argument that a decent wage standard would force companies to start locking out delivery workers in certain areas—like Manhattan—and at certain hours when order volumes are at their peak. While an hourly wage does place some natural limits on the number of employees a company can retain at any time, these apps already lock out employees at specific times and in certain regions of the city. This is neither a new practice nor the result of better pay for workers.

These tactics echoed Uber’s and Lyft’s actions when states like New York and California began legislating on behalf of rideshare workers. The companies used in-app messaging to reach out to both workers and consumers claiming that workers’ hours would be cut significantly and that the price of Uber or Lyft rides would skyrocket. Some three years later, we have seen that neither of these occurred. As Terri Gerstein—EPI senior fellow and director of the Center for Labor and Just Economy at Harvard Law—has pointed out, higher wages for workers usually lead to more productivity, less turnover, and better overall outcomes for both workers and their employers.

The overall lesson here is two-fold. First, when workers start to organize and take power for themselves, there is a high chance of success. This is especially true at the local level: In domains where local worker rights have not been preempted by abusive state interference, workers can assert direct influence with municipal lawmakers through grassroots organizing strategies. Second, organizers, advocates, and think tanks must work together to develop a counter-narrative strategy to effectively discredit outlandish claims from corporations that paying workers fairly will cause undue harm to consumers and employers.

Anthony Capote is a senior policy analyst at The Immigration Research Initiative.

About The Immigration Research Initiative

The Immigration Research Initiative is a nonprofit, nonpartisan think tank on immigrant integration, looking at issues of economic, social, and cultural inclusion of immigrants in the United States. IRI is attentive to how immigrants fare in the United States and to how the receiving communities fare as they change, with particular attention to the implications for race, gender, and income equity.

IRI is a member of EPI’s Economic Analysis and Research Network (EARN), a network of state and local organizations improving workers’ lives through research and advocacy.

Over the last decade, platform companies have targeted state legislatures, courts, and ballot initiatives to serve their interests in evading legal obligations to workers and consumers. Platform company strategies have included: ignoring existing laws and standards while counting on weak or absent state-level enforcement; pursuing state legislation to preempt new standard-setting; carving themselves out of coverage under laws employers are expected to follow; permanently redefining their workers as nonemployees; and attempting to rewrite or entirely repeal employment laws for all private businesses. State by state, platform companies continue to fight to keep their workers classified as “independent contractors” rather than as employees.

When challenged by active enforcement of existing laws or new initiatives to extend minimum pay or employment protections to their workers, companies like Uber and Lyft have resorted to proposing a new “third category” of worker—neither employee nor independent contractor. High-profile examples of such company-backed policies include Proposition 22 in California, 2021 legislation signed into law in Washington, and 2021 ballot initiatives proposed in Massachusetts. These policies typically promise limited benefits to a newly defined subset of workers (e.g., “transportation network company drivers”) while codifying their second-class status as nonemployees and their exclusion from a host of state and federal legal protections and benefits. Some “third category” proposals have also included highly restrictive quasi-bargaining frameworks that could compromise drivers’ rights to form or join unions of their own choosing and to collectively bargain with employers over wages, hours, and working conditions.1

Platform companies have illustrated their intent to continue investing heavily in state ballot initiatives, litigation, and an expansive state legislative lobbying agenda in their quest to redefine employment for ride-hail and delivery drivers and a growing list of occupations in which they hope to introduce this business model. This, combined with chronic federal failures to reform labor laws and fix a broken immigration system, poses a serious long-term threat to the fundamental rights of all workers.

Because Black, brown, and immigrant workers are disproportionately represented in platform-based work,2 company campaigns to strip legal protections from drivers and delivery service workers help maintain deep racial inequalities and occupational segregation in U.S. labor markets. Just as New Deal-era occupational carve-outs that excluded agricultural and domestic workers from major federal labor laws were racist policies designed to maintain economic white supremacy, proposals to create new legal categories that limit platform workers’ rights have clear racial impacts. As legal scholar Veena Dubal points out, Uber and Lyft have justified their preference for creating unique new “third categories” of worker status explicitly as a “means of providing economic opportunities to struggling immigrants and racial minorities,” perversely but strategically acknowledging race- and immigration-based inequities as primary rationales for denying drivers full employment protections.

This report provides an update on escalating instances of platform company influence on state policies regarding labor and employment. We survey the current landscape of state laws that are shaping digital platform work and companies’ evolving state-by-state campaigns to preempt local standard-setting, deny workers legal status as employees, and erode legal tests designed to prevent the misclassification of workers as “independent contractors.” Along the way, we highlight instances of state and local policy and enforcement innovations that offer models for effectively raising standards and combating widespread worker misclassification. These include worker-led organizing and policy initiatives that are shaping a proactive policy agenda with the potential to empower workers and better protect consumers and the public.   

Rewriting the rules for employment: Digital platform companies’ state policy agenda

App-based work in the U.S. is widely characterized by poverty wages, hazardous conditions, job insecurity, a lack of bargaining rights, and a lack of access to unemployment or other safety net protections. These conditions are rooted in digital platform companies’ attempts to exempt themselves from long-standing labor and employment laws designed to prevent worker exploitation.

Over the past decade, platform companies’ state policy agenda has included three expansive categories of activity that together form an overarching corporate strategy to avoid their legal obligations to extend rights, benefits, and protections to workers:

1. Preemption: Platform companies have pursued state legislation to prohibit local governments from setting labor standards for private-sector employers and to block local governments from regulating fares, licensing, insurance, safety, or other employment practices of Uber, Lyft, and other platform-based companies providing ride-hail, delivery, or other services.  
2. Carve-outs, exemptions, and redefinition of platform-based workers as nonemployees: Platform companies have pursued state legislation to exempt themselves from legal obligations and standards that apply to most other businesses; to carve their workers out of coverage under specific employment laws; to permanently define their workers as “independent contractors”; or to create unique new “third category” definitions of their workers as neither employees nor independent contractors.
3. Weakening legal tests and definitions of employee status for all workers: Platform companies have backed state legislation to weaken or repeal legal tests used to determine employee status for the purpose of state workers’ compensation, unemployment insurance, wage and hour laws, and nondiscrimination laws. Such tests are necessary to prevent the misclassification of workers as independent contractors, a known and pervasive problem in sectors well beyond ride-hail and delivery driving, including building services, construction, and trucking.

While tech companies’ state legislative lobbying has focused specifically on ride-hail and delivery services, recent company-backed proposals have elucidated their intent to expand their business model to additional industries and occupations, stripping workers of employee status and accompanying legal rights in the process. For example, a 2022 ballot initiative to define health care workers as “independent contractors” if a digital platform connects them with work assignments was introduced (but subsequently withdrawn) in California.4 In 2022, platform companies announced they had joined forces with major employers in a corporate lobbying consortium called the Coalition for Workforce Innovation, whose members include major retail, media, transportation, logistics, and construction industry associations interested in further carving workers out of employment protections.5 This group is already backing proposed federal legislation that would allow any private-sector employer to use coercive individual agreements to exempt workers from minimum wage and overtime protections.6

Tech companies are using state preemption to limit worker rights and block local progress

Digital platform companies have become central players in a growing trend of state interference, or “preemption,” in local government decision-making across the country. State preemption of specific forms of local standard-setting has become increasingly common in the past decade, and often involves predominantly white legislatures blocking specific local policies that could otherwise improve conditions for workers, especially workers of color.8 In the case of TNC regulation, states across the country have passed company-backed laws preventing cities from adopting wage and labor standards that could otherwise improve conditions for primarily Black, brown, and immigrant drivers. Uber’s early success in passing state preemption legislation (which initially mainly benefited just Uber and Lyft, who were intent on crafting state policy to further enable their monopoly or duopoly in local markets) has resulted in far less regulation of platform-based ride-hailing services than is traditionally applied to other vehicles-for-hire. Simultaneously, it has fueled broader trends toward extreme and harmful state preemption of local standard-setting across multiple industries, including a broad range of worker, environmental, and consumer protections.

Historically, local transportation services, including private taxi companies, have been regulated primarily by local governments. In response to the introduction of platform-based ride-hailing and delivery service operators, many local governments have moved to adopt policies regulating such entities in the interest of protecting workers and customers, as well as integrating new service providers with other local or regional transportation systems. For example, between 2014 and 2016, 20 different Texas cities adopted ordinances setting TNC licensing or operating standards.9

In response, wherever possible, platform companies have refused to comply with local standards and vigorously sought to block new standards of any kind. Starting in 2014, companies began investing heavily in a coordinated national effort to persuade state legislatures to preempt local governments from regulating any aspect of their operations. For example, in 2017, the Texas state legislature passed a bill that nullified the local licensing or safety ordinances that 20 Texas cities had adopted to regulate TNCs and blocked any future local regulation of TNCs in the state. As shown in Figure A, 44 states have since similarly restricted some or all of the ability of local governments to set standards for digital platform companies operating within their jurisdictions.

Figure A

Earlier studies have documented how, in just a few years, Uber and Lyft persuaded legislatures across the country to preempt local regulation of TNCs.10 In 2014, the American Legislative Exchange Council (ALEC) began circulating model state legislation asserting exclusive state control over minimum standards for TNC insurance and consumer protections. Elements—and often exact wording—from ALEC’s “Transportation Company Network Act” template bill have since been adopted in dozens of states.11 The unprecedented pace of platform companies’ success in passing preemption legislation reflects companies’ substantial investments in consolidating influence with state policymakers, coupled in some instances with aggressive customer advertising to press their policy agenda (see Figure B for a timeline of state passage of preemption legislation).12

Figure B

While many initial state TNC laws focused on setting uniform statewide insurance and licensing rules, and not specifically on labor standards, many of these statutes include preemption clauses worded so broadly that they could potentially be interpreted by courts to block local regulation of other aspects of a TNC’s operations. This includes efforts to protect workers or to set standards of local public interest in other domains, including emissions control, customer safety, disability access, and beyond.

Worker organizing is creating important local policy models for states to follow

A handful of states have exempted their largest cities and/or airports from preemption statutes. These exemptions have allowed cities like New York City and Philadelphia to develop important local TNC regulations. New York City, where TNCs are regulated by the city’s Taxi & Limousine Commission, has come closest to implementing standards typical of those applied to commercial taxi services, including important transparency rules requiring companies to disclose pricing and trip data. In response to driver organizing, in 2018 New York City passed the Minimum Pay Standard Act. This breakthrough ordinance guarantees drivers minimum take-home pay for each trip after accounting for time and expenses.14 In October 2020, the Seattle City Council unanimously passed a similar TNC driver pay standard.15 At the time, Washington state had no TNC legislation (and thus no state preemption of local TNC regulation) in place.

Companies have sought to resist or undermine each of these innovative local pay standards. In 2021, companies convinced Washington legislators to pass sweeping state TNC legislation that included preemption of all local TNC regulations and nullified Seattle’s pay standard (while establishing a new, but weaker state minimum pay system for drivers).16 Though  similar legislative proposals in New York have been unsuccessful so far, Uber recently challenged New York City’s pay standard in court, which has put a halt to the city’s 2022 proposal to increase driver pay rates for now.17

Notable exceptions to the state preemption trend include Minnesota, which has no TNC preemption language, and Illinois, where state law has set a floor rather than a ceiling for local regulation of TNCs since 2015. Chicago, for example, administers its own TNC licensing ordinance, which also includes a safety provision limiting TNC drivers to 10 hours of driving in a 24-hour period.18 Language in Illinois’ TNC law provides a useful model for other states: The law demonstrates that it is possible to enact uniform minimum standards while empowering units of local government to innovate with additional standards, as long as they are not “less restrictive than the regulation by the State.”19 Groups of drivers now organizing in both Chicago and Minneapolis have proposed local ordinances, currently under consideration by their respective city councils, designed to create a minimum pay standard, require more transparency from platforms, and address concerns with unjust terminations (i.e., platform companies’ ability to “deactivate” a driver’s access to an app at any time, with or without a good reason).20

Companies have continued to relentlessly push preemption in the few remaining states without TNC legislation in place. For example, after several years of proposing failed bills in Hawaii, in 2022 companies’ persistence resulted in a new state law preempting local regulation of TNCs.21 In Oregon, the only remaining U.S. state with no TNC legislation in place except for a liability insurance requirement, multiple preemption bills have been proposed each legislative session in recent years. These include standard company-backed bills to preempt all standards and counterproposals affirming the ability of local governments to set TNC standards, including those exceeding any standards set by the state.22

Where local standard-setting is legal, driver organizing continues to generate new and important models for improving the pay, benefits, and conditions associated with app-based work while retaining its positive features that drivers value, such as scheduling flexibility. San Francisco, for example, recently amended its minimum wage protections to clarify that they apply to independent contractors and employees alike. Some city commissioners in Portland, Oregon, have proposed establishing a TNC wage board to set pay and labor standards, and the city is currently convening a TNC Drivers Advisory Committee to gather driver concerns and policy recommendations.23  

Cities with strong pay and transparency standards show that tech companies can adapt and comply with important worker protections

New York City and Seattle have continued to advance particularly important innovations with a recent focus on improving standards for the growing number of app-based “delivery network company” (DNC) workers, an occupation that has grown exponentially and become more hazardous during the pandemic. In 2020, following months of delivery worker organizing, New York City approved a package of minimum pay and standards for app-based delivery workers.24 A new round of increases proposed in 2022 would boost NYC DNC workers’ hourly minimum pay to $23.82 by 2025.25 Although state preemption undid Seattle’s strong local TNC pay standard in 2022, Seattle has continued to innovate—most recently with its new “Pay Up Ordinance,” which guarantees DNC workers a minimum wage plus expenses and tips, and requires platform pay and pricing transparency. Seattle councilors have announced that work is underway on additional ordinance language to address DNC worker priorities, including restroom access, anti-discrimination, and protection from unjust termination or “deactivation.”26

The relatively robust local standards in place for TNCs in New York City (and now for DNCs in both New York City and Seattle) demonstrate that, like other viable businesses, platform companies can adapt their operations to comply with minimum pay, safety, and transparency standards similar to those other employers routinely follow. These city ordinances offer a glimpse into the promising local policy experiments that can emerge in the absence of preemption and serve as a reminder of how much innovation remains stifled by preemption in many states.

Drivers in Denver, Colorado, for example, have been organizing for months around demands that include transparency, just wages and benefits, and protection from discrimination and unfair deactivation. While their counterparts in Chicago and Minneapolis are introducing city ordinance language to address similar concerns, preemption in Colorado means that drivers there must (for now) direct their demands to the state’s Public Utilities Commission, which has exclusive authority over TNC regulation, or press for changes to state law. Colorado drivers are currently backing “Gig Work Transparency” legislation that would require TNCs and DNCs to disclose “take rates” to customers (how much of each customer’s payment the company keeps versus how much goes to drivers), disclose fares and destinations to drivers before they accept a job, provide drivers with accurate weekly summaries of wages, time worked, and expenses, and provide drivers with a transparent process for challenging terminations.27

Employee vs. independent contractor status: Tech company efforts to carve drivers out of state employment protections and redefine workers as nonemployees

In addition to preempting local standards, platform companies have used state legislation as a vehicle for preventing workers from claiming legal status as employees, thereby excluding them from accompanying legal protections and benefits. Within just a few years, Uber and Lyft have had stunning success in advancing state legislation that codifies their ability to (mis)classify their drivers as “independent contractors” rather than employees.  

How a worker is classified has serious implications. Most federal and state labor and employment protections are granted only to those classified as employees, not as independent contractors. This includes basic protections such as minimum wage, overtime pay, unemployment insurance, and workers’ compensation, as well as health and safety protections, nondiscrimination protections, paid sick or medical and family leave, and rights to organize and collectively bargain (Table 1). For these reasons, the legal definitions embedded in many state and federal laws are clear that independent contractor status should apply only to workers who have elected to go into business for themselves, and only when the firms they contract with do not control significant aspects of their work. 

Table 1

Many instances of early state TNC legislation included preemption provisions alongside language rewriting existing legal definitions of employment, suggesting TNCs are not employers, and erecting legal obstacles to potential TNC driver claims to employee status. Dozens of state TNC bills have drawn from model language in ALEC’s “Transportation Network Company Act,” which encourages states to claim exclusive authority for regulating TNCs and to declare that a TNC “shall not be deemed to control, direct, or manage the personal vehicles or transportation network company drivers that connect to its digital network, except when agreed to by written contract.”28

Several states have gone even further, adopting state TNC legislation that explicitly labels drivers as “independent contractors” or exempts drivers from coverage under certain state employment laws. For example, North Carolina’s 2015 TNC law creates a rebuttable presumption that “a TNC driver is an independent contractor and not an employee.” New Hampshire law similarly states that TNC “drivers are presumed to be independent contractors and not employees.” Wyoming’s 2018 TNC legislation specifies that a “driver shall be an independent contractor, not subject to the Wyoming Worker’s Compensation Act and not an employee.”29

Figure C includes links to laws passed between 2015 and 2022 in 34 states across the country that include instances of language intended to define TNC drivers as nonemployees.

Figure C

Platform companies’ widespread practice of regarding all workers who provide their services as “independent contractors” has already led to serious consequences, including poverty wages and wage theft. In a spring 2020 survey of individuals engaged in app-based “gig work” while classified as independent contractors, 29% reported being paid less than their state’s minimum wage, 62% reported having lost pay because of “technical difficulties clocking in or out” of platform applications, 30% reported that low pay left them reliant on Supplementary Nutrition Assistance Program (SNAP), and 31% reported the inability to afford their full utility bills in the previous month.30

Tech companies are pushing state ‘marketplace contractor’ legislation that threatens protections for workers across occupations

Moreover, platform companies have expanded their agenda well beyond legislation affecting just TNC drivers, pushing a series of “marketplace platform bills” designed to permanently exempt all current and future app-based businesses from coverage under state minimum wage, unemployment, and workers’ compensation laws.31 Like TNC laws before them, these bills invent a new occupational category of “marketplace contractor” applicable to any worker who may be connected to a variety of jobs by a digital app. The bills then declare all “marketplace contractors” to be “independent contractors” rather than employees. As shown in Figure D, ten states have already adopted “marketplace contractor” legislation.

Figure D

For example, since 2018, Kentucky state law has defined a “marketplace contractor” as a person or entity that “enters into an agreement with a marketplace platform to use its digital network or mobile application to receive connections to third party individuals or entities seeking services.” In 2019, the Texas Workforce Commission adopted an administrative rule designating all “marketplace contractors” as “independent contractors.” In 2022, South Dakota used slightly different language to achieve similar results, adopting a new law declaring “delivery facilitation contractors” who use a “platform’s digital network to connect with customers seeking services” to be independent contractors, not employees.32

Utah has had a “marketplace contractor” law in place since 2015, and in 2018 passed additional legislation designating anyone who uses a “service marketplace platform” to find work performing various building services to be an “independent contractor” if the charge for the service is $3,000 or less.33 The law goes on to define building services broadly to include “cleaning or janitorial; furniture delivery, assembly, moving, or installation; landscaping; home repair; or any service similar to the services described above.” Utah legislators have since proposed—but not yet passed—an additional “On-demand Labor Marketplace Platforms Act” that denies employee status to all workers of “marketplace platforms.”34 As a small indication that some states may be starting to recognize the many risks that accompany sweeping exemptions created by these laws, in 2020 Tennessee updated its law to prohibit “marketplace platforms” from keeping tips intended for drivers.35

Strong state ABC tests are needed to preserve definitions of employee status and prevent misclassification

Wherever companies have been challenged by strong state worker protection laws, active enforcement, or innovative local standard-setting, they have sought to eliminate or rewrite state employment rules. Where unable to immediately impose their policy agenda via legislative action, platform companies have shifted their tactical focus to ballot initiatives and litigation.

In 2020, platform companies spent more than $200 million to secure passage of California Proposition 22 in order to undermine the state’s strong protective test for preventing independent contractor misclassification and exempt their underpaid and disproportionately Black and brown workers from minimum wages and workplace protections.36 A year later, companies poured hundreds of millions into a similar ballot initiative aimed at exempting themselves from Massachusetts’ strong worker protection laws (see case studies below). Companies have been willing to spend endlessly in these high-stakes campaigns because they believe their business model depends on denying workers’ employment status.

Tech is merely the latest of many industries in which employers have sought to ignore and, where possible, erode or eliminate legal tests of employment status. Employer misclassification of workers as independent contractors is a pervasive and extensive problem in the United States. Platform companies have expanded on and quickly accelerated implementation of a playbook developed by employers in construction, transportation, landscaping, and other industries. Tech companies’ similar attempts to (mis)label workers as “independent contractors” and avoid minimum pay and labor standards have likewise been designed to undercut law-abiding competitors, grow their market share, and maximize potential profits and shareholder returns.

In response to the serious implications and costs that misclassification poses to workers and governments, many states have adopted standards to clearly determine whether a worker is an employee or an independent contractor. The ABC test is a strong, protective test for determining employee status. The test establishes a presumption that an individual performing services for an employer is an employee, not an independent contractor, unless the employer can establish three factors:

1. The work is done without the direction and control of the employer;
2. The work is performed outside the usual course of the employer’s business; and
3. The work is done by someone who has their own, independent business or trade doing that kind of work.

By establishing the presumption that a worker is an employee, the ABC test puts the onus on the employer to prove a worker is truly an independent contractor. In turn, this reduces the likelihood that workers are misclassified and lose protections they should be guaranteed under the law as employees.

Case study: California’s Proposition 22

In 2018, the California Supreme Court issued a unanimous decision, Dynamex Operations West, Inc. v. Superior Court of Los Angeles, 4 Cal. 5th 903. The Dynamex decision held that California’s ABC test was the appropriate test for evaluating employee status under California’s wage orders. The California legislature then passed Assembly Bill 5 (AB5) to codify the Dynamex decision in state law. AB5 established that the ABC test is the appropriate test for determining coverage under California wage and hour laws, with certain limited exceptions.39 AB5 would have made it harder for companies to misclassify janitors, construction workers, home health aides, and hotel and hospitality workers as independent contractors. However, before the bill was set to take effect in January 2020, platform companies—including Uber, Lyft, and Instacart—were already setting in motion a multi-million-dollar ballot initiative to exclude their workers from AB5.

The Protect App-Based Drivers and Services Act, also known as Proposition 22, was a ballot initiative that exempted TNC drivers from AB5 while proposing to extend some limited pay and benefit standards to drivers. Company arguments for Proposition 22 included promises that drivers would be paid an hourly wage of at least 120% of the state minimum wage, plus a health care stipend, totaling a minimum of $15.60 per hour. However, research by the University of California Berkeley Labor Center found that, because of multiple loopholes in Proposition 22’s pay system, the act would leave app-based drivers with a pay guarantee equivalent to only $5.64 per hour, far less than the $15.60 minimum promised.40 Companies spent over $200 million on a campaign to persuade voters to approve Proposition 22 in November 2020. Proposition 22 was later deemed unconstitutional by California’s Superior Court in August 2021 because it infringed on the legislature’s authority to regulate workers’ compensation.42

Despite the many public promises made during the ballot initiative campaign, since Proposition 22’s passage, companies like Uber and Lyft have been paying drivers well under minimum wage in California, where estimated driver pay now averages about $6.20 per hour.43 Likewise, hurdles to qualify for promised health care stipends have resulted in only 15% of drivers applying. By winning an exemption from AB5, Uber and Lyft avoided paying hundreds of millions of dollars into the state unemployment insurance system. Consequently, drivers were unable to draw regular unemployment benefits during the COVID-19 pandemic. When Congress authorized emergency unemployment benefits for independent contractors, tens of thousands of Uber and Lyft drivers gained access to these programs, meaning that the federal government—and taxpayers—financially supported drivers through the pandemic, not Uber and Lyft.

While litigation over Proposition 22 continues, California labor and legislative leaders have not backed down from commitments to maintain and enforce the ABC test codified in AB5. Legislation in 2021 to increase penalties for wage theft (making violations grand theft), for example, explicitly included independent contractors in its definition of employees.44

Case study: Massachusetts’s ballot initiative and legislative proposals

Like California, Massachusetts is among the half dozen states with an ABC test in place for wage and hour laws. In August 2020, Massachusetts Attorney General Maura Healey sued Uber and Lyft for misclassifying workers and denying them pay under the state’s wage and hour laws.45

As they had in California, platform companies sought to exempt themselves from Massachusetts’s strong ABC test and other state labor standards by introducing and heavily funding a state ballot initiative in 2021. Repeating many arguments from their Proposition 22 campaign, companies claimed the ballot initiative would provide workers with a health care stipend, the opportunity to earn paid sick time, family and medical leave, and a wage equal to 120% of the Massachusetts minimum wage. However, research by the University of California Berkeley Labor Center found that, because of multiple loopholes in the ballot initiative, drivers would have a pay guarantee that is equivalent to a wage of $4.82 per hour, far less than the $15.00 state minimum wage set to take effect in Massachusetts in 2023.46

In June 2022, the Massachusetts Supreme Court blocked the proposed ballot initiative because it contained “at least two substantively distinct policy decisions,” violating the state’s single subject rule.47 The court deemed language in the initiative designed to shield companies from liability for accidents or crime to be unrelated to the rest of the proposal, and therefore the initiative did not appear on the November 2022 ballot.48

While the court decision has, for the moment, interrupted platform companies’ ballot initiative campaign, attacks on worker protections in Massachusetts are expected to continue. In 2023, multiple bills featuring various “third category” proposals have already been filed in the state legislature. These proposals define app-based drivers as independent contractors—codifying their ineligibility for state minimum wage and all other employment protections—while creating a subminimum pay standard and some limited benefits.

“Massachusetts Is Not For Sale,” a coalition of worker, union, and community groups formed in opposition to the 2022 ballot initiative, has also continued to support driver organizing while developing new policy proposals.49 In the 2023 legislature, the coalition is backing a bill for “Establishing Protections and Accountability for TNC and DNC Workers, Consumers, and Communities.” This comprehensive legislation is a promising and important model for state policymakers that clearly defines all app-based ride-hail and delivery service workers as employees, ensuring that they will be covered by state unemployment, workers’ compensation, and other employment protections. The bill proposes a strong pay standard that ensures app-based workers’ wages meet or exceed the state minimum wage for all time worked, requires full pay and pricing transparency from platform companies, and includes worker anti-retaliation protections and measures to increase safety for both workers and customers.50

States have opportunities to adopt or strengthen ABC tests

These case studies illustrate that strong legal tests to distinguish employee and independent contractor status, such as the ABC test, are key to combating worker misclassification. As of 2022, 18 states and the District of Columbia have adopted the ABC test for determining employee status for certain workplace laws (see Table 2).51 By establishing the presumption that a worker is an employee, the ABC test puts the onus on the employer to prove a worker is truly an independent contractor, therefore decreasing the likelihood that an individual is misclassified.

Table 2

While several states have adopted the ABC test, it has yet to be established under federal labor and employment law. The Protecting the Right to Organize (PRO) Act, which was passed in the House of Representatives but has yet to advance in the Senate, would establish the ABC test under the National Labor Relations Act.52

Many states have immediate opportunities to adopt or expand ABC tests, and lawmakers should prioritize this as a first and essential step toward strengthening definitions of employee status and preventing worker misclassification. In the past two years, legislation to establish a full ABC test has been introduced in Minnesota, New York (where existing ABC tests apply only to construction work), Oregon, Pennsylvania, and Rhode Island.53

Several states, including those not yet using the full ABC test, have taken intermediate steps to strengthen legal definitions as part of broader efforts to crack down on worker misclassification. Nevada, for example, passed 2019 legislation clarifying that in order to be presumed an independent contractor, an individual must also hold a state or local business license to operate in Nevada.54 In 2021, Oregon passed legislation expanding the state workers’ compensation definition of “worker” to include anyone who is paid for their services, unless an employer can meet the state’s existing A&C test to classify them as an independent contractor.55 In 2021, Colorado proposed (but has not yet passed) a notable bill to protect employees from discriminatory employment practices that includes independent contractors in the definition of covered employees.56

Meanwhile, many other states have headed in the wrong direction. Relentless employer attacks have succeeded in eroding once-strong ABC tests and weakening legal definitions of employment across the country. Figure E highlights seven states that until recently had ABC tests in place for one or more state employment law but repealed or weakened those tests within the last decade.

Figure E

States with ABC tests still in place continue to face an onslaught of legislative threats to their strong standards. In California alone, at least a dozen bills aimed at repealing or weakening the state’s ABC test have been introduced in tandem with Proposition 22 and its subsequent court battles.57 Proposed bills have included measures to create a new category of “independent work” for those who “voluntarily choose it,” as well as various bills to exempt TNC drivers or other occupational groups from California’s ABC test.58 ABC tests in Hawaii, New Jersey, and Vermont have also been perennial targets for legislation proposing weaker multipronged tests of employment status or attempts to exempt TNC drivers from ABC tests.59

The evolution of these attacks provides insight into platform companies’ state policy priorities, which include new template bills to further weaken employee status definitions in states without ABC tests. Oklahoma and West Virginia are examples of states where legislators have introduced versions of ALEC’s newest and most extreme model legislation, the “Uniform Worker Classification Act,” which was designed to upend employee status definitions across statutes and occupations.60 The legislation proposes, in the name of “uniformity,” to supersede all existing employee status definitions in a given state’s employment laws, replacing them with a broad presumption of independent contractor status.61

Strong enforcement of state ABC tests can prevent worker misclassification and wage theft

Another tool all states can use to combat misclassification is stronger enforcement of existing employment laws, especially where ABC tests are already in place. New Jersey’s Department of Labor and Workforce Development, for example, recently found that Uber had violated the state’s ABC test for wage and hour laws by misclassifying drivers as independent contractors and fined the company $100 million in back taxes.62

New Jersey’s strong overall stance on misclassification provides an excellent set of policy models for other states. Along with maintaining an ABC test, New Jersey has employed a multifaceted legislative approach to provide state agencies with the necessary enforcement tools and resources to crack down on misclassification. New Jersey’s 2019 Wage Theft Act increased the amount that workers could collect for wage theft (a common consequence of misclassification), to include up to 200% in liquidated damages; the act also created strong new anti-retaliation provisions.63 In 2020, New Jersey created new penalties for willful misclassification—up to $1,000 per misclassified employee—and new requirements for employers to post a notice to all employees regarding misclassification.64 Then, in 2021, New Jersey passed four interrelated bills designed to enhance state agencies’ ability to pursue misclassification cases and deter violations using the following tools:

• Empowering the state commissioner of labor to issue stop-work orders to all work sites of employers found illegally misclassifying workers;
• Creating a state Office of Strategic Enforcement and Compliance responsible for interagency coordination of enforcement of wage payment, benefit, and tax laws;
• Making misclassification of employees for the purpose of evading payment of insurance premiums a violation of state fraud prevention laws that is subject to fines starting at $5,000 for a first violation, $10,000 for a second violation, and $15,000 for each subsequent violation; and
• Requiring creation of a statewide, publicly accessible database of certified payroll information for public works projects.65

Other states with strong ABC tests in place have recently taken important actions to strengthen enforcement. For example, in 2020, Vermont created its Task Force on Employee Misclassification and empowered the state attorney general to enforce complaints of willful, substantial, or systemic misclassification as potential unfair acts of commerce.66 In 2019, Nevada likewise created a Task Force on Employee Misclassification and increased penalties for violations to up to $5,000 per employee.67

Some states where ABC tests are not yet in place have taken steps to improve enforcement of misclassification, especially when it results in wage payment violations. These states include: Colorado, where a 2022 law increased penalties for employer violations and created a worker protection unit to investigate and enforce wage theft or misclassification claims;68 and Virginia, where 2020 legislation increased penalties for willful misclassification to $5,000 per violation and created a private right of action for workers who have missed out on pay or benefits due to misclassification.69

Over the past decade, over half of states established multiagency misclassification task forces in recognition of the complex enforcement challenges posed by misclassification. These structures vary widely in scope, mission, and effectiveness. To maximize the potential of task forces, states should provide them with adequate funding and staff, as well as clear mandates to crack down on illegal misclassification. These mandates should include requirements to solicit active participation from worker organizations and state agencies with jurisdiction over employment and tax laws and to adopt other best practices to ensure robust enforcement.70

In October 2022, the federal Department of Labor proposed a rule that provides employers with guidance on how to determine if a worker is an employee or an independent contractor under the Fair Labor Standards Act.{{71)) If finalized, the interpretative rule would draw on long-standing case law that employers have relied on to classify workers as employees or independent contractors under wage and hour laws. By providing clear guidance, the Department of Labor’s proposed rule—combined with federal enforcement—would help limit the misclassification of workers across the country. State labor departments can and should follow suit with regulations or guidance that affirm that employers should follow the same definitions for determining employee status under state wage payment laws.

A state policy agenda to empower workers and protect flexible work without exploitation

Understanding platform companies’ policy agenda and lobbying strategies can help workers, advocates, and lawmakers prepare for ongoing challenges to workers’ rights at the state level. It is clear that it will also take effective organizing and deliberate building of unified support for a worker-led policy agenda to confront and counter tech companies’ growing power and influence in the states.

In the face of corporate threats, groups of app-based workers, labor unions, and advocates across the country have continued to organize, strengthen, and enforce existing protective employment laws. Many are already developing new state and local policy solutions that can help chart a better future for accessible, flexible work without exploitation in the platform economy.

Lessons from recent state and local struggles to protect worker rights demonstrate the great potential for drivers and other app-based workers to join forces with constituencies who share a stake in overlapping areas of concern about platform company impacts on consumer safety, the environment, transportation access and cost (including equitable access for individuals with disabilities), racial and gender equity, and immigrant justice.

To empower workers and defend against tech company threats to worker rights, states should prioritize the following key policies:

Repeal state preemption of local labor standards and encourage local worker-driven policy innovation

• Review state TNC laws and other relevant state statutes, and repeal language that is currently prohibiting localities from developing policies to address priority worker and consumer concerns;
• Set strong state standards for employers as a floor while empowering localities to innovate beyond the floor;
• Regularly review local policy innovations and best practices, and move to adopt successful models for improving job quality and equity at the state level; and
• Carefully evaluate new policy proposals to ensure they build on, but do not diminish, local standards.

Reject or reverse occupational carve-outs that deny workers full rights

• Review state TNC laws and other relevant state statutes, and repeal language that excludes app-based workers from coverage under state employment laws or that defines “TNC drivers,” “marketplace contractors,” or other app-based workers as nonemployees or independent contractors;
• Assess new policy proposals carefully to prevent occupational carve-outs or exemptions from state minimum wage, unemployment, workers’ compensation, health and safety protections, paid leave, or nondiscrimination protections; and
• Reject “third category” proposals that define app-based workers (or other occupational groups) as nonemployees, and set subminimum pay or benefit standards.

Adopt strong, protective legal tests, such as the ABC test, for establishing employee status and preventing the misclassification of workers as independent contractors

• Review legal definitions and tests of employee status in current state wage and hour, workers’ compensation, unemployment insurance, and other employment laws; and
• Adopt a strong and consistent ABC test under all state employment statutes. Strong ABC tests are those that establish a presumption that an individual performing service for an employer is an employee, not an independent contractor, unless the employer can establish three factors: A) The work is done without the direction and control of the employer; B) The work is performed outside the usual course of the employer’s business; and C) The work is done by someone who has their own independent business or trade performing that kind of work.

Strengthen enforcement and increase penalties to deter the misclassification of workers as independent contractors

• Provide state enforcement agencies and misclassification task forces with adequate staff and funding as well as clear mandates to crack down on worker misclassification by enforcing existing state employment laws and targeting investigations and enforcement in sectors where misclassification is known to be widespread;
• Support and expand investments in co-enforcement partnerships between state agencies and labor and community organizations with the capacity to directly reach workers with education about their rights and to support workers who come forward to file complaints;
• Increase employer penalties for violations, and ensure that workers harmed by misclassification can collect liquidated damages in addition to back wages;
• Provide authority for attorneys general to prosecute willful misclassification cases under fraud or consumer protection statutes; and
• Empower state enforcement agencies to issue stop-work orders at work sites of employers who systematically violate the law or refuse to comply with ordered remedies.

Affirm and strengthen workers’ rights to organize and collectively bargain under federal labor law

• Strengthen anti-retaliation protections under existing state employment laws so that workers can bring forward complaints of violations without fear of job loss;
• Affirm app-based workers’ legal status as employees with full legal protections to unionize and collectively bargain over the full scope of wages, hours, and terms and conditions of work, as defined in the National Labor Relations Act;
• Reject “third category” proposals that restrict app-based workers’ organizing rights by defining them as nonemployees and/or creating quasi-bargaining agents (such as “driver resource centers” or other entities with restricted authority and accountability) that could allow companies to sidestep legal duties to engage in collective bargaining with workers’ unions; and
• Support federal labor law reform such as the Protecting the Right to Organize (PRO) Act, which would strengthen workers’ rights to organize and adopt the ABC test for purposes of coverage under the National Labor Relations Act.

Extend eligibility for unemployment insurance and other state benefit programs to all workers regardless of immigration status, and support federal immigration reform

• Expand on or create state excluded-worker funds that extend unemployment insurance eligibility to all workers, regardless of immigration status;
• Update the design of state paid leave and other benefit programs to extend coverage to all workers; and
• Support comprehensive immigration reform that creates a path to full citizenship for immigrant workers and disincentivizes employer exploitation and employment discrimination based on immigration status.

Acknowledgments

This report would not have been possible without invaluable research assistance from Rachel Dao, Oberlin College, and excellent assistance on figures and maps from Daniel Perez. EPI thanks the following advocates and experts for their assistance in providing background information for this report: Danielle Alvarado, Working Washington; Amanda Ballantyne, AFL-CIO; Brian Chen, National Employment Law Project; David Kallick, Immigration Research Initiative; Chrissy Lynch, Massachusetts AFL-CIO; Sophie Mariam, Colorado Fiscal Institute; and David Weil, Heller School for Social Policy and Management at Brandeis University.

Notes

1. A comprehensive proposal for this “third category” of employment was floated in 2015 by Harris and Krueger. (See Seth D. Harris and Alan B. Krueger, A Proposal for Modernizing Labor Laws for Twenty-First-Century Work: The ‘Independent Worker,’ The Hamilton Project, December 2015.) The proposal was roundly criticized by worker advocates, including EPI (see Ross Eisenbrey and Lawrence Mishel, Uber Business Model Does Not Justify a New ‘Independent Worker’ Category, Economic Policy Institute, March 2016). Washington state’s 2021 version of “third category” legislation defines ride-hail drivers as nonemployees, sets limited state standards for driver pay and sick pay (while preempting higher local standards like those previously in place in Seattle), and creates a state-sanctioned entity with exclusive authority to “enter into an agreement” with ride-hail companies on the single issue of an appeals process for driver deactivation. (See HB 2076, 2021–22 Assemb., Reg. Sess. [Wash. 2022] and Jennifer Sherer, “Testimony to the Washington State Senate Transportation Committee on ESHB 2076: Concerning Rights and Obligations of Transportation Network Company Drivers and Transportation Network Companies,” testimony submitted to Washington State Senate Transportation Committee, February 26, 2022.) Legislative proposals with similar elements have been floated in Connecticut and New York, where they have faced strong criticism from drivers, unions, and worker advocates and, as of this report, have not proceeded. (See SB 1000, 2021–22 Sen., Reg. Sess. [Conn. 2021] and SB 6538, 2019–20 Sen., Reg. Sess. [N.Y. 2019.])

2. Risa Gelles-Watnick and Monica Anderson, Racial and Ethnic Differences Stand Out in the U.S. Gig Workforce, Pew Research Center, December 2021.

3. Ben Zipperer, Celine McNicholas, Margaret Poydock, Daniel Schneider, and Kristen Harknett, National Survey of Gig Workers Paints a Picture of Poor Working Conditions, Low Pay, Economic Policy Institute, June 2022.

4. Ballotpedia, “California Independent Healthcare Contractor Definition Initiative (2022)” (web page), accessed January 26, 2023.

5. Gig Workers Rising, National Employment Law Project, PowerSwitch Action, SEIU, Temp Worker Justice, How the ‘Coalition for Workforce Innovation’ Is Putting Workers’ Rights at Risk, July 2022.

6. See Lorena Roque, Worker Flexibility and Choice Act: The Corporate Attempt at Stripping Labor Protections, Center for Law and Social Policy, November 2022; and National Employment Law Project, “Statement In Response to the Introduction of the Worker Flexibility and Choice Act” (press release), July 22, 2022.

7. ALEC Exposed, “Transportation Network Company Act Exposed” (web page), last updated October 12, 2017.

8. See Hunter Blair, David Cooper, Julia Wolfe, and Jaimie Worker, Preempting Progress: State Interference in Local Policymaking Prevents People of Color, Women, and Low-Income Workers from Making Ends Meet in the South, Economic Policy Institute, September 2020; and Julia Wolfe, Sebastian Martinez Hickey, Dave Kamper, and David Cooper, Preempting Progress in the Heartland: State Lawmakers in the Midwest Prevent Shared Prosperity and Racial, Gender, and Immigrant Justice by Interfering in Local Policymaking, Economic Policy Institute, October 2021.

9. Texas A&M Transportation Institute, “Transportation Network Company (TNC) Legislation” (web page), accessed November 17, 2022.

10. See Gali Racabi, State TNC and MC Legislation: Preemption and Employment Status of Drivers, OnLabor, October 2018; and Rebecca Smith, Joy Borkholder, Mariah Montgomery, and Miya Saika Chen, Uber State Interference: How TNC’s Buy, Bully, and Bamboozle Their Way to Deregulation, National Employment Law Project, January 2018.

11. ALEC Exposed, “Transportation Network Company Act Exposed” (web page), last updated October 12, 2017.

12. Rebecca Smith, Joy Borkholder, Mariah Montgomery, and Miya Saika Chen, Uber State Interference: How TNC’s Buy, Bully, and Bamboozle Their Way to Deregulation, National Employment Law Project, January 2018.

13. Sarah E. Light, “Precautionary Federalism and the Sharing Economy,” Emory Law Journal, 66, no. 2 (2017): 333–394.

14. Brad Lander, Establishing A Minimum Pay Standard for For-Hire Drivers, Local Progress, January 2021 and Taxi & Limousine Commission, “Driver Pay” (web page), NYC.gov, accessed on January 17, 2023.

15. Taylor Soper, “Seattle Mayor Signs Minimum Wage Law for Uber And Lyft Drivers in First-Ever Virtual Bill Signing,” GeekWire, October 8, 2020.

16. Jennifer Sherer, “Testimony to the Washington State Senate Transportation Committee on ESHB 2076: Concerning Rights and Obligations of Transportation Network Company Drivers and Transportation Network Companies,” testimony submitted to Washington State Senate Transportation Committee, February 26, 2022.

17. Ana Ley and Winnie Hu, “Uber Doesn’t Have to Raise New York City Drivers’ Pay, Judge Rules,” New York Times, January 6, 2023.

18. Chicago, Ill. Municipal Code § Chapter 9-115 (2014). 

19. 625 ILCS 57/32, 2021–22 Assemb., Reg. Sess. (Ill. 2021).

20. The People’s Lobby, Chicago Gig Alliance, and Chicago Jobs with Justice, Chicago Rideshare Living Wage and Safety Ordinance, n.d.; Heidi Wigdahl, “Uber, Lyft Drivers Call for Protections; Minneapolis City Council Takes First Steps,” KARE11, January 12, 2023.

21. HB 1681 HD 2 SD 1, 2021–22 Assemb., Reg. Sess. (Haw. 2022).

22. See HB 3023, 2019–20 Assemb., Reg. Sess. (Or. 2019) and HB 3379, 2019–20 Assemb. Reg. Sess. (Or. 2019). Oregon passed its first TNC bill in 2021, requiring TNCs to provide personal liability insurance to all drivers: HB 2393, 2021–22 Assemb., Reg. Sess. (Or. 2019).

23. Portland.gov, “TNC Drivers Advisory Committee” (web page), accessed on January 17, 2023.

24. Jeffery C. Mays, “New York Passes Sweeping Bills to Improve Conditions for Delivery Workers,” New York Times, September 23, 2021.

25. Winnie Hu, “Inside the Fight to Pay Food Delivery Workers $23 an Hour,” New York Times, December 8, 2022.

26. Seattle City Council, “Seattle City Council Passes PayUp Legislation” (press release), May 31, 2022.

27. Catie Cheshire, “Union Dash: Colorado’s Gig Economy Drivers Are Joining Forces,” Westword, October 31, 2022; Catie Cheshire, “The Gig is Up: Colorado Lawmakers Introduce Bill Regulating Rideshare Companies,” Westword, January 31, 2023. See SB23-098, 2023–24 Sen., Reg. Sess. (Colo. 2023).

28. ALEC Exposed, “Transportation Network Company Act Exposed” (web page), last updated October 12, 2017.

29. See NC Gen Stat § 20-280.8 (2015); NH Rev Stat § 376-A:20 (2018); and WY Stat § 31-20-110 (2018).

30. Ben Zipperer, Celine McNicholas, Margaret Poydock, Daniel Schneider, and Kristen Harknett, National Survey of Gig Workers Paints a Picture of Poor Working Conditions, Low Pay, Economic Policy Institute, June 2022.

31. Rebecca Smith, ‘Marketplace Platforms’ and ‘Employers’ Under State Law—Why We Should Reject Corporate Solutions and Support Worker-Led Innovation, National Employment Law Project, May 2018.

32. S.D. Codified Laws § 60-1-7 (2013).

33. UT Code § 34-53-102 (2018).

34. SB 209, 2021–22 Sen., Gen. Sess. (Utah 2021) and SB 0199, 2022–23 Sen., Gen. Sess. (Utah 2022).

35. HB 1862, 2020–21 Assemb., Reg. Sess. (Tenn. 2020).

36. Greg Bensinger, “Other States Should Worry About What Happened in California,” New York Times, November 6, 2020.

37. Lynn Rhinehart, Celine McNicholas, Margaret Poydock, and Ihna Mangundayao, Misclassification, the ABC Test, and Employee Status, Economic Policy Institute, June 2021; and John Schmitt, Heidi Shierholz, Margaret Poydock, and Samantha Sanders, The Economic Costs of Worker Misclassification (fact sheet), Economic Policy Institute, January 2023.

38. National Employment Law Project, Independent Contractor Misclassification Imposes Huge Costs on Workers and Federal and State Treasuries, October 2020.

39. AB 5, 2019–20 Assemb., Reg. Sess. (Cal. 2019).

40. Ken Jacobs and Michael Reich, “The Uber/Lyft Ballot Initiative Guarantees Only $5.64 an Hour,” UC Berkeley Labor Center blog, October 2019.

41. Brian Chen and Laura Padin, “Prop 22 Was a Failure for California’s App-Based Workers. Now, It’s Also Unconstitutional,” National Employment Labor Project blog, September 2021.

42. Joyce E. Cutler, “Gig Workers, Prop. 22 Backers Resume War Over Initiative’s Fate,” Bloomberg Law, December 12, 2022.

43. Aarian Marshall, “California Voted for Cheaper Uber Rides. It May Have Hurt Drivers,” Wired, September 21, 2022.

44. AB 1003, 2021–22 Assemb., Reg. Sess. (Cal. 2021).

45. Office of Attorney General Maura Healey, “AG Healey: Uber and Lyft Drivers Are Employees Under Massachusetts Wage and Hour Laws” (press release), July 14, 2020.

46. Ken Jacobs and Michael Reich, Massachusetts Uber/Lyft Ballot Proposition Would Create Subminimum Wage: Drivers Could Earn as Little as $4.82 an Hour, UC Berkeley Labor Center, September 2021.

47. Terri Gerstein, “In Massachusetts, a Limit on Gig Companies’ Deceptions,” The American Prospect, June 17, 2022.

48. Kellen Browning, “Massachusetts Court Throws Out Gig Worker Ballot Measure,” New York Times, June 14, 2022; and Lisa Kashinsky and Eleanor Mueller, “Massachusetts Court Shuts Down Gig Work Ballot Measure,” Politico, June 15, 2022.

49. “Massachusetts Is Not For Sale” (website), accessed January 26, 2023.

50. HD 3832, 2023–24 Assemb., Reg. Sess. (Mass. 2023)

51. Lynn Rhinehart, Celine McNicholas, Margaret Poydock, and Ihna Mangundayao, Misclassification, the ABC Test, and Employee Status, Economic Policy Institute, June 2021.

52. Celine McNicholas, Margaret Poydock, and Lynn Rhinehart, How the PRO Act Restores Workers’ Right to Unionize, Economic Policy Institute, February 2021.

53. See Minnesota bills SF4018, 2019–20 Sen., Reg. Sess. (Minn. 2020) and HF1897, 2021–22 Assemb., Reg. Sess. (Minn. 2021); New York bills A5772/S1999, 2021–22 Assemb., Reg. Sess. (N.Y. 2021), A7521, 2021–22 Assemb., Reg. Sess. (N.Y. 2021), and A7743, 2021–22 Assemb., Reg. Sess. (N.Y. 2021); Oregon’s 2019 proposal to add B prong to its existing state A&C test (HB 2498, 2019–20 Assemb., Reg. Sess. [Or. 2019]); Pennsylvania’s 2020 proposal to incorporate the full ABC test into the state Labor Relations Act (HB2289, 2019–20 Assemb., Reg. Sess. [Pa. 2019]) and “Application-Based Company Worker Misclassification Act,” which seeks to define app-based workers as employees unless a full ABC test is used to prove independent contract status (HB2215, 2019–20 Assemb., Reg. Sess. [Pa. 2019]); and Rhode Island bill S2861, 2022–23 Sen., Reg. Session (R.I. 2022).    

54. SB493, 2019–20 Sen., Reg. Sess. (Nev. 2019).

55. HB3188, 2021–22 Assemb., Reg. Sess. (Or. 2021).

56. SB 21-176, 2021–22 Sen., Reg. Sess. (Colo. 2021).

57. See, for example, SB 238, 2019–20 Sen., Reg. Sess. (Cal. 2019); AB 25, 2021–22 Assemb., Reg. Sess. (Cal. 2020); SB 806, 2019–20 Sen., Reg. Sess. (Cal. 2020); AB 1928, 2019–20 Assemb., Reg. Sess. (Cal. 2020); and AB 1008, 2021–22 Assemb., Reg. Sess. (Cal. 2021).

58. See SB 1039, 2019–20 Sen., Reg. Sess. (Cal. 2020); AB 2822, 2019–20 Assemb., Reg. Sess. (Cal. 2020); and SB 1423, 2019–20 Sen., Reg. Sess. (Cal. 2020). California has exempted some occupational groups, including nail manicurists, from its ABC test (see AB 1541, 2021–22 Assemb., Reg. Sess. [Cal. 2021]).

59. See New Jersey bills S4262, 2020–21 Sen., Reg. Sess. (N.J. 2021); A899, 2022–23 Assemb., Reg. Sess. (N.J. 2022); S 599, 2022–23 Sen., Reg. Sess. (N.J. 2022), A2057, 2022–23 Assemb., Reg. Sess. (N.J. 2022); and A6249, 2020–21 Assemb., Reg. Sess. (N.J. 2022). See Hawaii bills HB 2002 HD 2 SD 2, 2020–21 Assemb., Reg. Sess. (Haw. 2020) and HB 699, 2022 Assemb., Reg. Sess. (Haw. 2021). See Vermont bill S203, 2021–22 Sen., Reg. Sess. (Vt. 2022).

60. See Oklahoma bill SB 380, 2022–23 Sen., Reg. Sess. (Okla. 2021) and West Virginia bill SB528, 2020–21 Sen., Reg. Sess. (W.Va. 2020).

61. American Legislative Exchange Council (ALEC), “Uniform Worker Classification Act” (model legislation), accessed January 17, 2023.

62. Catherine Thorbecke, “Uber and Its Subsidiary Pay New Jersey $100 Million in Back Taxes over Driver Classification Dispute,” CNN Business, September 13, 2022.

63. A2903/S1790, 2018–19 Legis., Reg. Sess. (N.J. 2019).

64. See New Jersey bills A5839, 2018–19 Assemb., Reg. Sess. (N.J. 2019) and A5843, 2018–19 Assemb., Reg. Sess. (N.J. 2019).

65. Department of Labor and Workforce Development, “NJDOL Uses Expanded Powers to Stop Worker Exploitation at Job Sites” (press release), NJ.gov, August 17, 2022.

66. See S108, 2020–21 Sen., Reg. Sess. (Vt. 2020) and 21 Vt. Stat. Ann. § 1301(6)(B) (n.d.).

67. See SB 493, 2019–20 Sen., Reg. Sess. (Nev. 2019) and NV Rev Stat § 608.0155 (2019).

68. See SB 22-161, 2022 Sen., Reg. Sess. (Colo. 2022).

69. See Code of Virginia § 40.1-29 (2006) and VA HB984, 2020 Assemb., Reg. Sess. (Va. 2021).

70. Rebecca Smith, Public Task Forces Take on Employee Misclassification: Best Practices, National Employment Law Project, August 2020.

71. Employee or Independent Contractor Classification Under the Fair Labor Standards Act, 87 Fed. Reg. § 62218-62275 (2022).

Amy DeBisschop
Division of Regulations, Legislation, and Interpretation
Wage and Hour Division
U.S. Department of Labor
Room S-3502
200 Constitution Avenue NW
Washington, DC 20210

Re: Employee or Independent Contractor Classification Under the Fair Labor Standards Act (RIN 1235-AA43)

Dear Ms. DeBisschop:

The Economic Policy Institute (EPI) is a nonprofit, nonpartisan think tank created in 1986 to include the needs of low- and middle-income workers in economic policy discussions. EPI conducts research and analysis on the economic status of working America, proposes public policies that protect and improve the economic conditions of low- and middle-income workers, and assesses policies with respect to how well they further those goals. EPI submits these comments on the Department of Labor’s (Department/DOL) Notice of Proposed Rulemaking (NPRM) to revise its analysis for determining who is a covered employee and who is an independent contractor under the Fair Labor Standards Act (FLSA).1

Under the Trump administration, the Department of Labor finalized a rule that narrowed the scope of who is considered an employee under the FLSA. As a result, the Trump rule made it easier for employers to misclassify their workers as independent contractors rather than as employees. The way in which a worker is classified has serious implications and costs for their labor rights and their economic security. When an employer misclassifies a worker as an independent contractor, the employer robs that worker of basic protections such as minimum wage, overtime pay, the right to be free from discrimination in the workplace, access to workers’ compensation, and access to unemployment benefits. While misclassification can happen to any worker, due to occupational segregation and other labor market disparities rooted in structural racism, people of color and immigrant workers are more likely to be in occupations where misclassification is common. We applaud the DOL for proposing to rescind the anti-worker rule and replacing it with a rule that would help protect workers.

In the proposed rule, the Department seeks to reinstate the clear, long-standing six-factor “economic reality” test, which gets to the central issue of worker classification: is the worker truly in business for themselves, or do they depend economically on finding work in the business of others, under the control and terms of the employer? The DOL’s explanation of how each factor should be analyzed also provides clarity and focus, which will help workers and employers alike know who is covered by the Fair Labor Standards Act. The proposed rule also makes clear that the vast majority of workers are not truly in business for themselves independently and should be classified as employees, making them entitled to the FLSA’s rights and protections.

In this comment, we will demonstrate the importance of the proposed rule by estimating the financial benefit to workers who have been incorrectly classified as independent contractors as a result of the lack of clarity caused by the Trump administration’s 2021 rule. The basic structure of this analysis is to estimate (1) the difference in the value of a job to a worker if the worker is classified as an independent contractor rather than as an employee and (2) the difference in payments to social insurance funds if a worker is classified as an independent contractor rather than as an employee.

No comprehensive private or government data exist on the prevalence of the misclassification of workers as independent contractors, overall or by industry or occupation. To illustrate the substantial costs to workers caused by the lack of clarity in the Trump administration rule and the resulting misclassification, we provide estimates here for workers in 11 occupations that researchers have identified as particularly vulnerable to misclassification: construction workers, truck drivers, janitors and cleaners, home health and personal care aides, retail sales workers, housekeeping cleaners, landscaping workers, call center workers, security guards, light truck delivery drivers, and manicurists and pedicurists.2

We illustrate the methodology we used to estimate the cost to workers of being misclassified as an independent contractor using the case of construction workers, an occupation where misclassification is a long-standing, widespread practice and has been studied extensively.

We begin with a breakdown of total compensation for construction workers when they are classified as employees, drawn from the Bureau of Labor Statistics’ Employer Costs for Employee Compensation (ECEC) database. Table 1 presents the most recent ECEC data (June 2022) for construction workers. Their average hourly wage earnings are $33.97 per hour (row one), which is made up of straight pay ($30.39 in wages and salaries, in row two), supplemental pay ($1.61, mostly overtime, in row three), and paid leave ($1.97 in vacation, holiday, sick, and personal day pay). Over and above their pay, construction workers classified as employees also receive significant employee benefits—an average of $5.55 per hour (row five) in insurance (primarily health insurance) and defined benefit or defined contribution retirement benefits. Finally, when workers are as classified as employees, employers are also legally obligated to contribute on the employee’s behalf to Social Security, Medicare, federal and state unemployment insurance, and Workers’ Compensation, which in the case of construction totaled an average of $4.03 per hour (row six). After the various benefits and contributions to social insurance are included, the value of a job to the average construction worker increased from $30.39 per hour in wages and salaries alone to $43.56 per hour in total compensation (row seven).

Table 1

The ECEC data we use in Table 1 make it possible to breakdown total compensation for workers in construction (and in many other occupations) into its component parts, but only when those workers are classified as employees. No comparable data exist for workers when they are misclassified as independent contractors. Table 2 describes how we adapt the available compensation information for employees in order to provide plausible, conservative estimates of total compensation for workers who are misclassified as independent contractors.

Table 2

In Table 2, we apply the breakdown of total compensation from the ECEC data in Table 1 to the annual earnings of the median construction worker, which we obtain from the BLS’s Occupational Employment and Wage Statistics data (OEWS). According to the OEWS data, in 2021 the median construction worker working as an employee (not as an independent contractor) had $48,210 in W-2 earnings. Applying the distribution of compensation from Table 1 to this annual earnings figure, we estimate that the median construction worked received $43,129 per year in regular pay (line A), $2,285 in supplemental pay (line B), and $2,796 in paid leave (line C), and $7,877 in insurance and retirement benefits (line D). The same worker would have had to pay 7.65% of their earnings, or $3,688, toward Social Security and Medicare (line F).3 The net value to the worker of a job under these circumstances–that is, the sum of all pay, paid leave, insurance and benefits, minus Social Security and Medicare taxes–would be $52,398 (line G), substantially higher than the W-2 earnings of $48,210.

We then model two possible ways that workers’ total compensation can change if the employee is misclassified as an independent contractor. In the first case, we assume that construction workers classified as independent contractors lose their supplemental pay (employers are not legally required to pay time-and-a-half overtime to independent contractors, for example), their paid leave (if they aren’t working, they aren’t being paid), and their health insurance and retirement benefits (a major cost-savings for employers who switch employees to independent contractor status). These assumptions substantially reduce the value of the job as an independent contractor relative to the value of the same job when performed as an employee. But these adjustments are incomplete because they don’t account for the additional costs incurred by construction workers hired as independent contractors. The largest cost is the responsibility that independent contractors have to pay both the employee and the employer contributions to Social Security and Medicare. Independent contractors also assume new paperwork costs, including invoicing, bookkeeping, and small business tax filings.4

The second column of numbers in the top panel of Table 2 presents the results of these calculations for the typical construction worker. Here we assume that the annual pay for the independent contractor is identical to the regular pay of the same worker as an employee ($43,129). The independent contractor no longer receives supplemental pay ($0), paid leave ($0), or insurance and retirement benefits ($0), but must now pay the full employer and employee contribution to Social Security and Medicare (15.3%, or $6,443, up from the $3,688 employee contribution as an employee, line F) and cover $1,016 in paperwork costs (line E). Under these assumptions, the net value to the worker of the same job done as an independent contractor falls to $35,670 per year (line G)—a decline of $16,729 or almost one-third of the original net value of the job when done as an employee.

Table 2 also presents a second possible way that employers might treat independent contractors. In the last three columns of the table, we assume that employers pay independent contractors their regular pay and fully compensate them for the cost of health insurance and retirement benefits that employers would have paid to the same worker working as an employee. Given that avoiding the costs of employee benefits is a key motivation for hiring independent contractors rather than employees, we believe it is unlikely that employers would compensate workers in any substantial way for lost employee benefits. But this second case illustrates that even on these more generous terms, the value of the job to independent contractors still drops significantly relative to the value of the same job performed as an employee.

When we calculate the regular pay of the independent contractor as the regular pay as an employee ($43,129, as before) plus the full value of insurance and retirement benefits ($7,877), the annual earnings as an independent contract rises to $51,006–higher than the regular pay of an employee and even higher than total W-2 earnings as an employee ($48,210). But once we factor in Social Security and Medicare contributions ($7,627) and paperwork costs ($1,158), the net value of the job as an independent contractor is only $42,221, still more than $10,000 below the net value of the same job done as an employee. 5 6

The second panel of Table 2 uses the same two sets of assumptions to show the impact on payments to social insurance funds (Social Security, Medicare, federal and state Unemployment Insurance, and Workers Compensation) of the switch from employee status to independent contractor status.

As mentioned above, when workers are employees, they pay the employee share of Social Security and Medicare (7.65% of W-2 earnings). Their employers also make identical payments to Social Security and Medicare. Employers also make contributions on behalf of their employees–but not independent contractors—to federal and state Unemployment Insurance programs and to Workers’ Compensation.7 We estimate that when a worker is classified as an employee, the worker pays $3,688 toward Social Security and Medicare and their employer makes an identical $3,688 contribution toward Social Security and Medicare, and the employer makes additional contributions to Unemployment Insurance and Workers’ Compensation totaling $2,031.

When the same worker is misclassified as an independent contractor, contributions to social insurance fall but the entire burden of social insurance payments is shifted to the worker. Under our first set of assumptions (independent contractors are paid only their regular pay on a job when they are classified as independent contractors), total contributions to social insurance fall 31.5% ($2,964), but the payments made by the worker rise from $3,688 to $6,443. Under our second set of assumptions (independent contractors receive the regular pay on the job plus the full cost of insurance and retirement benefits), payments to social insurance drop 18.9% ($1,781), but again, the direct payments made by the worker increase from $3,688 to $7,627. As an independent contractor, all of the contributions toward fall directly on the worker.

One possible objection to the way that we have estimated the change in the net value of a job to an employee whose job is reclassified as an independent contractor is the claim, made by the Trump administration’s Department of Labor, that “in a competitive labor market, any reduction in benefits and increase in taxes is likely to be offset by higher base earnings—referred to as an ‘earnings premium,’” which would mean that “in theory, companies would likely have to pay more per hour to independent contractors than to employees because independent contractors generally do not receive employer-provided benefits and have higher tax liabilities,” and “any tax-related transfers from employers to workers are likely to be offset by higher wages employers pay to ensure workers’ take-home pay remains the same.”8 However, the Trump Department of Labor went on to note that “this expected wage premium may not always be observable at a statistically significant level” and in fact, their own analysis of the 2017 Contingent Worker Supplement (CWS) data “did not show a statistically significant difference” between the wages of employees and independent contractors with the same demographic characteristics in the same occupation.

This is not surprising given that this optimistic theory of the labor market—that is, that the base pay of former employees will rise to make up for a reduction in benefits associated with independent contractor status—is based on the assumption of perfectly competitive labor markets. There is broad and growing evidence that perfect competition is rare, and that most labor markets do not function competitively—particularly in low-wage labor markets such as many of those under consideration here.9 10 Even workers in the higher paid occupations examined here (particularly construction and trucking) are, in the absence of unionization, likely to lack the power to bargain for higher wages to compensate for their loss of benefits and increase in social insurance taxes when they become independent contractors.

Given these findings, we assume in our first case that low-earnings workers classified as independent contractors receive the same regular pay that they received when they were an employee–that is, there is no wage premium associated with being an independent contractor.11 In our second case, we allow for a large wage premium equal to the dollar value of health insurance and retirement benefits. In both cases, we also further assume that independent contractors receive no supplemental pay (such as overtime, holiday premium pay, shift differentials, or nonproduction bonuses), or paid leave.12

Table 3 presents the results from applying the same methodology applied to construction workers in Tables 1 and 2 and to ten additional occupations that researchers have identified as potentially vulnerable to misclassification.13 The first column of the table shows the median annual earnings in these occupations in 2021. The second column lists the total net value to the worker of the job when that job is classified as an employee. As in Table 1, the total value of the job to an employee includes paid leave (vacation, holidays, and sick pay), supplemental pay (overtime and holiday pay differentials), health insurance coverage, retirement contributions, and employer’s contribution to legally required employee benefits (Social Security, Medicare, federal and state unemployment insurance, and Workers’ Compensation), after subtracting the employee’s own costs to social insurance. The first row reproduces the results for construction workers, which we just reviewed. As we saw earlier, the median construction worker had annual W-2 earnings of $48,210 last year, but the value of the job after including benefits and social insurance contributions was $52,398. The value of that same job when performed as an independent contractor would be substantially lower, ranging from $35,670 to $42,221, depending on the specific assumptions. The estimated cost to the worker of independent contractor status, relative to employee status, is between $10,177 and $16,729 per year.

Table 3

The rest of the table shows the costs to workers in ten other occupations. As employees, these workers have median W-2 earnings between $25,770 and $48,310 per year. Using our most conservative estimate, a switch to independent contractor status reduces the value of their job by between $4,558 (manicurists and pedicurists) to $11,076 (truck drivers). Using equally plausible, but less conservative estimates the range of losses runs from $6,471 to $18,053 per year. Further, very-low-wage employees whose wages are elevated by the minimum wage could easily see their wages drop when, as independent contractors, they no longer legally must be paid the minimum wage.

What might have been left out in this analysis? Firms who hire independent contractors sometimes argue that independent contractor status provides workers with “flexibility and satisfaction,” a potentially important nonpecuniary attribute for workers who would be willing to accept lower income in exchange. Many workers indeed value flexibility, but employers are able to provide substantial flexibility to payroll employees if they choose to do so, while misclassified workers often have very little flexibility. The idea that workers can either have flexibility or payroll employment is a false choice. Moreover, it is difficult to imagine that there are a meaningful number of employees who would receive more satisfaction from doing the identical job for substantially lower compensation as an independent contractor. Finally, workers also highly value other job characteristics, including income stability and scheduling predictability, which are much less prevalent among independent contractors and are not taken into account here.

EPI strongly supports the Department of Labor’s proposed rulemaking regarding employee or independent contractor classification under the Fair Labor Standards Act. The Trump administration’s rule introduced substantial uncertainty into the determination of worker misclassification. As we have demonstrated here that uncertainty exposes workers across a wide range of occupations to potentially large financial hardships. For these reasons, EPI strongly supports the proposed rule and urges the Department to move swiftly to promulgate a final rule.

Sincerely,

Heidi Shierholz
President
Economic Policy Institute
Washington DC

John Schmitt
Senior Economist and Senior Adviser
Economic Policy Institute
Washington DC

Margaret Poydock
Policy Analyst and Government Affairs Specialist
Economic Policy Institute
Washington DC

1. Employee or Independent Contractor Classification Under the Fair Labor Standards Act, 87 Fed. Reg. 62218-62275 (October 13, 2022).

2. For discussions of occupations where workers are particularly vulnerable to misclassification as independent contractors, see Annette Bernhardt, Sarah Thomason, Chris Campos, Allen Prohofsky, Aparna Ramesh, and Jesse Rothstein, Independent Contracting in California: An Analysis of Trends and Characteristics Using Tax Data, UC Berkeley Labor Center and California Policy Lab, March 2022; Françoise Carré, (In)dependent Contractor Misclassification, Economic Policy Institute, June 2015; National Employment Law Project, Independent Contractor Misclassification Imposes Huge Costs on Workers and Federal and State Treasuries, Policy Brief October 2020; and Lisa Xu and Mark Erlich, Economic Consequences of Misclassification in the State of Washington, Harvard Labor and Worklife Program, December 2019.

3. The “total value” is defined as a relatively near-term concept here, in the sense that paying Social Security taxes would likely increase a worker’s Social Security benefits in retirement, so those taxes are not a long-run negative.

4. Updating the methodology laid out by Shierholz (“EPI comments on independent contractor status under the Fair Labor Standards Act,” October 26, 2020.), we estimate these paperwork costs as the annual purchase of basic bookkeeping software ($72, using Freshbooks, see https://www.freshbooks.com/pricing, accessed October 27, 2022), self-employed tax filing software for federal taxes ($119, using TurboTax, https://turbotax.intuit.com/personal-taxes/online/live/, accessed October 27, 2022) and state taxes ($49, using TurboTax), and 39 hours of administrative time per year at the independent contractors implied hourly rate. As Shierholz notes: the IRS “estimates that business taxpayers spend 13 more hours than nonbusiness taxpayers doing their taxes. If we conservatively assume that independent contractors spend 30 minutes per week on other (nontax) paperwork costs that they wouldn’t have to spend if they were a payroll employee, that, plus the additional 13 hours spent on taxes, is an additional 39 hours of paperwork per year”

5. A 2019 report on worker classification in the construction industry prepared by economists Dale Belman and Aaron Sojourner for the Attorney General of the District of Columbia made somewhat different assumptions about the changes in wages after workers move from employee to independent contractor status but arrive at broadly similar conclusions. For example, they estimate that “if misclassified workers receive only half the value of [paid leave, health insurance, and retirement benefits] to which they ought to be entitled, the cost reduction of doing business illegally jumps…to 48.1 percent.” (p. 5) Dale Belman and Aaron Sojourner, “Illegal Worker Misclassification: Payroll Fraud in the District’s Construction Industry,” Issue Brief and Economic Report, Office of the Attorney General of the District of Columbia, September 2019. See also Russell Ormiston, Dale Belman, and Mark Erlich, “An Empirical Methodology to Estimate the Incidence and Costs of Payroll Fraud in the Construction Industry,” January 2020.

6. Economist Michael Reich of the University of California Berkely finds similar results for Uber and Lyft drivers. He estimates that employee status for Uber and Lyft drivers would increase total driver compensation by about 30 percent. See, Michael Reich,“Pay, Passengers and Profits: Effects of Employee Status for California TNC Drivers,” Institute for Research on Labor and Employment Working Paper 107-20, October 2020.

7. We estimate total contributions to state and federal Unemployment Insurance and Workers’ Compensation by taking the value of “legally required benefits” in Table 1 and reducing that by the statutory payments made to Social Security and Medicare (7.65% of earnings).

8. 85 Fed. Reg. at 60626-60627, 60628

9. See. for example, Alan Manning, Monopsony in Motion: Imperfect Competition in Labor Markets (Princeton, N.J.: Princeton University Press, 2003); Anna Sokolova and Todd Sorensen, Monopsony in Labor Markets: A Meta-Analysis, Washington Center for Equitable Growth, February 2020; Arindrajit Dube, Jeff Jacobs, Suresh Naidu, and Siddharth Suri, “Monopsony in Online Labor Markets,” American Economic Review: Insights 2, no. 1 (March 2020): 33-46, https://www.aeaweb.org/articles?id=10.1257/aeri.20180150.

10. In fact, after review by the Office of Information and Regulatory Affairs (OIRA) at the White House, the following sentence was removed from the Trump Department of Labor’s original economic analysis: “The Department anticipates a positive wage effect due to the expected increase in labor force activity, but did not attempt to quantify estimates of changes in earnings.” That removal following OIRA’s review is no surprise, given that a positive wage effect of the proposed rule can’t be supported by the evidence.

11. We are not aware of any studies that directly examine what happens to earnings after workers who are initially classified as employees are later classified as independent contractors. Two studies, however, document declines in earnings for workers who were initially classified as employees but whose positions were later outsourced. Arindrajit Dube and Ethan Kaplan found that outsourced wages fell 4% to 7% for janitors and from 8% to 24% for security guards, with simultaneous declines in health benefits received (“Does Outsourcing Reduce Wages in the Low-Wage Service Occupations? Evidence from Janitors and Guards” ILR Review, vol. 63 no. 2, pp. 287–306). Using German administrative data on workers in food, cleaning, security, and logistics services, Deborah Goldschmidt and Johannes F. Schmieder found wages in outsourced jobs declined by approximately 10–15% relative to similar jobs that were not outsourced. (“The Rise of Domestic Outsourcing and the Evolution of the German Wage Structure,” The Quarterly Journal of Economics, vol. 132, no. 3, pp. 1165–1217).

12. Note that an individual with total household earnings on the low-end of the W-2 earnings reported in Table 3 and a household size of three or more (for example, one individual with two children) would likely be eligible for Medicaid. We do not attempt to quantify this effect, but to the extent that workers who change status as a result of this rule are able to take up Medicaid, the transfer to employers related to health care that would result from this rule would be transfers from the social insurance system to employers, not from the worker to employers.

13. See references cited in endnote 1.

Though much work remains to be done to enact a progressive economic agenda, this midterm election showed clear signs of support for a policy agenda that prioritizes economic, racial, and gender justice for working families.

Minimum wage

Nebraska: Voters approved Initiative 433, which will increase the state’s minimum wage to $15 by 2026.

Nevada: Voters approved Question 2, which will increase the state’s minimum wage to $12 in July 2024. The measure also removed a provision that allows employers to pay workers $1 less if they offer health insurance.

Tipped minimum wage

Voters in Washington, D.C. and Portland, Maine considered ballot measure to eliminate the subminimum wage for tipped workers. The tipped minimum wage system, which allows employers to pay workers well below the minimum wage, is a legacy of slavery and disproportionately harms workers of color and women. Over 3 million tipped workers nationwide are paid below their state’s minimum wage for as little as $2.13 an hour. Meanwhile, workers in states with one fair wage have higher take-home pay and are less likely to live in poverty than workers in states that pay tipped workers the federal minimum of $2.13.

Washington, D.C.: Voters approved Initiative 82, eliminating the subminimum wage and raising the wage floor for tipped workers from $5.35 to $16.10 by 2027. A similar initiative was passed in 2018 but was overturned by the D.C. City Council and Mayor Muriel Bowser.

Portland, Maine: Voters rejected Question D, which would have raised the overall minimum wage to $18 by 2025 and eliminated the subminimum wage for tipped work. The measure would have also classified app-based workers as employees and established a Department of Fair Labor Practices to investigate and enforce labor standards at the city level. The Maine Center for Economic Policy, a partner of EPI’s Economic Analysis and Research Network (EARN), estimates that over a third of Maine workers would have earned higher wages as a result of the change. An increased minimum wage would have primarily benefited women and workers of color in the state.

Workers’ rights

New York: Voters approved the Clean Water, Clean Air, and Green Jobs Environmental Bond Act of 2022, which establishes prevailing wage standards on construction projects. The bill also allows the state and municipalities to require contractors to execute labor peace agreements and buy American for structural iron and steel.

Illinois: Voters approved Amendment 1, which will prevent lawmakers from passing so-called “right-to-work” laws and give workers a constitutional right to collectively bargain over wages, hours, and working conditions.

However, in Tennessee, so-called “right-to-work” was further entrenched at the ballot box. Voters approved Amendment 1, enshrining “right-to-work” in the state’s constitution and making efforts to repeal the law much more difficult. EPI research has shown that states with so-called “right-to-work” laws, which are designed to weaken unions financially, have lower wages for both unionized and nonunionized workers than states without such laws.

Free school meals

Colorado: Voters approved Proposition FF to provide free meals for all public school students in the state. The measure, which will also fund pay increases for school cafeteria workers, will be funded by limiting state income tax deductions by households earning more than $300,000 annually. Colorado Fiscal Institute, an EARN partner, called the initiative a “fair, equitable” measure that “will boost the physical and economic health of our communities.”

Tax fairness

Massachusetts: Voters approved Question 1, an amendment to the state’s constitution that will increase taxes on the state’s richest residents. The Massachusetts Budget and Policy Center, an EARN partner, estimates that the tax will generate at least $2 billion a year for investments in public education and affordable transportation.

Health Care

Medicaid Expansion

South Dakota: Voters approved Constitutional Amendment D, which will require the state to provide Medicaid benefits to adults between 18 and 65 with incomes below 133% of the federal poverty level. Though the Affordable Care Act offered to pay 90% of states’ costs to expand Medicaid eligibility, 12 states have yet to expand eligibility. As a result, over 3.5 million people—mostly people of color—lack affordable health care coverage. South Dakota is the seventh state to expand Medicaid through the ballot initiative process. An additional 45,000 South Dakotans will qualify for Medicaid under the expanded program, 14,000 of whom are American Indian.

Abortion

Voters in Kentucky rejected an amendment that would eliminate residents’ right to reproductive freedom and prohibit the use of public funds for abortion. The right to an abortion is a matter of economic security, independence, and mobility for millions of women across the country. People who are denied abortion access are more likely to live in poverty, be unemployed, and face other adverse economic outcomes. Kentucky currently has an abortion plan in place, but the state Supreme Court will consider the constitutionality of the ban this week. 

California, Michigan, and Vermont voters approved amendments that enshrine reproductive rights, including the rights to contraception and abortion, into the state constitution.

Criminal justice

Constitutional amendments to abolish slavery

Voters in Oregon, Tennessee, Vermont, and Alabama approved measures that remove language in their state constitutions permitting slavery or involuntary servitude as punishment for a crime. Louisiana voters rejected a measure to remove language permitting slavery from the constitution after the amendment’s sponsor expressed concerns that the measure’s confusing wording could inadvertently erode protections against slavery. Louisiana voters will consider a revised measure in 2023.

Many state constitutions retain language similar to the 13^th Amendment to the U.S Constitution, which prohibits slavery and involuntary servitude except as punishment for a crime. The Abolish Slavery National Network—which is organizing the effort across the country—and other civil rights advocates argue that extremely low-paid (or, in some cases, unpaid) forced work in American prisons amounts to modern slavery. Incarcerated workers are not only exempt from minimum wage laws but are also denied overtime protection, workplace safety guarantees, and the right to unionize. Supporters see these slavery abolition amendments as an initial step in disrupting the power dynamic between incarcerated workers and prison staff and establishing basic rights for the incarcerated workforce.

Cannabis legalization

Marijuana is now legal to use recreationally in 21 states, Washington, D.C., and Guam. As legalization efforts gain momentum in states across the country, it is critical that lawmakers protect cannabis workers’ collective bargaining rights to ensure that this emerging industry provides safe, good-paying, and community-sustaining jobs.

Maryland: Voters approved Question 4, which permits residents to possess, smoke, and grow marijuana (within limits) and allows the General Assembly to tax the sale of marijuana. Companion legislation to the amendment proposes an expungement process for past marijuana convictions and an assistance fund for small, BIPOC-owned, or woman-owned businesses. Maryland Center on Economic Policy, an EARN partner, estimated that decriminalization would save the state tens of millions of dollars on enforcement costs and that taxing the sale of marijuana would generate hundreds of millions in revenue for the state.

Missouri: Voters approved Amendment 3, which legalizes recreational marijuana and will automatically expunge the records of individuals who were convicted of non-violent marijuana offenses and are not currently incarcerated. Currently incarcerated individuals can petition for release from incarceration, probation, or parole. State advocacy groups estimate that record expungement will impact thousands of Missourians whose marijuana offense convictions limited access to employment, housing, and the social safety net.

Meanwhile, Arkansas, North Dakota, and South Dakota voters rejected marijuana legalization.

Affordable housing

Voters in several states and localities approved measures to fund the construction of affordable housing. As the housing shortage grows and housing becomes increasingly unaffordable, particularly for communities of color and low- to moderate-income families, affordable housing construction has become an especially urgent priority. In Kansas City, voters approved Question 2, which allows the city to spend $50 million over five years to build affordable housing units for low-income residents.

Colorado voters approved the only state-wide affordable housing measure on the ballot this November. Proposition 123 will direct $300 million of the state’s taxable income to help essential workers like teachers and nurses buy homes, as well as help local governments increase housing supply. According to Colorado Fiscal Institute, an EARN partner, minimum wage workers in Colorado would need to work 75 hours a week to afford a one-bedroom apartment.

Los Angeles voters approved Measure LH, which grants the city authority to develop 75,000 units of affordable housing for seniors, unhoused, and low-income residents. Measure ULA, which will raise $1 billion per year for affordable housing and homelessness efforts in the city by taxing property sales over $5 million, also appeared likely to pass as of this writing.

And Austin voters approved Proposition A, the city’s largest ever affordable housing bond. The $350 million bond will be used to build and preserve affordable housing for Austin residents with annual incomes below $61,800.

When given the opportunity, millions of voters across the country showed their support for policies that will strengthen workers’ rights, reproductive justice, and racial equity. Lawmakers at every level of government should take note.

• establishing dedicated local labor standards offices that enforce workers’ rights laws 
• establishing ongoing worker boards or councils 
• passing local worker protection laws
• actively enforcing local worker protection laws 
• setting job quality standards for contractors with the municipal government 
• establishing legal consequences for labor violations among applicants for municipal permits or licenses 
• practicing high-road employment principles in relation to municipal employees
• championing worker issues through public leadership 

While other reports have done an excellent job of exploring local action on specific issues like paid sick leave, living wages, and creation of worker boards, this report identifies and examines the broader trend of increased local action and analyzes the landscape of cities and other localities’ pro-worker actions in a comprehensive way.

Why it matters: Policies and enforcement that protect the rights of workers, ensure workers are able to meet their basic needs, and support workers’ efforts to organize are foundational to building healthy, thriving, and equitable communities. Working people in the United States today face multiple crisis situations that not only adversely impact their well-being, but also undermine the health and well-being of communities. Outdated labor laws are skewed against workers trying to form and join unions, and workers who try often face retaliation and other violations by employers. Public enforcement resources are inadequate, and workers are increasingly unable to bring their claims in court because of forced arbitration. In this context, cities and localities are vitally important and necessary actors in the effort to expand and enforce workers’ rights. They are close to their residents, and often are nimble and fast-moving in responding to emerging needs. A few cities (along with a few states) are also at the vanguard of innovating on policy and piloting new approaches to expanding and protecting workers’ rights. There is very meaningful work currently happening at the local level, with untapped potential for much more local action. 

What can be done about it: Local policymakers, enforcers, advocates, and community members can work together to pilot new local laws, create dedicated labor enforcement agencies and worker boards, develop strategic community enforcement partnerships, and use permits to drive compliance. Localities can fight abusive state preemption that impairs the abilities of local governments to build upon minimum standards set at the state level. Unions, worker advocates, and the public can think creatively about how to enact measures within their own localities and press for action. Other actors and observers in this space—federal and state government, the media, funders, academics, and more—should develop a greater understanding of the emerging role of cities in protecting working people. They should work to institutionalize and chronicle protecting and supporting workers as part of our understanding of what localities do. This report offers a road map of opportunities to enact policies at the local level that advance workers’ rights and improve working conditions.

Executive summary

In recent years, cities, counties, and other localities have become innovators and leaders in standing up for working people. Responding to increased inequality, degraded working conditions, and insufficient or inconsistent worker protections at the state and federal level, localities have in many cases joined states as the “laboratories” of experimentation (as Supreme Court Justice Louis D. Brandeis described) in relation to workplace matters.1 A number of localities have come to view protecting workers and improving their conditions as part of their core municipal function.

This report provides an overview of some of the most noteworthy ways in which localities have taken action on behalf of working people in recent years:

• Some localities have established dedicated local labor standards offices that enforce workers’ rights laws; educate employers, workers, and the public about these laws; and in some cases help formulate or inform municipal policy in this area.
• Localities have established ongoing worker boards or councils to provide workers with a formal role in local government and/or access to local officials and agencies.
• Other localities have focused on passing local worker protection laws, including ordinances regarding minimum wages, paid sick leave, and fair scheduling; industry-specific protections for sectors with high violation rates or specific vulnerability (such as the domestic worker, gig, hotel, retail, fast-food and freelance industries); broader anti-discrimination protections; and specific laws responsive to the COVID-19 pandemic.
• Localities are actively enforcing local worker protection laws, including with funded community partnership models in some instances.
• Some localities have established job quality standards for contractors, while others have established legal consequences (including denial and revocation) for applicants for initial or renewed municipal permits or licenses who have a history of wage theft violations or unresolved labor standards orders.
• Localities are demonstrating how to be a high-road employer of municipal employees, including by incorporating labor standards like higher minimum wages and paid sick leave, and enabling or facilitating collective bargaining among workers in local government.
• Active localities and local elected and appointed government leaders are exerting leadership in the public sphere, through education and outreach about labor laws, issuance of reports, convenings and public hearings, and use of the bully pulpit.

Federal—and in some cases state—preemption creates some limitations on what localities can do to expand and protect workers’ rights. Preemption occurs when federal or state law prevents subordinate levels of government (in this case, municipalities) from legislating or acting on a given issue. Still, local governments have considerable opportunity to take meaningful action on behalf of the working people within their jurisdictions.

The time is ripe for local action to advance workers’ rights. Working people are expressing dissatisfaction with worsening working conditions by resigning, forming and joining unions, and demanding change. 

Overview and introduction

Policies and enforcement that protect the rights of workers, ensure that workers are able to meet their basic needs, and support workers’ efforts to organize are foundational to building healthy, thriving, and equitable communities (Bhatia et al. 2013; USC ERI 2020). Working people in the United States today face multiple crisis situations that not only adversely impact their well-being, but also undermine the health and well-being of communities. The COVID-19 pandemic has led to many workplace clusters. Federal and state workplace measures have been varied, yet insufficient, to provide adequate protection from the virus.

Even before the pandemic, working people had been experiencing a multitude of serious challenges. Two widespread challenges are wage theft—the practice of employers failing to pay workers the full wages to which they are legally entitled—and misclassification of workers as independent contractors—the practice of employers labeling workers as independent contractors, rather than employees, to avoid paying unemployment and other taxes on workers and covering them with workers’ compensation insurance. Outdated labor laws are skewed against workers trying to form and join unions, and workers who try often face retaliation and other violations by employers (McNicholas 2019). Public enforcement resources are inadequate, and workers are increasingly unable to bring their claims in court because of forced arbitration (Hamaji et al. 2019). Employers who fail to pay unemployment or other taxes deprive public coffers of resources needed for programs serving important human needs (Erlich 2019). Meanwhile, the labor market itself is skewed—workers’ wages have not kept up with their productivity (Mishel 2021), and corporate concentration along with anti-competitive practices add to workers’ challenges in getting a fair wage (Stansbury 2021). These challenges have fallen hardest on workers of color and workers in low-wage industries.

Federal and state leaders who wish to take action on these thorny and deep-seated issues often face significant obstacles when they seek to pass laws, promulgate regulations, or take other steps responsive to workers’ needs. Such challenges can be even greater in relation to emerging developments in the workplace.

Supreme Court Justice Louis Brandeis famously described states as laboratories of public policy experimentation.2 In relation to workers’ rights, U.S. localities3 have been true laboratories of experimentation in recent years (Diller 2014).4 Historically, the federal government and states have been responsible for workplace regulation; over the years, cities and localities have not generally taken a leading role.5 But in roughly the past decade, cities and localities have become increasingly important actors in expanding and enforcing workers’ rights—what some commentators have called the “municipalization” of labor law (Sarchet 2021).

Cities and localities have introduced cutting-edge laws that do not exist at the federal or state level (including some responsive to newly emerging problems); established new offices devoted to protecting workers; used their contracting, licensing, and permitting powers to drive employer compliance; and implemented new methods of enforcement, including close and even funded partnerships with worker and community organizations. Such action by localities has occurred not only in traditionally worker-friendly regions, but also in progressive cities located within more conservative states. (Efforts in such locales have often, but not always, been met with state-level preemption measures, as noted by Blair et al. 2020 and Wolfe et al. 2021). And in some cases, such as the expansion of paid sick days, policy leadership at the local level has provided proof of concept and helped build momentum for states (and earlier in the pandemic, even the federal government) to take action. Local government action on workers’ rights also often reflects efforts to address local conditions when it comes to cost of living, dominant and emerging industries, and the needs and organizing of specific communities (especially communities of color and immigrant communities).

This report provides both an outline and a road map: an outline of actions that cities and localities have taken in recent years to protect workers, and a road map of possible policy and enforcement options for local leaders, both elected and appointed, to consider.6 Such actions include:

• establishing a dedicated department, office, or subagency within city government focused on worker issues
• creating boards or councils that provide workers with a voice, a role, and/or access to local government
• passing laws that create new and essential rights for workers
• enforcing worker protection laws, including through strategic, innovative, and/or collaborative approaches
• leveraging contracting, licensing, and/or permitting powers to raise and address worker issues
• incorporating high-road employment practices and labor policies in relation to their own municipal workforces
• using soft powers, including community education and outreach, issuance of reports, and other “bully pulpit” vehicles for reaching the community and highlighting worker needs and available resources

Notably, some cities and localities have taken meaningful action to protect workers and advance their rights and well-being during the COVID-19 pandemic; more should follow suit. This report also outlines a number of measures taken at the local level in response to COVID-19.

This report is intended not only for local leaders, but also for labor unions and worker advocates, to help deepen their understanding of policy and enforcement levers at the local government level in order to guide advocacy and collaborative governance efforts. This report can also inspire academics and other researchers to study local efforts to advance workers’ rights. Finally, policymakers at all levels of government should pay attention to the innovative solutions advanced by localities. ​​

At least 20 localities have created or are creating dedicated local labor agencies

A number of localities have created agencies specifically dedicated to enforcing workers’ rights under local ordinances, including laws addressing minimum wages,7 wage theft, paid sick and safe leave, fair scheduling/fair workweek requirements requiring advance notice of scheduling, fair chance hiring laws, gig worker rights, and more. Several of these agencies are also charged with analyzing and potentially proposing local labor policies. In other instances, localities do not have a dedicated stand-alone office, but units of other municipal agencies focus specifically on workers’ rights matters. And some localities without dedicated units have tasked specific government entities with enforcing wage theft or paid sick leave laws, such as a city manager, treasurer, or attorney; office of human rights; unit of the mayor’s office; or other officials (A Better Balance n.d.b.; Boulder 2022; Pinellas OHR n.d.; Miami-Dade WTP n.d.).8

Creation of a dedicated unit within local government focused on workers’ rights can be transformative. It ensures that municipal public servants will be involved in worker protection in a continuous, proactive, ongoing, and in-depth manner. It allows specialized staff to develop expertise on the relevant municipal laws and policies, as well as deep knowledge of issues affecting local workers. Where there is a dedicated worker-focused office in local government, staffers can develop ongoing relationships with relevant stakeholders like worker advocacy groups, unions, immigrant rights advocates or service providers, employment lawyers, and employer associations, as well as other relevant government enforcement agencies at the local, state, and federal levels. A dedicated office also can be mobilized to address emerging needs, including those that arose in the COVID-19 pandemic. Most importantly, establishment of a dedicated office institutionalizes and embeds the work within local government, ensuring the focus on workers and their challenges will continue beyond a particular administration.

Jurisdictions with dedicated agencies, subdivisions, or staff include Berkeley (California), Boston, Chicago, Denver, Duluth (Minnesota), Emeryville (California), Flagstaff (Arizona), Los Angeles City, Los Angeles County, Minneapolis, New York City, Philadelphia, San Francisco, San Jose, Santa Clara County (California), Seattle, St. Paul (Minnesota), and Tacoma (Washington).9 In addition, the San Diego County Board of Supervisors voted in 2021 to create a county labor office, and the San Diego City Council followed suit in 2022 by voting to create a labor enforcement office in a new Compliance Department.10 Tucson, Arizona, voters in 2021 passed a ballot initiative to create a local minimum wage and also a city Department of Labor Standards.11 Numerous Florida localities have created wage theft enforcement or mediation programs of various kinds: Broward County (complaint form), Miami-Dade County, and Pinellas County.12 Via court order, Palm Beach County created a Wage Dispute Division within the county civil court.13

More dedicated units to enforce workers’ rights are likely on the horizon. For example, a legislative proposal resulting from the work of an Earned Sick and Safe Leave Task Force is currently under consideration in Bloomington, Minnesota (population of approximately 90,000), home of the Mall of America.14 The city manager there has stated that two full-time equivalent staffers (one attorney and one paralegal) would be needed for this work.15

Snapshots of several local agencies in cities of varying size:

Berkeley, California (Pop. 124,321): The Workplace Enforcement and Standards Unit was created in 2014. It currently has a single full-time equivalent (FTE) employee, who also holds nonlabor-related responsibilities in addition to enforcing the city’s minimum wage, living wage, paid sick leave, and other laws (U.S. Census Bureau 2022a).

Chicago (Pop. 2.7 million): Chicago’s Office of Labor Standards, housed in the Department of Business Affairs and Consumer Protection, began operating in 2019 (its official launch date was in 2020). As of June 2022, the office has eight FTEs. It enforces the city’s minimum wage, wage theft, paid sick leave, fair workweek, COVID and vaccine anti-retaliation laws, as well as a law effective in January 2022 requiring employers of domestic workers to provide them with written contracts (U.S. Census Bureau 2022b).

Denver (Pop. 715,522): Denver Labor, created in 2019, is a division enforcing wage and hour laws located in the Denver auditor’s office. The office has 25 FTEs, and it enforces the city’s minimum wage laws, as well as a number of laws related to government work: a minimum wage applicable to city contractors, the city’s prevailing wage, the city’s living wage, and more. The office also has a community education emphasis: there are full-time community education staff and an annual outreach/education plan, including radio and internet ads, weekly online training, hundreds of outreach events, and multilingual written materials (U.S. Census Bureau 2022c).

Duluth, Minnesota (Pop. 86,697): Enforcement of Duluth’s earned sick and safe time law (effective in 2020) is handled through the equivalent of one employee housed in the city clerk’s office (U.S. Census Bureau 2022d).

Los Angeles City (Pop. 3.9 million): The Office of Wage Standards in the city of Los Angeles was created in 2015. It is authorized to have 30 FTEs, although in February 2022, this figure included nine vacancies. It enforces the city’s minimum wage, paid sick leave, and fair chance hiring laws (U.S. Census Bureau 2022f). (The county of Los Angeles has a separate enforcement agency that enforces the county’s own workplace laws.)

Minneapolis (Pop. 429,954): The Labor Standards Enforcement Division was created within the city’s Department of Civil Rights in 2016. The office has five FTEs, and it enforces the city’s paid sick and safe time, minimum wage, wage theft, and freelance worker protections laws, as well as a law giving hospitality workers the right of recall, which will sunset one year after the COVID-19 public health emergency (U.S. Census Bureau 2022g).

New York City (Pop. 8.8 million): New York City’s Office of Labor Standards and Policy was created in 2016, and is housed in the Department of Consumer and Worker Protection (DCWP). (That agency was long known as the Department of Consumer Affairs; its name changed in 2019 (Greenbaum 2019) in part to convey the agency’s focus on workers as well as consumers.) In 2021, the office had 33 FTEs. While it lacks jurisdiction to set a city minimum wage, the office enforces the city’s Paid Safe and Sick Leave Law, Freelance Isn’t Free Act, and the Fair Workweek Law in retail and fast-food, as well as several new cutting-edge laws, including a “just cause” termination law giving fast-food employees protections against arbitrary termination, and a law giving food delivery workers greater control over their working conditions and authorizing DCWP to set a minimum pay rate (U.S. Census Bureau 2022h).

Philadelphia (Pop. 1.6 million): In the June 2020 primary election, voters of Philadelphia overwhelmingly approved a ballot question to amend the city charter to create a city department of labor, demonstrating widespread public support for municipal involvement in workers’ rights issues (U.S. Census Bureau 2022i; Ballotpedia n.d.). The head of the Philadelphia Department of Labor is the deputy mayor for labor, holding a high-profile position within city government. The Office of Worker Protections, located within the department, has a total of nine FTEs, and enforces wage theft, paid sick leave, and fair workweek laws; laws covering specific industries (domestic worker bill of rights, wrongful discharge of parking employment, recall and/or retention of hotel, travel and hospitality workers); and more. The office established a domestic worker task force and has been tasked with creating a portable benefits system for domestic workers (Orso 2020), likely to be the nation’s first. In addition, in 2020 and 2021, the office partnered with worker organizations on a citywide effort on the Philadelphia Worker Relief Fund (MF Phila. n.d.; Cox 2020), which distributed more than $2.2 million to 2,820 families left out of COVID-19 government relief (Philadelphia 2020a). The office also collaborated on a referral system with the city health department’s COVID-19 containment unit to mediate paid sick leave when workers reported exposure.

San Francisco (Pop. 873,965): San Francisco’s Office of Labor Standards Enforcement (OLSE) was created nearly 20 years ago (San Francisco n.d.a; SF OLSE n.d.e). The office has 30 FTEs, and currently enforces more than 30 citywide laws, including ordinances on minimum wage, paid sick leave, fair chance employment, scheduling laws, and others, as well as a handful of other laws related to government contracting (SF OLSE n.d.f; U.S. Census Bureau 2022j).

San Jose (Pop. 983,489): San Jose’s Office of Equality Assurance, with a staff of eleven, implements, monitors, and administers the city’s wage policies, including the living wage law applicable to city service contracts, the prevailing wage law which covers public works (construction) projects, and the minimum wage ordinance applicable to employers for work performed within the city. The Office also contracts with a number of neighboring localities to provide minimum wage enforcement services for their own local minimum wages. For example, in 2020, the City of San Jose entered into contracts with the nearby cities of Burlingame, Cupertino, Milpitas, Redwood City, San Carlos, San Mateo, Santa Clara, South San Francisco, and Sunnyvale; maximum compensation under the contracts is $40,000 to $45,000 to cover a period of two and a half to three years. This arrangement allows smaller localities to functionally pool resources in order to have their local laws enforced (San Jose 2020; San Jose n.d.; U.S. Census Bureau 2022k).

Santa Clara County, California (Pop. 1.9 million): The County’s Office of Labor Standards Enforcement was created in 2017. The office has capacity for five FTEs; four were filled as of May 2022. Among other things, the office ensures that recipients of county permits, licenses, and contracts comply with labor laws and satisfy outstanding judgments issued by the California Labor Commissioner’s Office. The office also enforces wage theft prevention and living wage requirements related to contracting, contained in Chapter 5 of the Santa Clara Board of Supervisors Policy Manual (Section 5.5.5.4) (SC BOS 2020). In 2021, the office also enforced a hazard pay ordinance related to COVID-19 (SC OLSE n.d.c; U.S. Census Bureau 2022l).

A deeper dive into Seattle’s local labor agency

Seattle’s Office of Labor Standards has grown rapidly since its creation in 2015 as a division within the Seattle Office of Civil Rights. The Office of Labor Standards became an independent, standalone city agency in 2017, and the breadth and impact of its activities provide a useful example of the potential of municipal labor agencies.

Staffing: As of February 2022, the office had 34 FTEs and one full-time temporary position. These position include a director, deputy director, communications manager, seven outreach positions, four policy-focused positions, three operations and finance positions, and eighteen enforcement officials.

Ordinances: The office enforces 18 city laws. These include laws of broad application (paid sick and safe time, fair chance employment, wage theft, and commuter benefits ordinances); laws targeting specific industries (secure scheduling ordinance for retail and food services workers, as well as ordinances protecting domestic workers, transportation network company drivers, and hotel workers); and laws enacted during the COVID-19 pandemic (paid sick and safe time for gig workers, as well as premium/hazard pay for gig workers/grocery employees) (Seattle OLS 2012, 2013, 2015a, 2015b, 2017, 2020b, 2020d, 2020e, 2020h, 2021a). Finally, on September 1, 2022, the Independent Contractor Protections Ordinance (Seattle OLS 2021b) will take effect; it will require commercial hiring entities to provide certain precontract disclosures and payment disclosures, and also requires timely payment of contracts. See Section 6 for more in-depth discussion.

Enforcement: The office has brought a number of successful enforcement actions, including in fast-food, gig economy, construction, retail, grocery, and other industries. These cases are described in Section 7.

Policymaking: The office has helped develop city labor policy in various ways. The office ran a broad policymaking process to develop two labor standards ordinances for transportation network companies (TNC) drivers, including contracting for a minimum compensation standard study (Reich and Parrott 2020). The office conducted an extensive stakeholder process and drafted the eventual TNC Driver Minimum Compensation Ordinance (Seattle OLS 2020i), which went into effect in 2021 and the TNC Driver Deactivation Rights Ordinance (DRO). The DRO provides drivers protection against unwarranted termination from companies’ platforms, a pathway to resolve deactivation disputes before a neutral arbitrator, and which created a first-in-the-nation Driver Resolution Center to provide consultation and direct representation to drivers facing deactivation, along with culturally relevant outreach and education, and other support. The Office of Labor Standards completed a request for proposal to award an 18-month contract for just more than $5 million to a community organization to get the Driver Resolution Center up and running (Seattle OLS n.d.h).16

In addition, pursuant to a city council resolution and recommendation by the city’s Domestic Workers Standards Board,17 the Office of Labor Standards will be crafting a proposal for portable paid time off for domestic workers.

Pandemic response: The Office of Labor Standards has taken numerous actions in response to the COVID-19 pandemic. In April 2020, following amendment of the city’s Paid Sick and Safe Time Ordinance (PSST) to expand PSST uses in response to COVID-19, the office conducted emergency rulemaking to ease the burden of verification for use of PSST on workers and the health care system. The office provided updated information in more than 11 languages and, with the city’s Department of Neighborhoods, increased access to this information through audio and video recordings, as well as through trainings and town hall meetings. Responding to the increase of domestic violence during the pandemic, the office also partnered on a safe leave training with a local community organization, API Chaya, and the Mayor’s Office on Domestic Violence and Sexual Assault.

The office also assisted in distribution of food vouchers and masks via community-based organizations, including the office’s Community Education and Outreach Fund partners, to workers who experienced structural or institutional barriers to accessing support from government (e.g., language barrier, fear of deportation, experienced domestic violence, did not qualify for other benefits). The community-based organizations enrolled more than 800 workers who had lost their jobs or experienced a decrease in hours or wages due to the pandemic. Each worker received $1,920 in grocery vouchers over a seven-month period.

Finally, along with the mayor’s office and the Office of Immigrant and Refugee Affairs, the Office of Labor Standards worked to increase access to unemployment funds for workers, especially for potentially misclassified gig workers and domestic workers, and also to enhance access to information about unemployment benefits in multiple languages. One effort included contracting with a community organization for three months to provide cultural- and language-specific outreach and referral assistance to transportation network company, taxi, and for-hire vehicle drivers seeking to access COVID-19-related relief resources. The community organization assisted 1,400 workers with their unemployment insurance claims in 12 languages, including Kiswahili, Nuer, Twi, and Hausa. Another effort included partnering with a local civil legal aid organization to provide training on unemployment insurance, and paid sick and safe time.

Several cities have created boards or councils to provide workers with a formal role and/or access to local government

Workers’ boards are bodies established by governments that include worker representation and that typically aim to provide workers with a voice and formal role in setting higher minimum standards for jobs in particular industries. These boards typically investigate challenges facing workers by conducting hearings and outreach activities, issuing reports on findings, and making recommendations regarding minimum wage rates, benefits, and workplace standards. By focusing on workers in specific industries, these boards are able to address industry-specific issues and involve workers and their organizations directly in governance decisions.

Professor Arindrajat Dube, based on his analysis of industry-specific wage boards in Australia, concludes that wage-setting boards “are much better positioned to deliver gains to middle-wage jobs than a single minimum pay standard” (Dube 2018); the local boards described here do not have wage-setting powers, but some may make recommendations. In 2019, the Center for American Progress issued a how-to guide for state and local governments and advocates interested in developing workers’ boards or similar structures (Andrias, Madland, and Wall 2019). The guide’s detailed recommendations include ensuring a broad mandate; requiring representative and democratic selection of members; granting boards authority to gather relevant information through hearings and investigations; granting boards authority to issue recommendations; creation of strong enforcement mechanisms to ensure compliance with new standards; and empowering worker participation in board activities by requiring employers to provide reasonable time to participate and compensating workers for their participation, among other things.

In some states, preemption of local wage or standard-setting limits potential recommendations a board could make that would result in material policy change; however, even then, workers’ boards may be able to impact local government purchasing and contracting policies, workforce development programs, tax abatement and incentive policies, economic development planning and community benefits agreements, distribution of local government funding, and workplace safety trainings. They may also be able to provide independent monitoring of local, state, and federal public health and labor laws, and inclusive economic development planning. Worker boards are a relatively new development, mostly established in the last five years.

The following are examples of several local worker boards or similar structures:

Seattle Domestic Workers Standards Board: In 2019, Seattle passed the Domestic Workers Ordinance, which along with establishing a minimum wage and entitling workers to rest and meal breaks, also created a Domestic Workers Standards Board (Seattle CC 2018). The board, members of which are appointed by the mayor and city council (and one member is appointed by the board itself), requires representation from domestic workers (including workers who are and are no members of worker organizations), employers, and the community (with an emphasis on vulnerable populations like people with disabilities) (Seattle OLS 2018a). The board is empowered to provide recommendations to the city council on workplace safety standards, discrimination and sexual harassment, training for workers and employers, access to leave, wage standards, workers’ compensation, hiring agreements, and other topics, and has been granted funding to implement these recommendations.

Detroit Industry Standards Boards: Detroit passed an ordinance in November 2021 creating a structure for industry standards boards (SEIU Healthcare 2021; Detroit 2021). A standards board in a specific industry can be established under the ordinance by the city council, at the request of the mayor, or by petition of at least 225 workers in a given industry. The standards boards are composed of workers, employer representatives, and other individuals appointed by the mayor and city council. The industry boards are tasked with investigating industry conditions, conducting outreach to workers, making recommendations as to pay, benefits, training opportunities and scheduling, and forwarding complaints to relevant enforcement agencies.

Harris County (Texas) Essential Workers Board: Harris County established an essential workers board in 2021 to advise the county on programs and policies that support essential workers. All members must be “low-income essential workers,” with at least one worker representative from each of the following essential industries: airport or transportation; construction; domestic work or home care; education or child care; grocery, convenience, or drug store; health care or public health; janitorial; food services, hospitality, or leisure services; and retail (Trovall 2021; Harris County 2021). In addition to advising the county on its overall approach to protecting essential workers’ rights and providing a public forum, the board is also tasked with providing feedback on the county’s “purchasing and contracting policies, workforce development programs, tax abatement and incentive policies, community benefits agreements, distribution of federal COVID-19 relief and recovery funds, disaster preparedness and recovery programs, OSHA trainings, independent monitoring of local, state, and federal public health and labor laws, and inclusive economic development planning.”

Durham (North Carolina) Workers’ Rights Commission: In 2019, Durham formed the Workers’ Rights Commission as an advisory body to the city council on working conditions in Durham. Except for a liaison to the city council, all members are workers appointed by the city council and must include workers from the largest employers in Durham, workers in low-wage industries, workers organized in unions, and unorganized workers. The commission aims to provide a public forum for discussion and exploration of workers’ rights, conduct studies, recommend pro-worker policies for the city council’s state legislative agenda, craft a workers’ bill of rights and develop a voluntary recognition program to reward employer compliance, propose standards to encourage all employers within the city to establish a minimum standard, support workers in union campaigns, and provide channels of communication between organized and unorganized workers (Durham WRC n.d.).

Twin Cities’ Workplace Advisory Committees: In 2016, Minneapolis created a Workplace Advisory Committee in connection with passing the city’s safe and sick time ordinance (Minneapolis 2016a). The committee is composed of representatives from organized labor, workers, and employer representatives, among others. The committee is tasked with providing advice on workplace initiatives, recommendations on community engagement, and monitoring and evaluating implementation of workplace policies (Minneapolis 2016a). St. Paul’s Labor Standards Advisory Committee (St. Paul n.d.a) advises and supports the city’s Labor Standards Enforcement and Education Division. The committee includes representatives of employers, employees, and the public, and advises in the development and implementation of policies, procedures, and rules related to the city’s minimum wage and earned sick and safe time ordinances; recommends actions to improve strategic community outreach and education efforts; supports strategic enforcement and strategic outreach; explores and recommends opportunities and resources to help small businesses; assists with community partnerships; and engages business owners, workers, and community stakeholders to gather feedback and recommendations.

Los Angeles County Public Health Councils (LA PHC n.d.): In November 2020, Los Angeles County approved a program establishing public health councils to help ensure that employers follow COVID safety guidelines. Implemented and overseen by the county’s Department of Public Health, the program empowers workers to form public health councils at their worksites to monitor compliance with county health orders in the following industries: food and apparel manufacturing, warehousing and storage, and restaurant (LA County BOS 2020). The Department of Public Health will enlist the help of certified worker organizations to conduct outreach and education to workers interested in forming public health councils.

Localities can serve as model employers in relation to their own workforces

Localities can support working people by creating good working conditions for their own municipal workforces. Nationally, about one-third of state and local employees are paid less than $20 per hour, and more than 15% are paid less than $15 per hour. In 13 states, more than 20% of state and local workers are paid less than $15 per hour (Sawo and Wolfe 2022). Women and Black workers are more likely to be employed by local and state governments, so improving working conditions for local government workers advances important equity goals (Cooper and Wolfe 2020).

A significant portion of local government employees are union members (40.2% in 2021) (BLS 2022); high unionization rates among law enforcement and teachers contribute to these numbers. Working conditions for these employees are established through collective bargaining agreements with the locality. Working conditions of nonunionized municipal workers are governed by applicable federal, state, and local laws, as well as municipal policy.

Localities can support workers by raising labor standards for their own employees regardless of union membership. They can also take steps to allow and facilitate collective bargaining by their employees.

Limited public funds can lead to concerns about the cost of supporting municipal workers in light of other pressing public funding needs. However, in addition to improving municipal job quality as a matter of values and commitment to working people, localities themselves can benefit from doing so. High-road job offerings can help attract better-qualified workers to local government and reduce turnover, both of which enable local governments to provide higher-quality public services, as well as avoiding the cost associated with employee turnover. Municipal employers are often the largest employers in many regions (Hain and Coffin 2020), and thus improved standards for municipal workers can also lead to additional benefits, like public health gains when paid sick leave prevents spread of illness, and stabilizing and stimulating the local economy in times of stagnation or recession. By exemplifying practices of a model employer, local governments also can play a leadership role for private and nonprofit employers, helping create local norms that lift local working standards generally. And collective bargaining in particular can help reduce racial and gender pay gaps, attract workers to local government, and create high-quality jobs (Morrissey and Sherer 2022).

Local governments can also support municipal workers by limiting and resisting privatization, defined as the shifting of governmental functions and responsibilities to the private sector through such activities as contracting out (Local Progress 2019). Privatization of local government functions has proliferated in the recent past, affecting services and infrastructure like water treatment, trash collection, and toll collection (Early 2021; Dutzik, Imus, and Baxandall 2009). Privatization not only denies opportunities to municipal workers who are more likely to be unionized and to have higher job standards, it also undermines democratic accountability. Moreover, projected cost savings from privatization often do not materialize, and service quality often declines under private provision (PWF n.d.b).18

Localities have raised labor standards for municipal employees

A number of localities have raised the minimum wage paid to their own municipal workforce; recent examples include Atlanta; Jersey City, New Jersey; Milwaukee; New Orleans; North Miami Beach, Florida; Tallahassee, Florida; and West New York, New Jersey (Noble 2021; Fox 2021a, 2021b; Atlanta 2017; Miami Times Staff 2021). More than 100 localities have passed paid family or parental leave policies for their municipal employees (NPWF 2020). Many local governments extended emergency paid sick leave to their municipal workers during the pandemic, and some front-loaded the annual sick leave allotment for all employees (Hain, Yadavalli, and Wagner 2020). The city of Austin distributed stipends to some city workers who continued to provide in-person services during the COVID-19 pandemic (Newberry 2020).

Localities can enable and support collective bargaining and union organizing by municipal workers

Localities also can enable or facilitate collective bargaining and unionizing among their municipal workforce. Public employee unions can be stable bargaining partners to local governments, promote labor peace, and ensure the delivery of high-quality services.19 In addition, unions reduce inequality as well as race and gender disparities (EPI 2021; Bivens et al. 2017) and boost democratic participation (McElwee 2015).

Whether or not local government workers can form and join unions varies by state and by the type of municipal worker. Many state statutes expressly authorize collective bargaining by teachers, police officers, and firefighters (Sanes and Schmitt 2014). In some states, local governments are permitted to collectively bargain with all municipal workers (Monroe 2018; Vermont 1973).20 In some states, local governments are prohibited from doing so.21 In states where collective bargaining for local employees is neither guaranteed nor prohibited by state law, localities can facilitate unionizing and collective bargaining by their own workforces by passing local ordinances permitting collective bargaining. Two states where there has been heightened attention to this issue in recent years are Virginia and Colorado. In Virginia, the General Assembly in 2020 passed a law lifting a previous ban, thereby allowing localities to recognize and collectively bargain with unions by passing an ordinance. A number of Virginia localities have since passed collective bargaining ordinances, including the city of Alexandria, Arlington County, Fairfax County, Loudoun County, and the Richmond School Board (Alexandria Magazine Living Staff 2021; Armus 2021; Olivo 2021; Loudoun 2021; Hunter 2021). In 2022, the Colorado state legislature passed a bill granting public employees the right to collectively bargain; previously localities could decide whether to grant such rights, and out of approximately 270 localities in the state, only 16 had collectively bargained contracts with any of their workers (Colorado General Assembly 2022; Miller 2022; Vo 2022; Kenny 2021). For example, Adams County, Colorado, had passed a resolution in 2017 authorizing collective bargaining for county employees.22 In states such as Colorado and Virginia, localities can explicitly grant their municipal workforce the right to collectively bargain. Cities like Louisville, Kentucky, Memphis, Tennessee, Salt Lake City, Utah, and Tulsa, Oklahoma, have recognized and entered into collective bargaining agreements with municipal unions (Louisville HR n.d.; AFSCME 1733 2021; SLC HR n.d.; Tulsa HR n.d.).

In addition, localities can emulate legislative measures taken by certain states to facilitate public employee union access to government workers in response to the Supreme Court’s decision in Janus v. American Federation of State, County, and Municipal Employees, Council 31, et al. That case held that requiring public employees to pay union fair share agency fees to cover the costs of collective bargaining violates the First Amendment (McNicholas 2018).23 The decision bars unions from requiring workers who benefit from union representation to pay their fair share of that representation, thereby reducing public employee union resources and potentially their stability. In the wake of the Janus decision, a number of states, including California, Massachusetts, New Jersey, Washington, and several others, passed measures to reduce barriers to public-sector unionization, such as by requiring public employers to allow public employee unions access to new employee orientations, and to provide public employee unions with lists of new and current employees with contact information (NCSL 2019).

Finally, the 2022 Report of the White House Task Force on Worker Organizing and Empowerment (Harris and Walsh 2022) contains a number of recommendations for the federal government to increase unionization rates among federal employees. While some of the measures contained in the report would potentially be preempted by the National Labor Relations Act, many of them could be adopted readily by local governments, such as:

• facilitating exposure to unions during the hiring process for job applicants and onboarding process for new employees, including listing information about whether a position is in a bargaining unit and the relevant union in job opportunity announcements, and encouraging agencies to offer their unions more opportunities to communicate with new hires during onboarding
• developing guidance and labor relations materials for agencies to use in trainings for managers and supervisors regarding unfair labor practices and neutrality in union organizing campaigns
• increasing and visibly supporting workers’ right to organize, including a know-your-rights initiative on the right to organize and collectively bargain

The report contains extensive analysis and practical suggestions about ways to encourage and facilitate collective bargaining.

Localities have enacted worker protection laws on a range of topics

Local governments typically have some authority to initiate legislation, subject to their authority under the relevant state constitution, state statutes, and city charters. In recent years, local governments have increasingly used this power to pass laws to advance workers’ rights.24

Laws setting higher minimum wages

In recent years, localities have often led the nation in policymaking to raise workers’ wages. The Fight for 15 campaign and other worker advocates and organizations have played a key role in seeking increased local minimum wage floors, which has paved the way for more innovative policymaking to advance workers’ rights by local governments (Meyerson 2019).25 Local wage and hour laws exist in a statutory landscape, including the federal Fair Labor Standards Act (FLSA), which establishes a federal minimum wage, overtime pay, record-keeping, and youth employment standards, and state laws that similarly establish their own state-level minimum wage and hour standards. The FLSA, and in some cases state law, acts as a floor, permitting local governments to provide more generous protections for workers. Some states, however, preempt local governments from setting higher local requirements, as discussed in further detail below (EPI 2019).

Currently, 52 cities and counties have local minimum wage laws that raise the minimum wage above the level established by state and federal governments (UC Berkeley Labor Center 2022; Lathrop 2021).26 Local minimum wages aim to keep workers out of poverty and to increase consumer purchasing power to spur economic growth. Such wages sometimes are enacted in metropolitan areas where the costs of living are higher relative to the rest of the state or region. Local minimum wages may vary in terms of wage levels, implementation timelines, and exemptions (for example, based on the size or classification of an employer, such as employers with more than 25 employees or nonprofits). Since 2012, local minimum wage increases have affected more than 4 million workers, more than half of whom are workers of color, and generated more than $33 billion in additional income for these workers each year (Lathrop, Lester, and Wilson 2021).

One way to increase the wages of many service workers without setting a higher minimum rate is for a locality to disallow the lower minimum wage that is permitted in many states and under federal law for workers who customarily and regularly receive tips (USDOL 2022b). Tipped workers are more likely to be women and people of color, and more likely to be subject to sexual harassment (Schweitzer 2021).27 In 2016, the city of Flagstaff eliminated the tipped minimum wage by referendum (Results for America n.d.). Las Cruces, New Mexico, also has enacted a higher tipped minimum wage than the state.28

In some instances, laws setting local minimum wage rates have focused on particular industries. Seattle’s Domestic Workers Ordinance requires domestic workers be paid at least the city’s minimum wage (Seattle OLS 2018a). At least four California cities—Los Angeles, Oakland, Santa Monica, and West Hollywood—have required a higher minimum wage for their hotel workers (LA DPW n.d.; Oakland n.d.; Santa Monica n.d.; West Hollywood n.d.).29

Laws addressing wage theft

Wage theft occurs when employees do not receive wages to which they are legally entitled for their work, including paying workers less than the minimum wage, not paying overtime premiums to workers who work more than 40 hours a week, or asking employees to work “off the clock” before or after their shifts. Cooper and Kroeger (2017) investigated just minimum wage violations, and found that in the 10 most populous states in the country (California, Florida, Georgia, Illinois, Michigan, New York, North Carolina, Ohio, Pennsylvania, and Texas), 17% of eligible low-wage workers reported being paid less than the minimum wage, amounting to 2.4 million workers losing $8 billion annually. Cooper and Kroeger estimate that workers nationwide lose $15 billion annually from minimum wage violations alone. A 2021 study found that more than $3 billion was recovered on behalf of workers by federal and state enforcers and through private litigation (Mangundayao et al. 2021).

In addition to setting up dedicated enforcement agencies and ensuring that these agencies are robustly funded to pursue violations, local governments can pass laws to address the problem of wage theft. For example, Denver passed a wage theft ordinance that classifies wage theft as a criminal misdemeanor and empowers the city attorney’s office to prosecute claims of $2,000 or less and seek restitution (Denver 2021).

In some instances, such measures may be a way for cities preempted from setting minimum wage rates to nonetheless have an impact on wage-related concerns and to protect workers within their jurisdiction from predation and abuse. Numerous localities in Florida have passed ordinances setting up administrative processes that make it easier for workers to file a complaint and recoup stolen wages without retaining a lawyer. In Florida, Miami-Dade County led the way, followed by Alachua County, Broward County, Hillsborough County, Osceola County, Pinellas County, and the city of St. Petersburg (Huizar 2019b). These ordinances set out a procedure for administrative resolution of wage theft claims by first allowing workers with claims of more than $60 in unpaid wages to settle claims with the city’s help. If those claims are not resolved, workers then may proceed to a hearing where the employer may be exposed to additional penalties (Miami-Dade WTP n.d.). An analysis of the Miami-Dade County Wage Theft Program found that between its adoption in 2010 and September 2014, workers recovered $2,039.83 in unpaid wages, on average, an amount researchers found was “well above the average recovered by federal enforcement” (RISEP-FIU 2014).

Finally, more wage theft protections at the city level may be on the horizon. The Austin (Texas) City Council passed a resolution in early 2022 directing the city manager to develop an ordinance on wage theft, with stakeholder input.30 Houston and El Paso, Texas, had previously passed similar resolutions (Ramirez 2022).

Paid sick and safe leave

Presently, 19 cities and counties have laws requiring employers to permit workers to take time to recover from an illness or care for a sick loved one and to be compensated for that time (A Better Balance n.d.b, 2021).31^, 32 Now 14 states and Washington, D.C., also have passed laws requiring paid sick leave (A Better Balance n.d.b), but local governments first led the way. For example, Jersey City, New Jersey, first enacted a paid sick leave ordinance in 2013, followed by 12 additional cities before a statewide law took effect in 2018.33 Research shows that paid sick leave ordinances effectively slow and reduce the spread of contagious illnesses by reducing the likelihood that workers will go to the workplace sick (otherwise referred to as sick presenteeism) (WCEG 2020). Especially for workers in low-wage industries, paid sick leave provides economic security when facing illness. Meanwhile, research has shown that businesses do not find such laws to be particularly burdensome once they are in effect. For example, a study of New York City employers revealed that “[b]y their own account, the vast majority of employers were able to adjust quite easily to the new law, and for most the cost impact was minimal to nonexistent” (Appelbaum and Milkman 2016). Moreover, 86% of the employers surveyed expressed support for the paid sick days law.

Local paid sick leave laws vary—i.e., exemptions for smaller employers, how family and loved ones are defined, the rate at which workers accrue sick time, and when workers start to earn sick time and whether it rolls over. However, many of them were developed with the technical assistance of groups like the nonprofit organization A Better Balance (A Better Balance n.d.a), and therefore have similar features. They generally provide somewhere in the range of 40 to 48 hours of leave annually, and prohibit retaliation against workers for taking leave.

Some of these laws also create a right to “safe leave” for situations in which workers or their family members are victims of domestic violence, stalking, and sexual assault (A Better Balance 2019). Safe leave laws can be used, for example, to obtain a protective order, access social services, or relocate.

Fair scheduling

Eight cities—Chicago; Emeryville, California; New York City; Philadelphia; San Francisco; San Jose, California; SeaTac, Washington; and Seattle—have laws to ensure workers have predictable schedules, more opportunities for existing employees to work, and sufficient periods of rest between shifts (A Better Balance 2022c). This set of policies, which have commonly been referred to as fair workweek or fair scheduling laws, have been championed and implemented because workers, particularly in the service sector, commonly receive their weekly work schedules only a few days in advance, and their scheduled work hours and workdays often change substantially from week to week. Fair workweek laws were first passed at the local level (Fair Workweek Initiative n.d.), paving the way for state-level action; Oregon has now adopted a statewide fair scheduling law.

Research suggests that unstable and unpredictable work scheduling practices undermine workers’ health and well-being and also lead to economic insecurity and income volatility, and that the fair workweek law in Seattle increased not only schedule predictability, but also subjective well-being, sleep quality, and economic security (Harknett, Schneider, and Irwin 2021). Most fair scheduling laws cover specific industries, such as retail or fast-food. They require covered employers to provide an initial estimate of a worker’s schedule upon hiring, advance notice of schedules, and compensation (predictability pay) for employer-initiated schedule changes with less than the requisite notice; workers also typically have the right to decline shifts that do not allow for a requisite period of rest, and the right to request a modified schedule.

In addition, because many workers in the relevant sectors seek additional work hours, fair workweek laws generally require employers to offer additional hours to existing employees before hiring new staff. Such laws also typically include provisions that prohibit employers from retaliating against workers for exercising rights under fair scheduling laws. Fair scheduling laws differ as to which employers are covered (typically limited by size and industry), notice and rest times, the level of predictability pay, and the like. San Francisco’s Family Friendly Workplace Ordinance specifically entitles workers to request a flexible or predictable schedule to assist with caregiving responsibilities, and requires employers to engage in an interactive process with the worker (San Francisco 2013).

Laws governing platform companies in the ‘gig’ economy

Almost all federal and state laws governing the workplace protect employees and not independent contractors. Platform companies in the so-called “gig” economy, in which workers are hired via apps, treat workers as independent contractors instead of as employees, thereby avoiding the obligations of an employer. This practice has led to considerable litigation, including lawsuits by the attorneys general of California and Massachusetts, alleging that such workers are misclassified (Gerstein 2020). Employer misclassification of workers as independent contractors is a longstanding, pervasive problem affecting millions of workers annually (Rhinehart et al. 2021).

New York City and Seattle have both passed ordinances creating various rights and protections for these workers, even as the cities have refrained from determinations about employee status. In 2018, New York City passed legislation34 empowering the relevant regulatory agency, the Taxi and Limousine Commission (TLC), to set minimum pay rates; accordingly, later that year, the TLC issued a rule (NYC TLC 2018) setting a minimum pay standard based on a study it had commissioned (Reich and Parrott 2020). In 2020, Seattle passed a similar ordinance (Seattle OLS 2020i) setting minimum pay for transportation network company drivers. New York City has also passed legislation35 allowing a city agency to set minimum payments for third-party (typically app-based) food delivery and courier providers. A comprehensive proposal to improve pay and transparency about working conditions for such workers was passed in 2022 by the Seattle City Council (Bull 2022, Taylor 2022a).

Seattle also passed a Transportation Network Company (TNC) Driver Deactivation Rights Ordinance (Seattle OLS 2021l), which grants drivers the right to challenge unwarranted deactivations before a neutral arbitrator, and creates a Driver Resolution Center to provide representation for drivers.36

Finally, in 2021, New York City passed a series of policies to protect delivery workers whose precarity was made clear during the COVID-19 pandemic (Figueroa et al. n.d.). An organization of bicycle delivery workers, Los Deliveristas Unidos, played a significant role in advocating for the new law (Los Deliveristas Unidos n.d.; City Staff 2021). The policies include a requirement that restaurants allow delivery workers to use their restrooms as long as they are picking up an order; minimum per-trip payments; transparency for customers and workers about tips (whether the tip goes to workers, in what form, and on what timeline); a prohibition on fees for receiving payment and a requirement that payments are made weekly, including at least one option that does not require a bank account; a prohibition on charging workers for insulated delivery bags; and permission for workers to limit their personal delivery zones (Sugar 2021).

Protections for freelancers or independent contractors

Minneapolis, New York City, and Seattle have passed laws to aid freelancers and independent contractors in securing timely payment for their work. Because such workers are not generally protected by employment law, they often face challenges in securing payment for their work, which is enforced by contract law and therefore typically requires securing legal counsel for any enforcement action (Yang et al. 2020). These local ordinances protecting freelancers require a written contract that includes certain written terms (e.g., pay rate and payment schedule) for a value greater than a minimum amount, require payment within 30 days of completion of the contract, offer protection against retaliation, and set up an administrative enforcement process. In 2022, the New York State legislature passed a state-level Freelance Isn’t Free Act based on New York City’s model (Maher 2022).

Protections against discrimination

Although the focus of this report is labor standards, not discrimination, it is worth noting that local governments have passed laws to expand protections from employment discrimination beyond what is protected under federal and state law. These local laws are typically enforced by local fair employment practices agencies (FEPAs), which are typically separate from agencies that enforce labor laws that regulate workers’ wages, hours, and benefits. For example, at least 330 local governments have passed nondiscrimination ordinances protecting workers from discrimination at work on the basis of sexual orientation, and at least 225 have done so to protect workers from discrimination on the basis of gender identity as well (MAP n.d.; HRC n.d.). Some local ordinances also protect workers from discrimination on the basis of marital or partnership status, family status, immigration status, status as a veteran, credit history, caregiver status, sexual and reproductive health decisions, salary history, weight and height, and status as a victim of domestic violence, stalking, or sex offenses (Vanderbilt 2012; Eidelson 2022; Brown 2002). In addition, federal employment discrimination protections only apply to employers with 15 or more workers, and local ordinances also often cover smaller workplaces (Clampitt n.d.). New York City in 2022 included domestic workers in the law prohibiting workplace discrimination (NYC CHR 2021). In addition, San Francisco in 2017 passed a law requiring employers to provide a reasonable break for a worker desiring to express breast milk for their child and to provide a space for lactation, other than a bathroom, that is shielded from view and intrusion (San Francisco 2017).

Several types of local anti-discrimination laws are described in more detail below.

Fair chance hiring

At least 22 local governments have passed laws requiring private and public employers to consider a candidate’s job qualifications before inquiring about a candidate’s criminal history—commonly referred to as “ban-the-box” or “fair chance” policies (Avery and Lu 2021). They may also prohibit consideration of certain types of past offenses, or require hiring entities to consider evidence of an applicant’s rehabilitation. Even more cities and counties have adopted fair chance hiring for their vendors’ or their own hiring. Fair chance policies vary as to the size of covered employers, when a background check is permitted in the job application and interview process, penalties, and enforcement.

Salary history bans

At least 20 local governments have passed laws prohibiting employers from inquiring about a job applicant’s salary history during the hiring process (HR Dive 2022; AAUW 2022).37 These ordinances seek to remedy systemic pay discrimination against women and people of color by allowing applicants to negotiate a salary based on their qualifications and earning potential, rather than being measured by their previous salary. Some local ordinances apply to private employers operating in the jurisdiction, whereas others apply only to local government hiring processes.

Pay transparency law

In January 2022, New York City became the first city38 to enact a pay transparency law,39 which requires employers to list a minimum and maximum salary for positions located in the city. This type of pay transparency law helps curb pay inequities. The law amends the New York City Human Rights Law (NYCHRL), the city’s ordinance that protects against employment discrimination, and makes any failure to post salary ranges an “unlawful discriminatory practice.” Ithaca, New York also passed a similar pay transparency law in May 2022 that applies to any employer with more than three permanent workers based in Ithaca (Zerez 2022).

Crown Act

Twenty eight municipalities, including New York City, have passed laws prohibiting discrimination based on a worker’s hairstyle or hair texture (NYC CHR 2019). Often known as the Crown Act (NAACP LDEF n.d.), these laws aim to address the impact of natural hair-based discrimination Black workers face in the workplace.

Protections against wrongful termination

Throughout the United States, almost all states have what is known as at-will employment; employers may terminate workers for reasons unrelated to job performance, as long as they are not discriminatory, retaliatory, or otherwise violative of the law. Just cause protections prevent employers from legally firing workers without warning or explanation (Tung, Sonn, and Odessky 2021). Such laws promote economic security and stability for workers and their families; they also protect workers from retaliation for raising concerns about violations of workplace laws.

Both Philadelphia and New York City have adopted ordinances that prohibit employers in certain industries from arbitrarily terminating employees. In Philadelphia, parking workers may only be terminated for just cause (which requires progressive discipline) or a bona fide economic reason (Philadelphia DOL 2021). New York City passed similar legislation applicable to fast-food workers (NYC OM 2021e).40 That legislation was recently upheld in the face of a legal challenge.41

In addition, in the wake of Hurricane Irma in 2017, the Miami-Dade Board of County Commissioners passed an ordinance (Miami-Dade Cty. 2018) prohibiting employers from retaliating or threatening to retaliate against nonessential employees for complying with county evacuation or other county executive orders during a declared state of local emergency.

Worker retention laws

Some localities have passed laws to protect workers’ employment when services are contracted out or when a contract changes hands (see Weil 2014, Weil n.d. on the “fissured workplace”). At least four cities (Hoboken, Newark, New York City, and Philadelphia) have passed laws that generally require successor contractors that operate in those cities to retain employees for at least 90 days, provide written offers of employment, retain employees by seniority, and maintain a preferential hiring list of employees not retained (Keon 2021; Kiefer 2022; Hoboken n.d.b., Jackson Lewis P.C. 2016). These laws differ in the categories of workers that are covered; Philadelphia’s ordinance provides the broadest coverage including security, janitorial, building maintenance, food and beverage, hotel service, and health care services workers (Keon and Sopher 2021). Unlike the policies addressing contractors discussed in Section 8, these ordinances apply to all contractors and subcontractors, not only those contracting with the relevant local government.

Industry-specific protections

Workers in certain industries may be subject to specific harms or be especially vulnerable to violations of the law. As a result, some local governments have passed laws specifically protecting workers in those industries.

Domestic workers

Chicago, Philadelphia, and Seattle have passed laws to provide domestic workers’ rights. In Seattle and Philadelphia, domestic worker bills of rights seek to ensure healthy working hours, sufficient earnings, and protections from sexual harassment and other exploitation. There are 2.2 million domestic workers in the United States—these housekeepers, child care workers, and home care workers are overwhelmingly (91.5%) women and are likely to be people of color, born outside of the United States, and older than other workers (Wolfe et al. 2020). Domestic workers are three times as likely to be living in poverty as other workers, and often are not protected by federal and state labor laws (Wolfe et al. 2020).42 Bill of rights ordinances typically provide domestic workers with meal and rest breaks, paid time off, and protections from sexual harassment and discrimination. Seattle’s law also created a Domestic Workers Standards Board, which provides a forum for employers, domestic workers, worker organizations, and the public to consider, analyze, and make recommendations to the city on other possible legal protections and standards for domestic workers (Seattle OLS 2018a). Chicago and Philadelphia have laws that provide domestic workers with the right to a written contract in English, as well as the language preferred by the worker (Chicago Dept. BACP 2021b; Philadelphia 2021b; Esposito 2021).

Hotel workers

At least seven cities have passed laws requiring hotels to equip workers with panic buttons, GPS-enabled devices that alert security when activated, and other protections (Hotel Tech Report 2022; Oakland OCA 2019). Entering a hotel room occupied by a visitor often places workers at risk of sexual harassment and assault, and data show that women in the hospitality and restaurant industries have the highest rates of sexual harassment on the job (Campbell 2019). In addition to requiring panic buttons, local ordinances typically require notice in each hotel room indicating that workers are equipped with panic buttons, and, in some cases, require hotel employers to develop and comply with a sexual harassment policy, take safeguarding steps after receiving an allegation of harassment, and prohibit retaliation for reporting sexual harassment or assault (UNITE HERE Local 1 2022; West Hollywood CC 2021). At least five cities have also passed laws regulating workloads, including regulation of hours and amount of work denoted in maximum square footage cleaned in a day (Stokes and Sarchet 2018; Santa Monica 2019; Sarchet 2021; Wagner 2020; Seattle OLS 2020f; Emeryville 2022). A few localities require additional payments from employers to increase health care access, and preferential hiring to retain workers when hotel ownership changes (Wagner 2020; Sarchet 2021; Santa Monica 2019).

Fast-food workers

New York City in 2017 passed a law, which is no longer in effect, requiring fast-food employers, upon authorization by an employee, to deduct voluntary contributions from workers’ paychecks and remit them to a nonprofit organization (not a labor union) designated by the employee (NYC n.d.c).43 The voluntary contributions were intended to enable and facilitate such workers having support and assistance from an organization advocating on their behalf, addressing work-related issues and other matters affecting working people.

Grocery workers

Los Angeles, New York City, and San Francisco have grocery worker retention policies that require new grocery store owners to retain employees of the previous owner for a 90-day transitional period after a change in ownership of the grocery store (NYC OLPS n.d.a; PWF n.d.e).44 The ordinances also establish a review process through which workers will be considered for continued employment.

Car wash workers

New York City’s car wash accountability law requires car washes to obtain a license to operate (NYC DCWP n.d.a). In addition to a license application, car washes must provide proof of workers’ compensation insurance, proof of disability benefits insurance, proof of commercial general liability insurance, and proof of unemployment insurance. Notably, car washes must also post a surety bond (also known as a wage bond) to cover potential wage claims as a condition of doing business.

Adult entertainment workers

Minneapolis in 2019 passed an ordinance requiring adult businesses to give workers copies of their contracts, post rules for customer conduct and workers’ rights, and prohibit retaliation against workers who report violations (Otárola 2019). Under the law, managers and owners are also prohibited from taking tips from workers, and workers will be provided security escorts when leaving after a shift. The ordinance also requires businesses to follow standard cleaning procedures, clear tripping hazards, and install security cameras to monitor all areas where entertainers interact with customers.

Wage standards and other requirements for local contractors or license/permit holders

Many localities have placed requirements on their contractors, including prevailing wage laws, living wage laws, and responsible bidder rules. In addition, some localities have created requirements for license or permit holders, in relation to compliance with labor laws or disclosure of past violations. Section 7 contains a detailed discussion of local laws affecting government contractors, and those affecting license and permit applicants and holders.

Higher labor standards for airport workers

Airports throughout the country are owned and operated by public entities—local and state governments, and regional entities composed of such governments (NASEM 2017).45 These public entities have required minimum wages for contractors and vendors at airports as a condition of being permitted to operate there. Many airport workers are low-paid; research has shown declining or stagnant wages, and poor working conditions (Sainato 2018; Editorial Board NYT 2018; Houston n.d.; Dietz, Hall, and Jacobs 2013). The Service Employees International Union (SEIU) has catalyzed airport-driven wage increases as a way to improve the working conditions of poorly paid janitorial, catering, food service, and other workers in airport facilities.

In places where local governments have authority to regulate the airport, many localities have exercised this authority to require all airport contractors to pay a higher minimum wage than the wage broadly required within the surrounding jurisdiction. Counties that have taken such action include Broward County (Fort Lauderdale, Florida) and Miami-Dade County, Florida (Miami-Dade Cty. n.d.a, n.d.b; Broward 2021). Cities taking similar action include Chicago, Denver, Houston, Los Angeles, Oakland, Philadelphia, Portland, Oregon, St. Louis, San Francisco, and San Jose, California (Spielman 2022; SEIU 2019; Houston n.d.; LAWA n.d.; Philadelphia CC 2021b; Holton 2021; Philadelphia CC 2021a; Port of Portland 2020; Port of Oakland 2001, 2021; STL Air Portal n.d.; SF OLSE n.d.d; Aitken 2021). In some instances, additional labor standards are required of airport contractors; for example, San Francisco also applied its health care ordinance to airport workers (San Francisco 2020), and the city of Los Angeles includes a worker retention provision (LAWA n.d.).

Some localities like Miami-Dade County, Philadelphia, and San Francisco, require certain contractors operating at the airport to enter into labor peace agreements with labor unions (LAWA n.d.).46 A labor peace agreement generally requires the employer and union to waive certain rights under federal law with respect to union organizing (for example, neutrality and nonopposition to the union on the employer side and a promise not to strike, picket, or disrupt the employer’s operations on the union side) to ensure uninterrupted workflow or, in the case of government, uninterrupted delivery of public services. In addition, the city of SeaTac, Washington, does not contain Seattle’s airport, but largely surrounds the airport; it passed an ordinance setting minimum employment standards for hospitality and transportation industry employers that requires higher wages for hotels and other businesses in the airport’s immediate vicinity (SeaTac n.d.).

Protecting workers and public health during the COVID-19 pandemic

Local governments have played a crucial role in protecting public health and worker safety during the COVID-19 pandemic. Especially given the failure of the federal government to take actions to protect worker safety in the beginning of the pandemic—and then subsequent action by the U.S. Supreme Court preventing the federal government from implementing a vaccine-or-test standard for workplaces—local and state governments have had to take emergency action to protect workers and public health (Rosenberg 2021; Totenberg 2022). Given that COVID-19 spreads through airborne transmission of respiratory droplets from infected people, protecting workers from contracting and spreading COVID-19 also plays an important role in protecting overall community public health and safety. Moreover, because of racial health disparities and the overrepresentation of people of color as essential workers, Black and Latino workers have been and remain at higher risk of contracting and developing serious complications from COVID-19 (UIC SPH 2021).

Local governments have used myriad authorities and programs to address the challenges facing workers during the pandemic, including emergency authorities often pegged to the duration of a local public health emergency order.47 Local governments—most typically by mayoral executive order—have used these emergency authorities to issue stay-at-home orders, as well as masking, testing, quarantine, and vaccination requirements (Foster n.d.; Kim and Romero 2021). For example, in December 2021, New York City’s mayor issued an order requiring all workers who perform in-person work or who interact with the public to be vaccinated (NYC DOH n.d.). These orders were typically enforced by local public health departments which, in some places, have taken complaints from workers and taken enforcement actions to stop workplace spread. Although these local public health measures are not always tied to the workplace, they are crucial to worker health and safety by ensuring that workers can stay home when necessary and reducing the likelihood of unmasked interactions.

In addition to the specific policies and programs intended to protect workers and public health during the pandemic outlined below, local governments also have established worker boards to hear from workers affected by the pandemic;48 mounted public education campaigns to inform workers, employers, and patrons about COVID safety at work (SAW LA n.d.); provided personal protective equipment (PPE) to employers for distribution to workers (St. Louis 2020); and set up funds for undocumented workers who were excluded from unemployment insurance and other federal funding (MF Phila. n.d.).

Paid sick leave: Modifications, enforcement, and emergency policies

As discussed above, 19 local governments have permanent paid sick leave laws. At least 16 local governments have made clear that paid sick leave may be used when their workplace or their child’s school or child care facility is closed due to a public health emergency (A Better Balance 2020, 2022b).49 Philadelphia, San Francisco, and Seattle temporarily limited employers from requiring a doctor’s note for employees to take sick leave (Philadelphia OMD 2020; SF OLSE 2020; Seattle OLS 2020g).

In addition to clarification and enforcement of permanent paid sick leave policies, local governments have also enacted emergency paid sick leave policies to supplement or extend federal emergency protections.50 For a period, the federal Families First Coronavirus Response Act required employers with fewer than 500 employees to provide workers with paid sick leave or expanded family and medical leave for reasons related to COVID-19, including the need to quarantine, care for an individual in quarantine, or care for a child whose care or schooling has been disrupted by the pandemic. Several local governments have passed paid sick leave legislation that supplements federal protections, for example by applying to employers with more than 500 workers, adding eligibility by permitting workers to take paid leave because they are older than 65 or are particularly vulnerable to COVID-19, and expressly permitting workers to take leave for vaccination-related illness (A Better Balance 2020). Local governments like Burlington, Vermont; Flemington, New Jersey; Shelby County, Tennessee; and Wilmington, North Carolina, enacted such emergency paid sick leave policies for their local government employees (A Better Balance 2020). Philadelphia51 and Seattle52 have passed emergency paid sick leave policies that extend to food delivery and transportation gig workers. Los Angeles County passed legislation requiring employers to provide additional paid leave for vaccination and recovery for workers who had exhausted their paid leave (LA County LED 2021).

Protection against retaliation in connection with workplace safety

Los Angeles County and Philadelphia passed ordinances prohibiting employer retaliation against workers in connection with workplace safety and compliance with COVID-19 public health orders. Los Angeles County’s law prohibits any adverse action by an employer against a worker for blowing the whistle on noncompliance with public health orders; discussing any perceived noncompliance with the county, other employees, or members of a public health council; belonging to a public health council; or informing employees of their rights under this ordinance (LA LED 2020; LA County n.d.). Notably, Los Angeles County’s law does not sunset. Philadelphia’s law53 prohibits employers from taking any adverse action against a worker for refusing to work in unsafe conditions if the worker reasonably believes the employer is operating in violation of a public health order and has notified the employer. An anti-retaliation law passed in Chicago (Chicago Dept. BACP 2022) protects against retaliation in relation to compliance with COVID-19 public health orders.

Hazard and premium pay

More than two dozen local governments in California and in the Seattle metropolitan area passed laws mandating hourly hazard pay bonuses of typically $4 or $5 per hour for grocery store workers (Egan et al. 2021; King 5 Staff 2021). Some laws also cover drugstore employers and vary as to the size of the employer covered (Kinder and Stateler 2021). Seattle also passed an ordinance providing food delivery gig workers premium pay on a per pick-up and drop-off basis (Seattle OLS 2020c).

Right to recall

At least 18 cities (Fair Hotel 2021) have passed laws—commonly referred to as “right to recall” or “right to return” laws—to protect workers in certain affected industries that were laid off during the pandemic. In particular, the leisure and hospitality sector accounts for 39% of total jobs lost due to the pandemic, which disproportionately affected workers of color (Huang 2021). These laws require employers to offer positions that become available first to qualified laid-off workers, typically in order of seniority. The laws vary as to which employers are covered (hospitality, event centers, commercial real estate), and whether laid-off workers can become qualified for the position with the same training that would be provided to a new employee hired into that position, enforcement, and notice. Detroit also passed a resolution in support of the right of recall, but is preempted by the state of Michigan from enacting an ordinance to that effect (DeVito 2021). Five cities have also applied this right to recall to changes in ownership of the employer (Fair Hotel 2021).

Severance

Shortly after emergency federal unemployment insurance relief in response to the COVID-19 pandemic expired, New York City passed a severance law requiring hotels with at least 100 rooms to pay a weekly severance of $500 per employee per week to laid off-employees for up to 30 weeks until the hotel has recalled 25% or more of its employees or reopened to the public (Moss 2022).

Vaccination

In addition to providing emergency paid sick leave for vaccination and recovery, local governments also have partnered with worker organizations to promote vaccination. Philadelphia partnered with the National Domestic Workers Alliance to transport workers to vaccine sites, where city officials addressed concerns by providing information about paid sick leave laws. Houston partnered with SEIU to deliver vaccines to janitors (Gerstein and Salas 2021).

Discrimination

San Francisco ​​enacted an ordinance prohibiting employers from discrimination based on exposure to or having tested positive for COVID-19 (SF OLSE n.d.b). Employers are prohibited from taking any adverse action (i.e., firing, threatening to fire, suspending, disciplining, rescinding an offer) against a worker because the worker tested positive for COVID-19 or is isolating or quarantining due to COVID-19 symptoms or exposure.

Federal and state preemption should be considered but still permit considerable action on workers’ rights matters

Preemption occurs when a higher level of government (for example, the federal or state government) restricts or withdraws the authority of a lower level of government (such as a city council) to act on a particular issue. While a detailed discussion of preemption is beyond the scope of this report, it is important for local governments to consider potential preemption by federal or state law.

Federal preemption

An analysis of federal preemption starts with the question of congressional intent: Did Congress intend to displace state or local law? Federal preemption limits some possibility for local action on workers’ rights, but still leaves significant room for legislation, enforcement, contracting consequences, and other local innovation. Some relevant federal laws and points to consider are as follows:

• The National Labor Relations Act (NLRA) guarantees and regulates the right of private-sector workers to organize into unions, bargain collectively, and take collective action to improve their working conditions. NLRA preemption is quite broad, and for workers covered by the NLRA, local and state governments are preempted from regulating workers’ rights to form and join labor unions or to bargain collectively with their employers, employer speech about unionization, and bargaining rules and obligations (Sachs 2011). Notable exceptions are when a state exercises traditional police powers; also when a state or local government acts as a “market participant,” it enjoys the same freedom to structure its labor policies as a private party and is not limited by NLRA preemption. Thus, local governments can require contracts to honor prehire agreements, for example.57 Moreover, local governments are free to enact labor laws that otherwise would be preempted by the NLRA for workers who are not covered by the law (i.e., farmworkers and domestic workers).
• The Occupational Safety and Health Act (OSH Act) regulates workplace safety nationally. It only preempts local and state action when there is a standard set by the Occupational Safety and Health Administration (OSHA) addressing a particular and specific workplace hazard (Flanagan, Gerstein, and Smith 2020). However, even if there is an OSHA standard, a local law, regulation, order, or government action will not be preempted if it protects the general public; to wit, laws of “general applicability (such as laws regarding traffic safety or fire safety) that do not conflict with OSHA standards and that regulate the conduct of workers and non-workers alike would generally not be pre-empted.”58 For example, a New York City building code provision regulating cranes was found not to be preempted because it protected not only workers, but also the “safety of the general public in the vicinity.”59 In addition, 21 states and Puerto Rico have become OSHA-approved “state plans” (USDOL OSHA n.d.) that regulate private-sector workplace safety and health themselves; they are subject to OSHA oversight and their provisions must be as protective of workers as OSHA standards and regulations (USDOL OSHA n.d.).60 In such states, federal OSHA preemption would not apply.
• There is no preemption of local standards that are more protective of workers under the Fair Labor Standards Act (FLSA), which sets the floor for minimum wage, overtime pay, record-keeping, and youth employment standards nationwide.61 In other words, the FLSA does not preempt higher minimum wages at the state and local levels.
• As a general matter, exercise of traditional police powers (civil or criminal) does not lead to preemption concerns. Longstanding principle in preemption cases requires courts to “start with the assumption that the historic police powers of the states are not to be superseded…unless that was the clear and manifest purpose of Congress.”62 For example, criminal prosecutions of employers, or civil tort lawsuits, for conduct that would also give rise to occupational safety and health violations generally would not be preempted (Flanagan, Gerstein, and Smith 2020).

State preemption

Local policymaking to advance and expand and protect workers’ rights, as well as other progressive causes, is substantially hindered by the emergence of state preemption used in a punitive manner (Briffault 2018).63 In particular, conservative state legislatures have increasingly preempted local efforts to increase the minimum wage, guarantee paid sick leave, require fair scheduling, regulate gig employers, and set prevailing wages for municipal contracts (Wolfe et al. 2021). For example, at least 26 states have passed preemption laws to prohibit local governments from setting minimum wages higher than the state minimum wage (EPI 2019). The preemption of local policies to support workers’ rights is most common in the South and Midwest, where these laws are part of a long history of efforts to limit the rights and freedoms of Black people (Blair et al. 2020; Wolfe et al. 2021). Even a progressive state like Washington recently moved in this problematic direction when the state legislature passed a bill on transportation network companies (like Uber and Lyft) that preempts any local regulation of the industry.64

An encouraging development in this area occurred in Colorado, when the state in 2019 reversed its prior preemption of local labor standards, providing cities and worker advocates in other states with potential lessons in how to do the same elsewhere (Huizar 2019a).

Even in the face of state and local preemption, there are still opportunities for localities and local government leaders to take action to protect workers: passing legislation that is not preempted; setting high standards in relation to local government employees; conducting extensive know-your-rights outreach and public education about workers’ rights; supporting pro-worker state legislation; conducting research and issuing reports on worker issues; documenting the extent of labor violations; promoting labor compliance by local government contractors, permit-holders, and licensees; and advocating for an end to state-level preemption. In addition, the Local Solutions Support Center and National Employment Law Project have created resources to assist localities in making assessments regarding preemption of desired action (Huizar 2021; LSSC 2020a, 2020b).

Enforcing local worker protection laws

This section provides examples of the enforcement cases brought by local labor agencies in recent years. However, it is important to note that the case descriptions are just a sampling of enforcement work performed at the city level, based on publicly available media coverage and press announcements. Only a few city agencies routinely issue news releases or disclose employer information about their investigations. More could recognize news releases as a tool in their worker protection toolkit, given the documented impact (Johnson 2020) of deterring employer violations by issuing press releases in workplace enforcement.

Some office websites include dashboards, posted annual reports, or other compilations of enforcement work, which should be consulted in conjunction with the below case descriptions, in order to obtain a fuller picture of the work being done. For example, Denver Labor, a division of the Denver Auditor’s office created in 2019, posts restitution stories (Denver n.d.b) on its website, summarizing the office’s enforcement work, including industry of employers, type of work, amount of money recovered, and the number of workers involved, although it does not mention specific employer names. The Seattle Office of Labor Standards has a Resolved Investigations (Seattle OLS n.d.e) section of its website, with detailed information about closed cases, and in 2021 released a press announcement (Seattle OLS 2021h) commemorating the office’s six-year anniversary and detailing accomplishments in that time. In addition, a number of offices post annual or periodic reports that include information not only about enforcement actions, but also about legal developments, outreach and public education activities, regulations issued, and more. (See Section 9 for more detail).

In addition to dedicated labor standards offices, it should be noted that city and county attorneys, who represent local government entities in legal proceedings, have sometimes enforced local worker protection laws. Some city and county attorneys have criminal authority to prosecute misdemeanors, but they typically bring and defend civil suits on behalf of local governments. Many city and county attorneys have the authority to enforce local ordinances to protect workers, although such enforcement is uncommon in many jurisdictions. In some states, they also have the authority to enforce select state laws,65 and they also can bring impact litigation on behalf of local governments (Justice Catalyst et al. 2019). In some cases, city or county attorneys have enforced workplace laws, either independently or in conjunction with municipal labor standards offices or other government entities.66 District attorneys, and in some places county or state’s attorneys, are responsible for criminal enforcement, and are increasingly using those powers to prosecute employer crimes involving serious violations of workers’ rights. In some jurisdictions, they have authority to bring civil cases as well.67 Criminal prosecutors have also been increasingly active in bringing charges against employers to protect workers’ rights (Gerstein 2021). In addition, some local auditors and controllers also enforce workplace laws. For example, in New York City, the comptroller plays a significant role in enforcing prevailing wage and other laws within the city (NYC Comptroller n.d.), and the city controller also enforces Pittsburgh’s prevailing wage ordinance (Pittsburgh 2010). Local departments or agencies that focus on contract enforcement may also enforce worker protections and standards in local governments contracts (LA City BCA n.d.). While enforcement action by these various officials is noteworthy, the cases outlined below generally include those brought by local labor standards agencies.

Examples of enforcement

In the compilation of cases below, where the same employer has committed multiple violations of law, to avoid duplication, cases are listed in one category only.

Paid sick leave

Enforcing paid sick leave laws has been a significant focus for many local agencies, particularly since these laws often exist only at the local level. New York and Seattle have been particularly active in this area. Agencies have obtained restitution for workers, as well as reinstatement in some cases. In some instances, settlements have also included crediting workers with additional paid sick leave in the future. New York City required Starbucks to educate the public about paid sick leave laws through posters in public areas, and Minneapolis required a home health agency to train all managers and staff on the relevant law.

New York City’s Department of Consumer and Worker Protection has enforced paid sick leave laws in multiple industries, with noteworthy cases involving fast-food, home care, and airline industry workers.

• The department conducted multiple investigations of paid sick leave violations involving home health agencies, including a 2021 collaborative case with the New York state attorney general’s office resulting in the recovery of up to $18 million for 12,000 home health aides at two agencies that underpaid workers and did not provide paid sick leave. In 2022, the department also reached settlements involving two domestic workers who had been denied paid sick leave (NYC DCA 2018a; NYC OM 2020a, 2021c; NYC DCWP 2022).
• Fast-food industry cases include a $155,000 settlement with a McDonald’s franchisee in 2019 (also involving fair workweek violations); an ongoing case against Chipotle, in the midst of which the city obtained reinstatement for a worker who had been unlawfully terminated; and a 2019 settlement with Starbucks, jointly with the New York state attorney general’s office, in which the company agreed to create a $150,000 restitution fund for employees whose rights had been violated, and to promote public education about the paid sick and safe leave law by requiring Starbucks to post an educational poster about paid sick leave in public locations in all New York City stores (NYC OM 2019b, 2020c NYC OM 2019c).
• The department in 2019 sued American Airlines for violating the paid sick and safe leave law by assigning disciplinary points and thereby illegally retaliating against workers for taking leave. American Airlines later sued New York City challenging the law. The case was ultimately settled in 2021; the airline agreed to pay workers restitution and to comply with the law going forward. The department in 2021 also settled a case involving a Southwest Airlines ground crew worker who was illegally fired for using sick leave; the resolution required reinstatement and payment of restitution. And in 2020, the department settled a case with an American Airlines contractor that staffed wheelchair attendants, customer service representatives, baggage handlers, and cargo agents; the contractor was required to pay more than $100,000 in restitution, and also to credit workers with additional prospective paid sick leave (NYC DCWP 2019b, NYC OM 2021b, 2021d, 2020b).
• In one case involving a law firm that violated the paid sick leave laws, the department obtained a hearing officer decision requiring payment of $172,000 to the worker (NYC DCWP 2019a).
• The Department of Consumer and Worker Protection settled two cases involving domestic workers who were denied paid sick leave (one was fired for using sick leave and for filing a complaint, ultimately losing their housing as a result) (NYC DCWP 2022).
• New York City’s law also requires paid safe leave to be used by those experiencing domestic violence, human trafficking, stalking, or similar offenses; the office in 2020 obtained a $25,000 settlement in its first paid safe leave case (NYC DCWP 2020b).

The Seattle Office of Labor Standards in 2011 recovered (Seattle OLS 2021i) more than $290,000 from a cleaning company for paid sick leave and other violations, including not paying for all hours worked, paying subminimum wages, and making unauthorized deductions from workers’ pay for training and other costs. In 2021, Seattle’s Office of Labor Standards resolved a paid sick and safe leave (Seattle OLS 2021c) involving Compass, a multinational food service company with hundreds of thousands of employees worldwide.

The Labor Standards Enforcement Division of the Minneapolis Department of Civil Rights has brought a number of paid sick leave enforcement cases, including against the national sandwich shop Jimmy John’s (Mahamud 2021) and a local gas station (Minneapolis 2018), as well as a home care business (Du 2021). In that last settlement, the division required the employer to train managers and staff on the relevant law, and to credit all workers with 80 hours of sick leave.

Chicago’s Office of Labor Standards in 2021 reached (Chicago OM 2021) paid sick leave settlements (Channick 2021) with a Burger King franchisee, recovering more than $458,000 in restitution for workers plus $100,000 in city fines, and with global snack food company Mondelēz Global LLC, recovering $476,000 in restitution for workers plus $95,000 in fines.

Wage theft

Some city agencies have authority to enforce municipal minimum wage or other wage-related laws. Wage theft68 cases brought by city enforcement agencies include the following.

Seattle’s Office of Labor Standards has been a national leader in enforcement activities in this area. Cases include:

• a $2 million settlement with a Domino’s franchisee in 2022 based on the employer paying workers below the city’s minimum wage and failing to pay overtime when employees’ work at multiple locations led to workweeks in excess of 40 hours; the case also involved fair scheduling violations (Seattle OLS 2022a)
• a 2022 settlement for more than $250,000 with a national traffic control company that paid below the city’s minimum wage, among other things (Seattle OLS 2022b)
• a finding in 2021 that construction contractors and subcontractors were jointly and individually liable for $2 million in underpayment based on a host of violations, including unauthorized deductions from workers’ paychecks, subminimum wages, uncompensated work time, nonpayment of overtime, and failing to provide paid sick and safe time (Seattle OLS 2021g)
• a 2021 settlement for more than $290,000 with a cleaning company for minimum wage paid sick and safe time violations, and retaliating against workers (Seattle OLS 2021i)
• a 2019 settlement for $182,000 with two Hyatt hotels that were paying a lower minimum wage for small employers instead of the applicable higher wage, and a $686,000 settlement, also in 2019, with a staffing company based on similar violations; the office also reached a $120,000 settlement for underpaid home care providers (Seattle OLS 2019d, 2019c, 2019b)
• after finding wage theft and other violations by two painting contractors, the office provided trainings in 2018 to the industry trade association
• the office also recovered more than $40,000 on behalf of workers with disabilities after the city eliminated a previously existing subminimum wage for such workers
• in one 2018 case involving a restaurant that had retained workers’ tips and failed to provide paid sick time, the employer apologized to employees (Seattle OLS 2018c, 2018d, 2018b)

Other local enforcement actions include a 2018 settlement (Minneapolis 2018) for $20,000 with McDonald’s by the Labor Standards Enforcement Division of the Minneapolis Department of Civil Rights, and a 2021 lawsuit (Chicago Dept. BACP 2021c) by the city of Chicago against DoorDash that focused on other legal issues, but also contained allegations that the company illegally retained workers’ tips.

In addition, Denver Labor reported (Denver OA 2021a) multiple successful enforcement actions in 2021 involving cases under the city’s minimum wage law, contractor minimum wage law, and prevailing wage law. Minimum wage cases included investigations involving a local restaurant, home improvement sales workers, a national retailer, a janitorial company, a fast-food chain, and a hair salon; sample prevailing wage cases involved a custodial contractor at the Denver Zoo, a crane contractor on a federal prevailing wage project, and solar power contractors at Denver International Airport.

COVID-19 pandemic-related enforcement

Seattle’s Office of Labor Standards has brought several actions enforcing the city’s gig worker paid sick and safe time law passed in June 2020. These enforcement actions have resulted in a $3.4 million settlement with Uber (Seattle OLS 2021d), a nearly $1 million settlement (Seattle OLS 2021e) with Postmates, and a $160,000 settlement (Seattle OLS 2021f) with DoorDash, all in 2021. In addition, the office recovered (Seattle OLS 2021j) more than $330,000 for 101 wine and alcohol shop workers who did not receive hazard pay as required by city law, as well as more than $100,000 (Seattle OLS n.d.g) for workers for the gig delivery company Go Puff. Los Angeles County also took enforcement (LA County CBA 2021b) actions against a number of employers based on pandemic-specific workplace protections, including a grocery store that failed to pay “hero pay” (also known as premium pay during the pandemic), and a construction company that terminated a worker for requesting indoor use of face coverings. Pursuant to New York City’s Grocery Worker Retention Act, the city’s Department of Consumer and Worker Protection filed a case (NYC DCWP 2020c) against a Bronx supermarket in 2020 and resolved it several months later (NYC DCWP 2021a) with payment of restitution and reinstatement of most of the discharged workers.

Protections for gig workers and freelancers

The broader issue of classification of workers for app-based driving and delivery companies generally has been playing out at the federal and state, and not local, level. The issue has emerged, for example, in relation to state laws on wages, workers’ compensation, and unemployment insurance (NELP 2019).69 However, there have been some instances of localities challenging misclassification of such workers as independent contractors rather than as employees. In other cases, several cities have created municipal-level wage, paid sick leave, or other protections that apply broadly, including for so-called gig workers, and have taken action to enforce those municipal laws in relation to app-based companies.

In addition to the COVID-19-related cases brought by Seattle described above, other cases include a civil lawsuit (SF ODA 2021) against the cleaning company Handy filed in 2021 by the district attorneys of Los Angeles and San Francisco, as well as a 2021 letter inquiry (Fox, Marchese, and Shimko 2021) regarding Handy’s potential misclassification, sent by the Seattle and Chicago Offices of Labor Standards and the Philadelphia Office of Worker Protections. Also, in 2021, the San Francisco city attorney, San Francisco Office of Labor Standards and Enforcement (OLSE) and a city supervisor announced (SF OCA 2021) a $5.3 million settlement with DoorDash, the largest in the OLSE’s history, after an investigation into allegations of violations of San Francisco’s paid sick leave law and a separate health care security ordinance (SF OLSE 2022), which creates an employer spending requirement to fund health care benefits (health insurance, dental, or vision coverage) for employees in the city. In 2020, OLSE reached a settlement of nearly $750,000 with grocery delivery company Instacart (Said 2020).

In addition, New York City agencies have taken action to enforce the city’s Freelance Isn’t Free Act (NYC DCWP n.d.e), which gives freelance workers (NYC DCA 2018c) the legal right to written contracts, timely payment, and freedom from retaliation. In late 2021, the New York City Law Department and Department of Consumer and Worker Protection announced (NYC OM 2021f) a lawsuit (NY Supreme Court 2021) against French global fashion media company L’Officiel, based on a pattern of failing to pay freelancers on time or at all, including writers, editors, photographers, videographers, graphic designers, and illustrators. According to DCWP, the agency has received 2,024 complaints from freelancers since the law’s inception in 2017, and has helped freelancers recover more than $2.1 million in owed compensation for their work.

Fair scheduling laws

Several cities have fair scheduling or fair workweek laws, which require employers in certain industries (usually retail and/or fast-food) to provide workers with their schedules with advance notice. These laws ensure that workers can plan for child care, elder care, education, second jobs, and other responsibilities, without having the insecurity of unstable and unpredictable schedules. In some cases, fair workweek laws also require employers to offer current part-time workers additional hours before hiring new employees, thereby increasing opportunities for full-time employment.

Seattle’s Office of Labor Standards has resolved a number of investigations under its secure scheduling ordinance, including recovery (Seattle OLS n.d.f) in 2020 of nearly $2 million from Macy’s in a case involving more than 800 workers, and recovery (Seattle OLS 2020a) that same year of more than $600,000 from Fred Meyer’s supermarkets in a case involving approximately 750 workers. In 2019, Seattle resolved a secure scheduling case (Seattle OLS 2019a) involving two franchises operating nine Jack in the Box locations and employing more than 500 workers.

New York City’s fair workweek law applies only to fast-food employers, and the Department of Consumer and Worker Protection has brought a number of actions. Most notably, in 2021, the department sued (Scheiber 2021) fast-food chain Chipotle for extensive and ongoing violations at several dozen stores, alleging that workers are owed $150 million as a result. The 2021 filing followed a prior case (NYC OM 2019a) in 2019. New York City also enforced its fair workweek law in cases involving McDonald’s and Pizza Hut (NYC OM 2021a) locations, the owner of 30 KFC stores (NYC DCA 2018b), and multiple other fast-food employers (NYC DCWP 2020a).

Philadelphia’s fair workweek law covers service, retail, and hospitality workers. A 2021 case involved the resolution (Reyes 2021a) of allegations of violations by a local Target.

Additional cases: Just cause termination rights, health care, and consumer protection

In addition to the broad categories described above, offices also have brought cases under other laws to protect workers and consumers. For example, in 2021, the New York City Department of Consumer and Worker Protection announced (NYC DCWP 2021b) the resolution of its first investigation of a termination of two Subway workers in violation of a new city law (NYC OM 2021e) protecting fast-food workers from being fired without just cause or for a bona fide economic reason. And in a consumer-related case, the department settled charges against (NYC DCA 2017) a large New York City parking garage company that began charging monthly customers an additional “living wage fee” after an increase in the city’s minimum wage under state law. The San Francisco city attorney has worked with the Office of Labor Standards in bringing cases under the city’s health care security ordinance, including a 2019 lawsuit (SF OCA 2019) against a tour bus company, and recovery in 2014 of $1.34 million from a janitorial company (SF OCA 2014).

Funded strategic enforcement partnerships with worker organizations

Some local labor agencies have explicitly and formally included worker organizations in aspects of the labor law enforcement process, by contracting with community organizations to support community partnerships that conduct public education and outreach, and refer violations to the enforcement agencies. Such relationships are sometimes referred to, most commonly by worker advocates, as “co-enforcement.”

This model has long existed at the federal level: The Occupational Safety and Health Administration (OSHA)’s Susan Harwood Training Grant Program since 1978 has awarded grants to nongovernmental entities, including worker organizations, “to provide training and education programs for employers and workers on the recognition, avoidance, and prevention of safety and health hazards in their workplaces and to inform workers of their rights and employers of their responsibilities” under the Occupational Safety and Health Act.

Several local agencies in more recent years have created similar formal, funded partnerships with worker organizations, including unions, worker centers, and community-based organizations. Some of these organizations played a role in advocating for what is now the longest-standing local program of this type, in San Francisco (Patel and Fisk 2017). The city was a forerunner in creating its community partners program was established under a 2006 amendment to the city’s minimum wage law, requiring the Office of Labor Standards Enforcement to create a community-based education and outreach program focused on workers in particular industries (San Francisco 2011).

The Office of Labor Standards in Seattle has a Community Outreach and Education Fund that grants money to community organizations focused on workers who experience high rates of workplace violations, including women, workers of color, immigrants and refugee workers, LGBTQ workers, workers with disabilities, veterans, and youth workers. The most recent round of grants was announced (Seattle OLS 2021k) in December 2021; nearly $3 million in funding will be provided over two years to nine organizations that will provide outreach, education, and support to low-wage workers. The office also has a Business Outreach and Education Fund (Seattle OLS n.d.a), which provides assistance and outreach to small businesses owned by low-income and historically disenfranchised communities, in order to increase their compliance with city labor laws. For the two-year period starting in January 2021, the fund committed $1.1 million to five organizational grantees. In 2021, the office also granted $50,000 to an organization to provide outreach to domestic employers about their obligations.

In 2021, the Chicago Office of Labor Standards announced (Chicago Dept. BACP 2021a) a $100,000 grant, funded in part by the city and in part by the Chicago Foundation for Women, to the nonprofit Arise Chicago. The funding is for outreach and education on city labor laws, with additional activities focused on domestic workers: providing trilingual trainings in developing contracts, and offering template contracts in Spanish, Polish, and English, among other things.

A Minneapolis ordinance requires the development and implementation of “a multilingual and culturally specific outreach and community engagement program to educate employees and employers about their rights and obligations under this chapter…[with] media, trainings and materials accessible to the diversity of employees and employers in the city.”70 Accordingly, the Office of Labor Standards has devoted $300,000 annually to contracting with community organizations for these purposes. The Centro de Trabajadores Unidos en La Lucha (CTUL)(CTUL n.d.) is a grantee and also helps administer the contract; in 2021, CTUL subcontracted also to Awood (a worker center serving the East African community) (Awood n.d.) and the local chapter of Restaurant Opportunities Centers United (ROC-United n.d.; Walsh 2021).

Finally, the Santa Clara County Office of Labor Standards Enforcement also provides funding for education and outreach to community-based organizations providing services to workers and businesses in Santa Clara County (SC OLSE n.d.e, n.d.b, and n.d.a).

Localities have created labor standard requirements and consequences for their government contractors, and for applicants/holders of licenses and permits

A considerable number of businesses interact with localities not just as regulated entities, but also as government contractors or vendors, or as holders of local government-issued permits or licenses. These relationships present opportunities for localities to improve working conditions or drive compliance with worker protection laws. Local governments may have more ability or leverage to positively affect employer conduct in these situations, when businesses are actively seeking approval, funding,71 or a contract from the government.

In relation to contractors or vendors, localities may wish to ensure their contracting funds family-supporting employment, not low-road, underpaid, precarious jobs. They may wish to ensure contractors do not win contracts through a race to the bottom on working conditions. They may also be aware of the practical benefits of contracting with companies that employ highly skilled unionized workers, where turnover and job disruptions may be reduced and product quality may be higher. Or they may wish to ensure their contractors—even if they are not high-road employers—at the very least do not have a history of violating basic workplace and other laws. This report provides a general overview of some options, but localities wishing to achieve these goals should consult more comprehensive and informative resources on this topic (Walter and Madland 2015; Walter, Rowell, and Wall 2020; IIIFFC 2017).

Before approving license/permit applications or renewals, localities may wish to ensure that applicants and license/permit holders are financially responsible, and that they are at least in compliance with the basic applicable workplace statutes.

In relation to contracts, permits, and licenses, localities also may wish to have laws and operations in place to allow termination of such relationships in the event of established and unremedied violations.

Accordingly, localities have passed laws and taken other actions in relation to their contractors, as well as license and permit holders.

Localities have imposed requirements related to public projects or projects seeing public approvals

Localities have imposed prevailing wage and living wage requirements on contractors, passed responsible bidder ordinances, and used project labor and community benefits agreements

Prevailing wage

Prevailing wage laws require covered government contractors to pay a wage and benefit rate based on similarly employed workers in a given geographic region (ILEPI n.d.a; Mahalia 2008). Sometimes ordinances also will require payment of prevailing wages by entities like developers and owners that receive local subsidies or tax abatements. These laws can help make sure that public funds support good jobs, and that bidders do not win government contracts through race-to-the-bottom labor practices. The federal prevailing wage laws (the Davis-Bacon and Service Contract Acts) cover federally funded construction and service contracts. Roughly half of U.S. states (USDOL 2022a) have prevailing wage laws. A number of localities do as well; for example, New York City requires payment of prevailing wage on city-contracted construction projects, to service workers (such as security guards) working for city contractors, and to service workers in residential projects that receive more than $1 million in city financial assistance with 120 or more residential units (Wall, Walter, and Madland 2020; NYC DHPD n.d.). In early 2022, San Diego County passed the “Working Families Ordinance,” which requires contractors for construction projects on county land working on projects of more than $1 million to use skilled, trained workers and pay prevailing wages. It also requires employers on county-leased land to provide paid sick leave. (Brennan 2022). Local prevailing wage laws more commonly cover construction of “public works,” or public buildings, roads, and structures, but they also may be enacted to cover service contracts with the locality as well (Walter, Rowell, and Wall 2020). Studies have found that prevailing wage laws have an overall positive economic impact, and also that costs savings were not realized in jurisdictions where such laws were repealed (Manzo IV 2018). The Center for American Progress in 2020 published a how-to guide with information for states and localities wishing to enact or expand prevailing wage laws within their jurisdictions (Walter, Rowell, and Wall 2020).

Living wage

Living wage laws require employers who receive contracts, tax benefits, or government subsidies from a locality to pay their workers a higher-than-minimum wage (PWF n.d.d; Bernstein 2002). These policies are meant to cover the cost of living, and the wage rates are often calculated based on ensuring that a family would be raised to or above the poverty threshold. Living wage policies in some cases establish different wage levels for employers who provide health insurance and those who do not. A 2011 compilation by the National Employment Law Project (NELP 2011) reported there were more than 120 localities with living wage requirements at that time.

As an example, Boston’s living wage law, enacted in the late 1990s, has as its purpose “to assure that employees of vendors who contract with the City of Boston to provide services earn an hourly wage that is sufficient for a family of four (4) to live at or above the Federal poverty level. This Chapter is also designed to maximize access for low- and moderate-income Bostonians to the jobs that are created, maintained or subsidized through service contracts with the City of Boston.”73 It covers city vendors and beneficiaries of city financial assistance. The law defines financial assistance broadly (Boston n.d.a),74 and covers any employer with at least 25 employees who has been awarded a service contract or subcontract with the city (Boston n.d.a).75 The law contains employee notice and employer reporting requirements, and a mechanism for enforcement, with potential penalties and remedies including fines, restitution, suspension of ongoing contracts and subcontract payments, and ineligibility for future city contracts for three years or until all penalties and restitution have been fully paid (Boston n.d.b).76 Companies bidding or negotiating on a service contract must complete an affidavit regarding the living wage (Boston 2022) prior to the awarding of the contract.

A major shortcoming of Boston’s law is that its formula for calculating the living wage can result in a relatively low dollar amount (the 2022 living wage is $15.87 per hour (Boston OWD n.d.), compared with the state’s 2022 minimum wage (Massachusetts n.d.b) of $14.25.

By contrast, the County of Santa Clara for 2021–2022 has a living wage set at $25.31 per hour (SC OCE n.d.) for employers who do not provide health or retirement benefits; employers who provide such benefits may pay a lower rate ($23.31 per hour with either health or retirement benefits; $21.31 per hour with both). In addition, Santa Clara County’s living wage requires77 provision of up to 12 paid days off to be used either as paid sick leave for the worker or for that worker to care for a family member or designated person.

Some city living wage laws incorporate other kinds of requirements, such as worker retention policies (PWF n.d.e). Hoboken, New Jersey, recently enacted a living wage ordinance for building service workers that includes both a monetary wage component and paid leave requirements.78 The city also passed an ordinance requiring contractors or subcontractors with a service contract in the city to ensure that when there is a change in employer, the successor employer must retain building service workers for 90 days.79 In 2022, the Newark (New Jersey) City Council passed an ordinance (TAPinto Staff 2022) to protect subcontracted janitors, security officers, and door attendants from losing their jobs for 90 days when a contract changes hands through no fault of workers.

Responsible contractor requirements

Numerous local governments have passed laws requiring contractors bidding for public projects (above a certain value) to meet certain “responsible contractor” criteria (ILEPI n.d.b). A responsible bidder ordinance is a policy that sets minimal requirements for all contractors bidding on publicly funded projects in a given political jurisdiction.

Criteria may include, for example, previous compliance with worker protection laws (i.e., laws prohibiting wage theft, misclassification. etc.), appropriate insurance coverage (i.e., for workers’ compensation), participation in a registered apprenticeship training program, and appropriate professional licenses (ILEPI n.d.b). While such requirements are based in commonsense and noncontroversial approaches, they do diverge from the frequently taken approach of awarding contracts to the lowest bidder based solely on price alone (IIIFFC n.d.d).

The Indiana, Illinois, Iowa Foundation for Fair Contracting has developed a Responsible Bidder Toolkit (IIIFFC 2017) providing guidance to municipalities wishing to pass such measures; the organization also compiled a list of nearly 50 responsible contractor ordinances in municipalities within those three states (IIIFFC n.d.a, IIIFFC n.d.b; IIIFFC n.d.c). Other localities are considering such requirements. New Orleans, for example, passed (New Orleans MO 2021) a responsible contractor ordinance after the collapse of the Hard Rock Hotel, which was under construction; three workers died in the accident. New Orleans also specified that the primary contractor would be responsible for any subcontractor violations.

Seattle’s minimum wage ordinance contains a provision disallowing employers from bidding on city contracts if they are the subject of a final order and have not paid all money owed; if an employer has been the subject of a final order twice or more within five years, the contractor cannot bid on city contracts for two years.80 Most of the city’s other labor ordinances contain similar language.

San Diego’s municipal code requires city contractors, during the term of a contract, to “comply with all applicable local, state, and federal laws, including health and safety, labor and employment, and licensing laws, that affect the employees, the worksite or performance of the contract.”81

Minneapolis bars the city from contracting with entities included on a list of companies with outstanding violations of the city’s wage theft law (Minneapolis n.d.c). The city of Omaha, Nebraska, sets contractor rules for contracts greater than $500,000. These rules include a “bid incentive” for contractors to use apprenticeship training programs (allowing them to be competitive while submitting slightly higher bids), and also require proof of workers’ compensation insurance, proper classification of workers as employees, and disclosure of subcontractors; penalties for noncompliance include withholding by the city of any payments still owed to the contractor, as well as a year of being debarred from bidding on contracts if there are two violations (Omaha n.d.).

Toledo, Ohio, has a municipal code that requires payment of prevailing wages for contracts of $10,000 or more, and prohibits awards of such contracts to bidders who have been convicted or found liable under the city’s wage-related law in the previous two years. For construction projects of more than $100,000, city law sets criteria, including continuity and experience of the workforce, local hiring, whether there is an apprenticeship program, and whether the employer provides benefits (health insurance and retirement or pension plan), as well as the bidder’s record of compliance with tax, wage and hour, and unemployment laws (Toledo n.d.b).

Other cities that disqualify contractors with a history of wage theft and other labor standards violations from winning city contracts include Cincinnati (Hussein and Coolidge 2016); Columbus, Ohio (Columbus n.d.a, n.d.b); Coralville, Iowa (Zaluska 2021); El Paso, Texas; and Houston.

In 2021, New York City amended its law to include a requirement, currently being challenged in litigation, that human services contractors and subcontractors must agree to labor peace agreements as a condition to being able to win or renew a city service contract with city agencies. Among other things, they must file an attestation that the employer has entered into a labor peace agreement with a labor union, or that no union has sought to represent their workers, and if a union seeks to represent their employees during a contract, they must enter a labor peace agreement within a set period of time (NYC n.d.a).82

Local and targeted hiring policies

Local and targeting hiring programs require or incentivize businesses that receive public dollars to hire workers from the local community, or from targeted populations in the community. Local hiring creates hiring preferences for people who live in a specific geographic area, which can be as large as an entire city or county, or as small as specific zip codes or neighborhoods. Targeted hiring refers to hiring preferences based on a range of worker characteristics, such as veteran status, gender, race or ethnicity (where allowed), residency in a low-income neighborhood, having been formerly incarcerated, having a disability, or being long-term unemployed (Gross and PolicyLink 2019). Local and targeted hiring policies can be implemented by ordinance, as part of responsible contractor standards, or negotiated as part of project labor agreements or community benefits agreements (UCLA Labor Center 2014). Baltimore’s local hire law, for example, requires compliance by vendors, contractors, and subcontractors who do business with the city, and is applicable to city-awarded contracts of more than $300,000, and city-subsidized projects of more than $5 million. The law requires businesses and all of their subcontractors to post new jobs with the mayor’s Office of Economic Development exclusively for a period of seven days, that 51% of all new hires are Baltimore residents, and for businesses and subcontractors to submit monthly reports (Baltimore OED n.d.).

Project labor and community benefits agreements

Project labor agreements (PLAs) are used primarily in the construction industry to establish the terms of employment for all workers on a project. Generally, PLAs specify workers’ wages and benefits, and may include provisions requiring contractors to hire workers through union hiring halls, otherwise establish a unionized workforce, or develop procedures for resolving employment disputes. PLA terms often also prevent workers from striking, and employers from locking workers out, during the project (Mangundayao, McNicholas, and Poydock 2022). PLAs can help eliminate costly delays caused by labor conflicts or shortages of skilled workers. While many states have policies that promote PLA use in state-funded projects, some states restrict or disallow them (Brubeck 2018; FC and SLC 2018; Von Wilpert 2017). Local governments such as those in Boston, Los Angeles, and New York City have successfully used PLAs for years; more localities could use PLAs on major projects.

Community benefits agreements are made between developers of a commercial and/or residential project and representatives of community groups where the project is being developed (PWF n.d.a). Communities can stipulate certain requirements for the projects, such as hiring from the local community, or guaranteed financial or social benefit from the project; in return, the developer receives the community’s support for the project (Island Institute 2021). Major development often occurs on city land, receives public funding or tax breaks that can accrue value to the developer, and in almost all cases require land use approvals that require the support of local government officials (PWF and LP 2019). Consequently, local governments are sometimes parties to community benefits agreements directly, may have a separate agreement with developers that is also part of negotiations, or may otherwise leverage their land use or funding powers as a part of these community benefits agreement negotiations.

Some examples of community benefits and labor peace agreements are as follows:

• In 2012, a community coalition and the city of Oakland negotiated a community benefits agreement that included requirements for local and targeted hire, living wages, fair chance hiring, limitations on the use of temporary workers, and community oversight and enforcement (PWF n.d.c).
• In 2018, the city of Nashville supported a community coalition in winning a community benefits agreement that included requirements for local hire, a $15.50/hour minimum wage, mandatory worker safety training for construction workers and supervisors, and workforce development (Porterfield 2021).
• A 2008 community benefits agreement regarding the development of the Bayview-Hunters Point neighborhood of San Francisco included a labor peace agreement in key industries related to the project (PWF n.d.c).
• Pittsburgh also has an ordinance from 1999 that requires hotel contractors and employers to sign labor peace agreements when city financing has been involved in the development of the hotel (Pittsburgh 1999).

Some localities created compliance requirements to obtain, retain, or renew permits or licenses; however, limited enforcement lessens deterrence

The licensing and permitting process can be used to drive improved labor standards and conditions; accordingly, some localities have incorporated labor-related requirements into these processes (Madland and Rowell 2017). This can take the form of requiring disclosures or evidence of compliance as part of the application or renewal process, or imposing potential permitting or licensing consequences in the event of certain established violations.

One caveat regarding the numerous laws that have been passed in this area: lack of media reports suggests very limited exercise of these powers by localities that have passed them. As with any law, the effectiveness of these provisions depends in large part on enforcement. Economists have observed that “employers will not comply with the law if the expected penalties are small either because it is easy to escape detection or because assessed penalties are small” (Ashenfelter and Smith 1979). Licensing and permitting consequences change both parts of the equation—the ease of escaping detection, and the scale of the assessed penalties. In addition, as discussed in Section 9 below, media coverage of these consequences would likely significantly drive deterrence.

Localities face several challenges in operationalizing these requirements. First, there is the need for at least some dedicated staff time on the local level to make the program work. There is also the logistical challenge of ensuring that local licensing or permitting agencies learn about serious violations, which will require proactive outreach and research. In addition, unless they are given very clear direction or mandates from the ordinance and/or from their chain of command, licensing or permitting agencies may be reluctant or resistant to imposing consequences based on workplace violations (even those that are proven and unremedied), seeing these issues as outside of their substantive purview.

There also may be concerns about revocation of a license or permit possibly leaving workers out of jobs. However, licensing and permitting provisions generally provide ample opportunities to cure, as well as a range of consequences—not only the most severe—including a period of temporary suspension for a license or permit, or a probationary period. In addition, the existence of licensing or permitting consequences could permit an agency to reach a negotiated settlement with terms to ensure future compliance, such as requiring an employer to engage an independent monitor. Such negotiated settlements or less punitive measures could in many cases be preferential to revocation.

In addition, it is likely that even one or two well-selected, well-publicized uses of these powers would achieve much of the desired deterrence in a given industry or neighborhood. Further, the limited available examples suggest that these consequences work: as described below, the Santa Clara County Office of Labor Standards Enforcement has operationalized food permit consequences for restaurants with unpaid wage-related determinations from the state labor commissioner. In response, almost all employers involved have paid what they owed in order to avoid further consequences.

In short, this tool appears to be underutilized despite its apparent untapped potential in terms of deterring violations. Localities without these laws might consider passing them, along with required annual reports on activities. Localities with such laws might wish to systematically enforce them through leveraging the license application and renewal process, and through scheduled routine checks with local, state, and federal labor enforcers, and routine searches of court filings.

Sample legislative language

Even without language specifically addressing wage theft or other labor conditions, licensing or permitting laws may contain general language with catch-all provisions that may be used for the purposes of ensuring licensees or permit holders comply with workplace laws. The Minneapolis Code (Minneapolis n.d.d) section on business license holders provides several examples of this:

• It requires license holders to“maintain and operate the business in compliance with all applicable laws and ordinances, including the zoning, fire, environmental health, environmental management, license, food, liquor, housing and building codes” (emphasis added).83 The “all applicable laws and ordinances” provides a basis for taking adverse action against a licensee based on proven violations of wage or other workplace laws.
• It requires license holders to “pay all delinquent court judgments arising out of their business and business operations.”84 This provision could provide a basis for adverse action in a situation where a judgment related to wage, discrimination, or other workplace violations remains unsatisfied.
• Finally, the code states, “The provisions of this section are not exclusive. Adverse license action, inclusive of, but not limited to, revocation, may be based upon good cause at any time upon proper notice and hearing. This section shall not preclude the enforcement of any other provisions of this Code or state and federal laws and regulations.”85 This broad “good cause” language again provides an opening for action based on workplace practices, such as persistent ongoing violations or egregious infractions.

In addition to potential use of this type of general language, some city laws specifically reference working conditions and labor violations in relation to issuance or revocation of permits and licenses.

For example, Philadelphia’s city code allows the city to “deny, suspend, or revoke any license or permit issued or pending” for a period of up to one year if the applicant or licensee was found guilty, liable, or responsible for violating the city’s anti-wage theft ordinance. In addition, all applicants for a commercial or business license must certify that they have not been found guilty, liable, or responsible for violating wage theft laws within the past three years (Philadelphia n.d.b). Similarly, Jersey City, New Jersey’s wage theft prevention law prohibits issuance or renewal of a license or permit to an applicant or entity that has been found liable for wage theft and has not come into compliance within 90 days of any final judgment. It also requires disclosure of wage theft cases within the two years prior to license or permit application, and requires the city to make an annual request to the state labor department for any wage claims (and associated documents) filed against licensees in the past two years (Jersey City n.d.).

Permits

Some localities have used the permitting process to drive labor compliance. Prior to issuance of a permit for construction of a building above a threshold size, the city of Milpitas, California, requires applicants to sign a form (Milpitas n.d.) acknowledging responsibility for complying with certain state and local labor laws. They must also sign a form certifying compliance before a certificate of occupancy will be issued for the project (Milpitas n.d.). For issuance of a special construction permit under the Quincy, Massachusetts, city code, all levels of entities involved in the project (construction manager, lead contractor, contractor, subcontractor, etc.) must comply with wage payment-related laws; if not, the city’s measures to achieve compliance include issuance of a stop-work order until there is compliance.86

Michigan City, Indiana, creates requirements for issuance of building permits for construction projects of more than $250,000, including that in the past three years, the contractor must not have been barred from bidding on public work because of, or been found to have committed, legal violations pertaining to wages, taxes, workers’ compensation, or misclassification. It also requires contractors who receive permits to comply with these laws as well, and requires the property owner applying for a building permit to use their best efforts to require all contractors to comply with these obligations. The law contains serious potential consequences, including suspension of the permit (requiring stoppage of work), or even revocation (Indiana n.d.).

The Better Builder Program in Austin, Texas, uses a carrot instead of a stick. The program, in partnership with the Workers Defense Project (WDP n.d.), provides an innovative example of creating permit-related incentives for employers willing to commit to higher labor standards. In the program, construction companies willing to ensure certain protections for construction workers on commercial projects may receive expedited handling of their permits (Austin n.d., Hasan 2017; Anderson 2017).

Licenses

A number of localities incorporate wage theft and labor compliance into their business licensing laws and practices. For example, the city of Toledo prohibits issuance of a license to any applicant who has found liable or been convicted pursuant to the city’s anti-wage theft laws or any other wage-related provisions of local, state, or federal law within the previous two years.87 The Seattle municipal code empowers the Department of Finance and Administrative Services to deny, refuse to renew, or revoke an employer’s business license, if requested to do so by the Office of Labor Standards as a result of an unsatisfied settlement or order.88

In Boston, a 2017 executive order allows the city’s licensing board to take into consideration whether a licensee has been found to have violated state or federal wage laws in determining whether to reissue, modify, suspend, or revoke a license (Boston MO 2017). A number of localities in Massachusetts have similar provisions. In Northampton, the License Commission has authority over issuance and administration of licenses for a range of types of businesses: service and sale of alcoholic beverages; operation of restaurants, hotels, inns, and lodging houses; indoor and outdoor entertainment for licensed and nonlicensed premises; car dealers; and more. When issuing a new license or a renewal, the License Commission requires completion of a Fair Wage Compliance Certificate (NLC n.d.), attesting that the business is not subject to a judgment or final determination resulting from a violation of state or federal wage protection laws. If they do not certify as such, they may be required to provide a wage bond for the time period covered by the license (Northampton n.d.). The media reported on a case in which this wage bond requirement could potentially be triggered, based on citations issued by the Massachusetts attorney general’s office (Fieldman 2021).

The Santa Clara County (California) Office of Labor Standards Enforcement is an agency that has begun to meaningfully operationalize permitting consequences for violators of labor standards laws. Data from the California Division of Labor Standards Enforcement showed that Santa Clara County workers filed the highest number of wage theft claims in the state: over a nearly five-year period, retail food vendors were found to owe nearly $5 million in back wages, an estimated $2,900 per employee. In addition, worker advocates reported on (Gleeson, Taube, and Noss 2014) the high incidence of wage theft and highlighted potential responses by local government. Accordingly, the county established a food permit enforcement program (SC OLSE n.d.d) to encourage payment of existing judgments by conditioning the issuance, renewal, or retention of food facility permits on compliance with labor standards.

If a retail food vendor is determined to be in violation of a judgment for nonpayment, the county may elect to temporarily suspend or revoke the vendor’s food health permit. The program, which is being rolled out gradually to all zip codes in the county, contains graduated measures to encourage payment of outstanding wages: the county sends three notices (a notice of outstanding judgment, notice to comply, and notice of violation, with 15 days to respond to each), and ultimately, continued nonresponsiveness or noncompliance will lead to a food permit suspension of at least five days (with notice provided to the public regarding the reason for the suspension). The county created a flow chart to explain the process, contained in Figure A. One noteworthy aspect of this process that may increase its likelihood of success and effectiveness is its focus on only one industry (restaurants), and its gradual rollout plan, based on zip codes. This kind of approach—targeting a problem industry and gradual implementation—could readily be replicated elsewhere. The county also added ongoing wage theft violation information to its “SCCDineOut” app, which allows county diners to view restaurants’ food safety records on their smartphones (Ochavillo 2019).

Figure A

Retail food vendors may have food health permit suspended or revoked for noncompliance. In addition, in 2010, the San Francisco Department of Public Health, recognizing the socioeconomic determinants of health and the poor health outcomes resulting from labor violations, incorporated certain labor elements into its restaurant permit review process, including requiring proof of workers’ compensation insurance by all applicants, as well as successfully leveraging the permitting process in relation to unremedied serious labor violations by several employers (Bhatia et al. 2013).

Localities can support workers through exercise of public leadership: education and outreach, issuing reports, holding hearings, and general advocacy

Localities have leveraged their soft powers to support workers’ rights and organizing. Local agencies devoted to protecting workers’ rights have used a range of tools to educate workers about their rights, inform employers about their obligations, and share information with the broader community about issues affecting workers. They have issued reports, conducted extensive public education and outreach, made materials available on their websites, garnered media coverage, and more. Localities without dedicated labor agencies can also use these soft powers to promote public and worker education. Moreover, local elected officials—whether individually or collectively alongside other officials and community labor groups—can use their public platforms and convening authority to provide public education and support workers, including those who are actively forming and joining unions.

Strategic communications, including use of media, is particularly important in educating workers about their rights and deterring violations. Media coverage increases employers’ knowledge about their legal obligations; it also increases their perceptions about the likelihood and cost of detection of violations. A recent study showed that press releases about OSHA enforcement of workplace safety violations deterred other workplace safety violations, an effect likely applicable to other labor standards laws as well (Johnson 2020). In addition, many workers, especially low-wage workers, have limited knowledge about the laws that affect them (Rankin and Lew 2018; Miller and Tankersley 2020). There are numerous communications tools that localities can use to reach the public (Gerstein and Goldman 2020).

Many local labor agencies have issued reports on worker issues or on their activities supporting workers

Several local agencies have issued regular reports on their activities or on the state of workers’ rights within their jurisdiction. Annual reports generally provide a comprehensive overview of an office’s work. In some jurisdictions, such as Chicago, Duluth, and St. Paul, annual reports are required by statute, a beneficial requirement that ensures transparency and continued focus on the labor offices’ work (Chicago n.d.c; Duluth n.d.; St. Paul n.d.c). In other jurisdictions, such as New York and Seattle, there are not annual report requirements per se, but other mandates for regular report-backs; Seattle’s ordinance requires an annual report regarding required funding for the Office of Labor Standards (Seattle n.d.a) (which necessarily requires an accounting of the past year’s activities), and individual laws in New York City have their own specific reporting requirements (NYC n.d.b).

Here’s a look at some local reports:

• The Chicago Office of Labor Standards issued annual reports covering its activities in 2019 (Chicago OLS 2019), 2020 (Chicago OLS 2020), and 2021 (Chicago OLS n.d.).
• The Denver auditor issues an annual report (Denver OA 2021a), and the 2021 version has a section (Denver OA 2021b) on wage-related enforcement.
• The city of Los Angeles issued a milestone report (LA City OWS 2022) in January 2022, detailing its activities and accomplishments since 2016.
• The Minneapolis Labor Standards Enforcement Division has a running dashboard (Minneapolis n.d.a) on its website, with data about the division’s activities, and issues an annual report (Minneapolis 2020).
• St. Paul includes labor enforcement data in the annual report (St. Paul 2020) of the Department of Human Rights and Equal Opportunity.
• The New York City Department of Consumer and Worker Protection has issued annual reports (NYC n.d.d) on the state of workers’ rights since 2017. The department in 2018 issued a report (NYC 2018) specifically on paid care workers.
• The Philadelphia Department of Labor issued annual labor policy and compliance reports (Philadelphia OLS & OWP n.d.) in 2019, 2020, and 2021. In addition, the department issued a report (Cox 2020) in 2020 on the Philadelphia Worker Relief Fund, which provided foundation and city-funded cash assistance to workers excluded from unemployment insurance and pandemic-related stimulus, through distributions via 14 community-based organizations.
• The San Francisco Office of Labor Standards has issued three annual reports (SF OLSE n.d.a).
• The Santa Clara County Office of Labor Standards Enforcement has issued several reports, including an annual report (SC OLSE 2020) in 2020.
• The Seattle Office of Labor Standards has an extremely detailed interactive dashboard (Seattle OLS n.d.b).

Local labor agencies have launched campaigns to educate communities about workers’ rights

Many local labor offices are extremely active in reaching out to the public and educating workers about their rights as workers. The New York City Department of Consumer and Worker Protection has engaged in a number of targeted campaigns, including educating the public about the city’s paid sick leave law when it first took effect, introducing the agency’s new name (NYC 2019c) to include the word “worker,” and reaching out to nail salon workers (NYC 2019b). During the early months of the COVID-19 pandemic, the department set up a hot line (NYC 2020a) for workers with questions about the city’s reopening.

The Minneapolis Labor Standards Enforcement Division held a workshop to help employers plan for a minimum wage increase, (Minneapolis 2018), as well as a workshop on paid sick and safe time for immigrant-owned small businesses (Minneapolis 2017). The Philadelphia Department of Labor has extensive know-your-rights resources on its web page (Philadelphia DOL n.d.), including access to a video (Philadelphia 2021a) about city worker protections during the COVID-19 pandemic.

The Chicago Office of Labor Standards and Denver Labor are both relatively new offices that have taken considerable action to educate the public in their cities. In Chicago, the Department of Business Affairs and Consumer Protection, within which the Office of Labor Standards is located, has its own YouTube channel, and the Office of Labor Standards has posted numerous webinars there on a wide range of labor-related topics (Chicago Dept. BACP n.d.; Chicago n.d.b). The office also created a “Your Home is Someone’s Workplace” campaign focused on domestic workers, and has a web page specifically focused on this workforce, as shown in Figure B (Chicago n.d.a). 

Figure B

The Chicago Office of Labor Standards also engaged in an outreach campaign about a new law giving domestic workers the right to a written contract from their employer (Chicago n.d.a; Chicago Dept. BACP 2021b). Some outreach took place in conjunction with the nonprofit worker organization Arise Chicago, which provided trilingual (English, Spanish, and Polish) sample contracts for employers’ use (Arise Chicago n.d.).

Los Angeles County announced a similar “Your Home is Someone’s Workplace” campaign to educate employers about domestic workers’ rights, and the Philadelphia Labor Department conducted a fair workweek survey in English and Spanish (LA County CBA 2021a; Chewning 2021b, 2021a).

Denver Labor has an extensive outreach and public education function. The office holds “Wages Wednesday” live on Wednesdays on the Denver Labor Facebook page, including programs in English and Spanish (Denver 2022b, n.d.a). The office held nearly 50 live Facebook trainings in 2021, and had bilingual (English and Spanish) staff available to answer questions (Denver OA n.d.a). The office web page highlights restitution stories, and contains online resources for small businesses about compliance (Denver n.d.b, n.d.c). It also contains tools for workers and employers: a regional address finder to assess whether work performed was in the relevant local boundaries, and a minimum wage and tip calculator, among other things. Also, the office launched an “Earned It, Deserved It” campaign to raise awareness of the city’s minimum wage ordinance, with bilingual ads at regional bus stops, and on radio, television, and social media platforms (Denver OA 2021a, p. 16).

Local labor agencies have highlighted worker issues in their jurisdictions through advocacy, hearings, and convenings

Several city labor agencies have gotten involved in various worker advocacy efforts.

In 2021, officials from several local enforcement agencies, including Chicago, New York City, Philadelphia, Seattle, and the district attorneys of Suffolk County, Massachusetts, and Washtenaw County, Michigan, all signed a joint letter (NYC DCWP 2021), along with 11 state attorneys general, to the U.S. Department of Homeland Security (DHS) supporting the agency’s plan to change its approach to worksite enforcement to support labor rights, and recommending changes to DHS policies and practices to facilitate the ability of state and local labor officials to enforce workplace laws. The letter was in response to a recent DHS memorandum (USDHS 2021) to Immigration and Customs Enforcement (ICE), Customs and Border Protection (CBP), and U.S. Citizenship and Immigration Services (USCIS), directing them to adopt practices and policies to deliver more severe consequences to exploitative employers, and increase workers’ willingness to report violations of worker protection laws.

In March 2020, agency officials in four cities (Chicago, New York, Philadelphia, and Seattle) called on (NYC 2020b) FedEx, UPS, and XPO to improve their policies in response to the then-new pandemic, particularly in relation to paid sick leave. Also in 2020, four localities (Chicago, New York, Philadelphia, and Pittsburgh) joined (NY AG 2020) a coalition of 24 state attorneys general in submitting a comment letter (NY AG et al. 2020) to the U.S. Department of Labor opposing a proposed regulation that would make it easier for employers to classify workers as independent contractors instead of as employees.

Finally, the New York City Department of Consumer and Worker Protection has held a number of hearings and convenings. For example, in 2017, it held a public hearing (NYC 2017) on the state of workers’ rights in the city, along with the Mayor’s Office of Immigrant Affairs and the New York City Commission on Human Rights, and in 2019, the same three agencies, along with partner organizations, held a convening (NYC 2019a) focused on immigrant workers.

Making know-your-rights resources, labor law posters, and other materials widely available, including in multiple languages

Some local agencies have been particularly aware of the need to reach the broad range of workers within their jurisdictions, and have translated materials into multiple languages. Cities and counties operate on the ground serving diverse communities, and may sometimes be more attentive to language access concerns than agencies at other levels of government.

The New York City Department of Consumer and Worker Protection has produced workers’ bill of rights booklets in 15 languages and audio files in five indigenous languages (Garifuna, K’iche, Kichwa, Mixteco, and Nahuatl), as well as an animated video. The animated video and audio files also enhance access for people with varying literacy levels. The Philadelphia Department of Labor web page (Philadelphia DOL n.d.) contains workers’ rights resources in 12 languages. Los Angeles City has minimum wage and paid sick leave posters available in 13 languages (LA City OWS n.d.a). Santa Clara County’s Office of Labor Standards’ web page provides information (SC OLSE n.d.f) in five languages. Even smaller jurisdictions, like Emeryville, California, with a 2020 population (U.S. Census Bureau 2022e) of less than 13,000, offers minimum wage and paid sick leave notices and posters (Emeryville n.d.) in six languages.

Local labor agencies have generated media coverage about worker issues

In addition to issuing press releases and reports, some offices have been effective in helping to catalyze coverage of workers’ rights issues in the local press. The Philadelphia Department of Labor has been especially effective in this regard, helping place news stories about workers’ rights under the city’s fair workweek law when it was first enacted, about its issuance of an annual report that would shame employers with records of violations, and about the Philadelphia Worker Relief Fund for workers excluded from other public assistance during the pandemic (Dorfman 2021; Reyes 2021b, 2020; Marin 2020).

The Santa Clara County Office of Labor Standards received coverage (Reese 2021) on a county contracts enforcement pilot program, in which the office reviews judgments and orders from state and federal labor authorities to determine whether a contractor should be disqualified from working with the county. The office also received coverage (Telemundo n.d.) on Telemundo about its enforcement program related to county food permits.

Finally, workers themselves can catalyze coverage of enforcement actions by local labor enforcement agencies, as when a worker whose case was handled by the San Francisco Office of Labor Standards gave a TEDx Talk (Winner 2019) and was featured in a PBS NewsHour program (Nawaz and Carlson 2021) about the city’s fair chance ordinance, which requires employers to consider mitigating circumstances and rehabilitation evidence for job applicants with a criminal record.

Local elected officials have used their public platforms and convening authority to support workers

Local elected officials have used their public platforms to demonstrate their support for working people in many ways. Such officials have shown up at rallies, events, and actions (including strikes (Aponte 2021) and walking workers back to work after days of action). Local elected officials have also written opinion pieces (op-eds) in support of worker advocacy and to bring attention to harms and challenges experienced by workers (Rosenthal 2021), and have written and signed letters to employers expressing concerns about worker treatment. Moreover, local elected officials can hold hearings, which allow workers an opportunity to share about their experiences and for officials to ask employers relevant questions.

Local elected officials can also show support for ongoing worker organizing campaigns. For example, in 2022, New York City Comptroller Brad Lander, as a public pension fund trustee, led a shareholder effort to address high injury rates and turnover at Amazon warehouses (Newman 2022). Also in 2022, the Seattle and Philadelphia city councils both passed resolutions supporting Starbucks workers seeking to unionize (Taylor 2022b; Valentine 2022). A Local Progress website provides additional ideas and resources for local elected officials wishing to show support for the Starbucks worker organizing campaign (Local Progress, n.d.b.).  

Conclusion: Localities throughout the country can adopt supporting workers’ rights as among the core functions they perform for their communities

There is a wealth of possibilities for localities that wish to get involved in expanding and enforcing workers’ rights. While some recent local action emerged in response to the Trump administration’s hostility to workers’ interests, much of cities’ work in this area pre-dated 2016. Accordingly, the local role in protecting working people continues to be relevant and critically important, even in the context of a worker-friendly federal administration.

Localities have been key innovators on labor matters, piloting new laws on such issues as paid sick leave and fair workweek; with proof of concept at the local level, such laws are later adopted at the state level (and perhaps eventually at the federal level as well). Creation of worker boards, strategic community enforcement partnerships, and using permits to drive compliance are also local innovations that help move the field forward. In addition, expansion and robust enforcement of workers’ rights at the local level serves as a hedge in our federal system, helping ensure at least some continued protection of workers in times when federal or state government is unfriendly to workers or insufficiently effective in protecting them. Moreover, public enforcement of workers’ rights is of even greater urgency when skyrocketing use of forced arbitration blocks workers from bringing their cases in court.

Localities in states without preemption of local laws may undertake any and all of the actions described above. However, even localities facing serious legal, political, or financial constraints in relation to their involvement in worker issues still can take action that will have a meaningful impact on workers’ lives.

Specifically, even in states with preemption:

• Localities can offer high-road standards to their own workforces, including enabling or facilitating collective bargaining where permitted, as well as sufficient minimum wage and paid sick/family leave for municipal employees.
• Localities can consider enacting laws that may not be preempted, such as those that do not set labor standards. These might include anti-wage theft ordinances that do not set a local minimum wage, but simply enforce existing rates; responsible bidder ordinances; ordinances concerning licensing or permitting consequences or incentives; or laws on salary transparency, for example. Local leaders can examine their state’s preemption law to assess the realistic possibilities.
• Localities can assess whether there is authority to require increased labor standards at the local airport.
• Localities can establish a worker advisory board to create a vehicle for open lines of communication and opportunities for worker leaders to raise newly emerging issues that the locality may be able to help address.
• Localities can establish a dedicated labor office or at the very least, a dedicated labor liaison at the local level. Even in a state with strong preemption, such an office could likely do some or all of the following:
  • Conduct outreach and public education on workers’ rights. Create a workers’ rights landing page on the locality website (in languages commonly used in the locality), with information about federal, state, and local workers’ rights applicable within the jurisdiction, (however expansive or limited they may be), as well as hyperlinks to relevant government agencies and other worker-oriented resources. Conduct outreach and include basic workers’ rights information in community outreach by existing local officials (such as by Fair Employment Practices Agencies, where they exist).
  • Review contracting, licensing, permitting standards, especially in industries with high rates of violation. Consider whether new laws are needed in order to impose compliance prerequisites or consequences for violations of labor laws. If so, try to enact them. In either case, routinely review labor compliance records of recipients of local government contracts, permits, or licenses, and consider whether action can be taken by contracting, licensing, or permitting agencies.
  • Review forms used for contracting, permitting, and licensing. Incorporate workplace law information about employer responsibilities on application forms and require signed certification by bidders or applicants that they will comply with these laws.
  • Research working conditions within the locality (possibly in conjunction with local or state academics), and issue and publicize reports on findings
  • Hold convenings or hearings to uncover and highlight problems facing workers, and to generate media coverage of these issues.
  • Create a comprehensive complaint form for workers and become a one-stop shop for reporting violations, serving as a gateway to help workers navigate other agencies and resources.
  • Publish enforcement data and stories to demonstrate effectiveness and deter violations.
  • Enlist and/or organize local resources, such as law school clinics or the local bar, to address worker issues. For example, the Massachusetts attorney general’s office holds a monthly wage theft clinic for cases it cannot handle, with nonprofit organizations, pro bono lawyers, legal services offices, lawyers who can take contingency cases, etc. (Massachusetts n.d.a). Along similar lines but addressing a problem unrelated to labor, the California Attorney General’s office in 2015 convened a roundtable of law firms and immigrants’ rights advocates about the legal needs of unaccompanied minors fleeing Central America; these efforts led to the legal representation of more children in immigration cases (CA DOJ 2015).

Localities in states without preemption, in locales more friendly to workers’ rights, can consider enacting any and all of the above measures. In addition, they have even more leeway to act, since they can:

• enact higher labor standards for all workers within their jurisdiction
  • minimum wage, overtime, paid sick and safe leave, fair workweek, expansive anti-discrimination laws, strong anti-retaliation protections
  • protections needed in particular industries: domestic workers, hotel, retail, fast-food, car wash workers, freelancers, etc.
  • cutting-edge worker protections such as just cause termination, gig worker pay or termination standards, salary transparency, and more
• meet with local worker organizations to learn what issues they identify as pressing
• create, fund, and empower a robust local office of labor standards with
  • enforcement power, including subpoena power
  • the ability to inform the administration and legislators on policy matters
  • a strategic enforcement approach
  • a funded community partnership model
• enact and enforce job quality standards (prevailing wage, living wage) and responsible bidder ordinances for local government contractors
• enact and fully operationalize workplace law compliance prerequisites and consequences for applicants and holders of locally issued permits and licenses.

In all localities—those in states hostile to workers, friendly to workers, and in between—there are opportunities to stand up for working people and take action.

Acknowledgments

The authors would like to thank Daniel Perez and Katherine DeCourcy, who provided excellent research assistance.

About the authors

Terri Gerstein is the director of the State and Local Enforcement Project at the Harvard Law School Labor and Worklife Program and a senior fellow at the Economic Policy Institute. She was recently an Open Society Foundations Leadership in Government Fellow. Previously, Terri was the labor bureau chief in the New York State Attorney General’s Office and a deputy commissioner in the New York State Department of Labor. Before her government service, Gerstein was a nonprofit lawyer in Miami, Florida, where she represented immigrant workers and co-hosted a Spanish language radio show on workers’ rights. She was a law clerk for Judge Mary Johnson Lowe of the U.S. District Court for the Southern District of New York. Her writing on workers’ rights issues has appeared in numerous outlets, including the New York Times, Washington Post, NBC News Think, The American Prospect, Politico, Slate, The Nation, and more; a complete listing is available at www.terrigerstein.com. She is a graduate of Harvard College and Harvard Law School.

LiJia Gong is the policy and legal director at Local Progress. She leads the development of Local Progress’ policy and research capacity to support members, and drives the development and growth of national program areas. Gong is an attorney with more than a decade of experience in policy, litigation, and political strategy. Prior to joining Local Progress, she served as counsel at Public Rights Project, an organization that empowers local and state governments to advance civil rights, worker and consumer rights, and environmental justice. At Public Rights Project, she launched a partnership with Local Solutions Support Center to fight abusive state preemption of local policymaking. Gong worked on the 2018 campaign to re-elect Sen. Elizabeth Warren of Massachusetts and served as a law clerk for Judge Kiyo Matsumoto of the U.S. District Court for the Eastern District of New York. Prior to becoming a lawyer, Gong worked as a research assistant at the Federal Reserve Board of Governors. LiJia earned her J.D. from Georgetown University Law Center and her B.S.F.S. from Georgetown University.

Endnotes

1. New State Ice Co. v. Liebmann, 285 U.S. 262, 311 (1932) (Brandeis, J, dissenting).

2. New State Ice Co. v. Liebmann, 285 U.S. 262, 311 (1932) (Brandeis, J., dissenting).

3. This report uses the terms “localities” and “local governments” as an umbrella term for political subdivisions of a state that include, for example, counties, cities, townships, villages, and school districts. Local government decision-making structures and authorities vary significantly–in some localities the executive has far more authority than the legislative body (often referred to as “strong mayor” systems as applied to cities), while in some localities significant control rests with appointed offices like a city manager. Localities also vary tremendously in terms of size–some towns have only a few hundred or thousand residents, whereas Los Angeles County has more than 10 million residents. Accordingly, the capacity for policymaking and enforcement among localities also varies greatly. Due to this diversity across localities, this report uses “localities” and “local governments” generally to refer to powers that may belong to the local executive, legislature, administrative agencies, or some combination thereof in a given jurisdiction.

4. Diller argues that cities’ smaller scale, concentrated political preferences, and streamlined lawmaking processes facilitate public health innovation.

5. Many localities have longstanding agencies that enforce human rights, civil rights, or other anti-discrimination laws; this report touches on the work of such agencies, but they are not the focus. 

6. Because in its employment-related lawmaking and enforcement, Washington, D.C., operates more akin to a state than a city, it is not included in this report. For more information for enforcement actions taken by D.C.’s attorney general, please see Gerstein 2020.

7. The federal government sets the federal minimum wage; that rate serves as a national floor. Under the federal minimum wage law, the Fair Labor Standards Act, states and localities may pass minimum wages that are higher. Many, but not all states, also allow localities to require pay higher than the state minimum wage.

8. The advocacy group “A Better Balance” has an option on its website that enables filtered searches of enforcement agencies handling paid sick day enforcement (A Better Balance n.d.b). Several localities assign this function to their offices of community relations or of human rights (Boulder 2022; Montgomery n.d.; Pinellas OHR). In Duluth, Minnesota, the city clerk has authority to enforce the law (Duluth 2022b). In Miami-Dade County, a consumer mediation center handles wage disputes (Miami-Dade WTP). This list is illustrative but not exhaustive.

9. UC Berkeley 2022; Boston OWD n.d.; Chicago OLS 2022; Denver 2022a; Duluth 2022a; Emeryville 2022; Flagstaff 2022; LA City OWS n.d.a; LA City BCA n.d.; Minneapolis n.d.b; NYC OLPS n.d.b; Philadelphia n.d.a; SF OLSE n.d.c; Santa Clara n.d.a; SJ 2022; Seattle OLS n.d.d; St. Paul n.d.b; Tacoma n.d.

10. Brennan 2021; San Diego 2022.

11. Kelty 2022; Ludden 2021.

12. Miami-Dade WTP n.d.; Pinellas OHR n.d.; Broward OPSHR n.d.; Broward OIAPS 2022.

13. In re: Palm Beach County Wage Dispute Docket and Creation of “WD” Division, Administrative Order No. 3.907-3/15, March 9, 2015. Fifteenth Judicial Circuit Court in and for Palm Beach County, Florida. See Palm Beach 2015.

14. Bloomington n.d.

15. Bloomington 2022.

16. In March 2022, a Washington state bill was signed into law that will preempt Seattle’s local regulations of TNCs HB 2076, 2021–22 House of Rep., Reg. Sess. (Wash. 2022). See Washington 2022.

17. Res. 32038, 2021 City Council, Seattle (Seattle 2021). See Seattle CC 2021.

18. For an in-depth analysis of privatization generally, see Cohen and Mikaelian 2021.

19. Brief for the States of New York, Alaska, Connecticut, Delaware, Hawaii, Iowa, Kentucky, Maine, Maryland, Massachusetts, Minnesota, New Jersey, New Mexico, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, Virginia and Washington, and the District of Columbia as Amici Curiae in Support of Respondents, Janus v. American Federation of State, County and Municipal Employees, Council 31, et al., 138 S. Ct. 2448 (2018); see also Brief for the City of New York as Amicus Curiae in Support of Respondents, Janus v. American Federation of State, County and Municipal Employees, Council 31, et al., 138 S. Ct. 2448 (2018); Brief of Mayor Eric Garcetti, County Executive Dow Constantine, Mayor Jenny Durkan, Mayor Rahm Emmanuel, Mayor James Kenney, and Mayor Bill de Blasio as Amici Curiae in Support of Respondents, Janus v. American Federation of State, County and Municipal Employees, Council 31, et al., 138 S. Ct. 2448 (2018).

20. See, e.g., Louisiana (Louisiana Revised Statute 44:67.1(a), Davis v. Henry, 555 So.2d 457, 459 (La., 1990).

21. See, e.g., North Carolina (N.C. Gen. Stat. Ann. § 95–9).

22. Res. 2017–259 2017, Adams County Board of County Commissioners (Colo. 2017). See Adams Cty. BOC 2017.

23. Janus v. American Federation of State, County, and Municipal Employees, Council 31, et al., 138 S. Ct. 2448 (2018).

24. This authority typically derives from the “police power”—as in the power to promote the health, safety, welfare, and morals of the community—among the powers delegated to local governments. See, for example, Utah Const. art. XI, § 5 (delegating “the authority to adopt, and enforce within its limits, local police, sanitary, and similar regulations”).

25. Before 2012—the beginning of the Fight for 15 movement—only five local governments had minimum wage laws (UC Berkeley Labor Center 2022).

26. Birmingham, Alabama; Johnson, Lee, Linn, Polk, and Wapello counties, Iowa; Kansas City, Missouri; Louisville and Lexington, Kentucky; Miami Beach, Florida; and St. Louis, Missouri, passed local minimum wages that were higher than the state minimums, but they were subsequently preempted by state legislation, thereby rendering the local ordinances ineffective (UC Berkeley Labor Center 2022).

27. Dependency on tips often makes workers more vulnerable to sexual harassment.

28. Council Bill 18–008, 2018, Las Cruces City Cncl. (N.M. 2018). See Las Cruces 2018.

29. Oakland’s hotel minimum wage is higher than the citywide minimum wage for hotel workers who do not receive employer benefits.

30. Res. No. 20220127–053, 2022, Austin City Cncl. (Texas 2022). See Austin 2022.

31. There is a distinction between paid sick leave, and paid family and medical leave laws. Paid sick day laws require employers to pay workers for a modest number of days out of work for the short-term health needs of themselves and their families, while paid family and medical leave laws establish social insurance programs, typically funded by employer contributions and employee payroll deductions, to be used for longer-term medical issues, care for a new child, or care for a family member who is ill. This discussion addresses paid sick leave. Paid family and medical leave has been generally addressed in the United States at the state level, although some local governments do provide paid family and medical leave for their own employees. See Onuma 2015.

32. Austin, Dallas, and San Antonio passed paid sick leave laws that subsequently were found to be preempted in litigation. The laws were challenged by business groups arguing that the local ordinances were preempted by a Texas law that prohibits localities from enacting a minimum wage higher than the state’s. As a result, workers in these three cities lack the legal right to paid sick time. See A Better Balance 2021.

33. The state law in New Jersey mooted and preempted the numerous local paid sick leave laws.

34. Law 2018/150, 2018, New York City Cncl. (N.Y. 2018). See NY City Council 2018.

35. Law 2021/aa5, 2021, New York City Cncl. (N.Y. 2021). See NY City Council 2021.

36. Seattle’s local regulations of transportation network companies will be preempted pursuant to a state law passed in March 2022. See Washington 2022.

37. These localities include Albany County (New York), Atlanta, Chicago, Cincinnati, Columbia (South Carolina), Jackson (Mississippi), Kansas City (Missouri), Louisville, Montgomery County (Maryland), New Orleans, New York City, Philadelphia, Pittsburgh, Richland County (South Carolina), Salt Lake City, San Francisco, St. Louis, Suffolk County (New York), Toledo, and Westchester County (New York).

38. Colorado had passed a similar law in 2021. S.B. 19-085, 2019 Gen. Assemb., Reg. Sess.

39. Law 2022/031, 2022, New York City Cncl. (N.Y. 2022). See NY City Council 2022.

40. N.Y.C. Admin. Code § 20–1271 et seq.

41. Rest. Law Ctr. v. City of New York, 2022 U.S. Dist. LEXIS 24268, __ F. Supp. 3d __, 2022 WL 409190.

42. Rest. Law Ctr. v. City of New York, 2022 U.S. Dist. LEXIS 24268, __ F. Supp. 3d __, 2022 WL 409190.

43. N.Y.C. Admin. Code § 20–1301 et seq.

44. City of Los Angeles Municipal Code Chapter XVIII § 181.00 et seq.; San Francisco Police Code Article 33D.

45. A 2003 survey conducted by Airports Council International-North America concluded that city ownership accounts for 38%, followed by regional airports at 25%, single county at 17%, and multijurisdictional at 9%.

46. 8 Phila. Code § 18–201(8); Miami-Dade Cty. Res. No. R–148–07 (Feb. 6, 2007); Rules and Regulations, San Francisco Airport, Rule 12.1.

47. By using a state’s grant of local emergency authority, local governments might plausibly be able to adopt temporary emergency policies even when state law preempts such policies under normal circumstances (Haddow, Davidson, and Huizar 2020).

48. See discussion in Section 4.

49. These local governments include Chicago; Cook County, Ilinois; Duluth, Minnesota; Emeryville, California; Los Angeles; Minneapolis; Montgomery County, Maryland; New York City; Philadelphia; Pittsburgh; San Diego; San Francisco; Seattle; St. Paul, Minnesota; Tacoma, Washington; and Westchester County, New York. In general, this clarification of existing paid leave laws was permanent.

50. Many of these ordinances are no longer in effect, and the remainder that are still in effect are set to sunset on a specified date or after the conclusion of the relevant COVID-19 emergency order.

51. Bill No. 200303, 2020, Philadelphia City Cncl., (Pa., 2020). See Philadelphia CC 2020a.

52. CB 119793, 2020, Seattle City Cncl., (Wash., 2020).

53. Bill No. 200328, 2020, Philadelphia City Cncl. (Pa., 2020) See Philadelphia CC 2020b.

54. Coronavirus State and Local Fiscal Recovery Funds [rule], 87 Fed. Reg. 4338–4454 (January 27, 2022).

55. Minneapolis n.d.e.

56. The nonprofit organization Good Jobs First has lamented the lack of transparency in relation to state use of ARPA funds; it is likely that similar concerns exist in relation to local decision-making. See Furtado 2021.

57. Building & Construction Trades Council v. Associated Builders & Contractors of Massachusetts/Rhode Island, Inc., 507 U.S. 218 (1993).

58. Gade v. National Solid Wastes Management Association, 505 U.S. 88, 99–100 (1992).

59. Steel Inst. of New York v. City of New York, 716 F.3d 31, 34 (2d Cir. 2013).

60. In addition, five state plans cover only local and state government workers.

61. 29 USC § 218 (“No provision of this [Act] shall excuse noncompliance with any Federal or State law or municipal ordinance establishing a minimum wage higher than the minimum wage established under this [Act] or a maximum work week lower than the maximum workweek established under this chapter.”)

62. Wyeth v. Levine, 555 U.S. 555 (2009).

63. Also referred to as the “new preemption” or “abusive preemption” by some legal scholars.

64. HB 2076, 2021–22 House of Rep., Reg. Sess. (Wash. 2022). See Washington 2022.

65. For example, many state consumer protection and public nuisance laws empower city, county, and district attorneys to bring actions to enforce those laws. See, e.g., N.C. Gen. Stat. §§ 160A–193, 153A–140 (providing cities and counties with authority to abate public nuisances); Cal. Bus. & Prof. Code § 17204 (2019) (providing city and county attorneys in local jurisdictions with more than 750,000 residents the authority to bring unfair competition claims).

66. The Oakland city attorney’s office brought a case alleging wage and hour violations alongside a civil legal services organization to vindicate the rights of hotel cleaners (Oakland OCA 2018). In 2019, the San Diego city attorney’s office brought suit against Instacart alleging misclassification of its shoppers who obtain and deliver groceries and obtained an injunction, which was rendered inoperative by the passage of Proposition 22 in 2020 (Allsup and Mulvaney 2021).

67. In Alabama, California, Colorado, Florida, Kansas, Kentucky, Michigan, Minnesota, Missouri, and Montana, district attorneys have civil authority to enforce the state unfair deceptive acts and practices (UDAP) law. Ala. Code § 8–19–4, 8–19–8 (2019); Cal. Bus. & Prof. Code § 17204 (2019); Colo. Rev. Stat. § 6–1–103 (2018); Fla. Stat. § 501.203, 501.207 (2019); Kan. Stat. Ann. § 50–626(a)–632(a)(3) (2018); Ky. Rev. Stat. Ann. § 367.300 (West 2019); Wayne Cty. Prosecutor v. Wayne Cty. Bd. of Comm’rs, 93 Mich. App. 114, 127 (1979); Minn. Stat. § 325F.67, 325F.70 (2019); Mo. Rev. Stat. § 407.020 (2018); Mont. Code Ann. § 30—14–121 (2019).

68. Wage theft is the practice of employers failing to pay workers the full wages to which they are legally entitled. It includes situations in which employers refuse to pay promised wages, pay less than legally mandated minimums, fail to pay for all hours worked, keep worker tips or deductions intended for worker benefits, or do not pay overtime. In some states, the term “wage theft” is defined in the law, but more commonly it is used as a colloquial and descriptive term to refer to a set of practices. See Rosado Marzán 2020 for a detailed description of wage theft.

69. See also, In re Vega, 2020 N.Y. Slip Op. 02094 (N.Y. Court of Appeals March 26, 2020).

70. Minneapolis Code 40.110.

71. Localities also may provide conditions on grants to improve worker standards. For example, Boston funded a pilot program to support small restaurants and their workers during the COVID-19 pandemic. The grants were conditioned on the small businesses paying workers $12.75 an hour, as compared with the $5.55 tipped minimum wage under Massachusetts law (Edwards n.d.).

72. Somerville Code of Ordinances, Chapter 9, Article III, Division 2. See Somerville n.d.

73. City of Boston Municipal Code Chapter 24. See Boston n.d.a, n.d.b.

74. “Assistance shall mean any grant, loan, tax incentive, bond financing, subsidy, or other form of assistance of one hundred thousand ($100,000.00) dollars or more realized by or through the authority or approval of the City of Boston, including, but not limited to industrial development bonds, Community Development Block Grant (CDBG) loans and Federal Enhanced Enterprise Community designations awarded after the effective date of this Chapter. The forgiveness of a loan shall be regarded as financial assistance. A loan shall be regarded as financial assistance to the extent of any differential between the amount of the loan and the present value of the payments thereunder, discounted over the life of the loan by the applicable Federal rate as used in 26 U.S.C., Section 1274(d) 7872(f). A recipient of assistance shall not be deemed to include leases and subleases.” City of Boston Municipal Code Chapter 24 § 24-2(a).

75. City of Boston Municipal Code Chapter 24 § 24-2(e). See Boston n.d.a.

76. City of Boston Municipal Code Chapter 24 § 24-11(a). See Boston n.d.b.

77. Res. BOS-2016-196, 2016 Board of Supervisors, Santa Clara County (Santa Clara 2016). See Santa Clara n.d.c.

78. Hoboken Municipal Code Chapter 23. See Hoboken n.d.a.

79. Hoboken Municipal Code Chapter 199. See Hoboken n.d.b.

80. Seattle Municipal Code § 14.19.080 (I). See Seattle n.d.b.

81. San Diego Municipal Code Article 2 Division 30 § 22.3004(c). See San Diego n.d.

82. Social service agencies have filed a lawsuit challenging this law. See Blau 2022. 

83. Minneapolis City Code § 259.250 (2). See Minneapolis n.d.d.

84. Minneapolis City Code § 259.250 (5). See Minneapolis n.d.d.

85. Minneapolis City Code § 259.250 (5). See Minneapolis n.d.d.

86. City of Quincy, Massachusetts, Code § 9.4.9-9.4.10. See Quincy n.d.

87. City of Toledo, Ohio, Municipal Code § 701.04 (b). See Toledo n.d.a.

88. Seattle Municipal Code 14.19.100 (A) (4). See Seattle n.d.b.

References

Court Decisions and Orders

Building & Construction Trades Council v. Associated Builders & Contractors of Massachusetts/Rhode Island, Inc., 507 U.S. 218 (1993).

Florida, Palm Beach County, Fifteenth Judicial Circuit Court, Administrative Order No. 3.907-3/15.

Gade v. National Solid Wastes Management Association, 505 U.S. 88, 99–100 (1992).

New State Ice Co. v. Liebmann. 285 U.S. 262, 311 (1932).

Restaurant Law Center v. City of New York, U.S. District Court, S.D.N.Y., Case 1:21-cv-04801-DLC, Document 68, Filed 02/10/11, Opinion and Order.

Steel Inst. of New York v. City of New York, 716 F.3d 31, 34 (2d Cir. 2013).

Wyeth v. Levine, 555 U.S. 555 (2009).

References in text

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A Better Balance. 2020. “Public Health Closures and Paid Sick Time: What You Should Know.” A Better Balance Blog, March 6, 2020.

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In the most basic terms, gig work can be defined as work done by individuals who are classified as self-employed, freelancers, or independent contractors. However, in recent years the term “gig work” has become synonymous with working for digital platform companies, including driving for ride-share apps, making deliveries for restaurants, shopping or delivering groceries, and performing errands or household tasks. In this use, “gig work” is a misnomer that helps companies propagate the myth that these workers have more independence and control over their work than they actually do.

Digital platform companies have constructed a business model on the premise that they do not employ their workforce. These companies treat workers who perform the services they offer not as employees but as independent contractors. By classifying their workforce in this way, they deprive workers of fundamental rights under federal and state labor and employment laws, including wage and hour protections, anti-discrimination protection, workers’ compensation, unemployment benefits, and the right to organize and collectively bargain.

Digital platform companies claim that their workforce benefits from this classification, enjoying the benefits of entrepreneurship with good pay and more flexibility than workers classified as traditional W-2 employees. However, a survey of gig workers reveals that these workers often are paid low wages, in some instances less than the minimum wage; they face economic insecurity at high rates; and they routinely report losing earnings because of technical difficulties with digital platforms.

The impact of gig worker misclassification

The determination of whether an individual providing services to an employer is an employee or an independent contractor carries significant consequences for both the individual and the employer in terms of job protections, tax obligations, and eligibility for employment-based benefits and protections.

As Table 1 shows, individuals who are classified as independent contractors are not covered by federal or state wage and hour, anti-discrimination, health and safety, collective bargaining, or other worker protection laws. They do not receive employment-based health insurance or retirement benefits, and they do not qualify for paid sick or family leave in places where those benefits are statutorily prescribed. Nor are independent contractors eligible for unemployment insurance when temporarily unemployed, or workers’ compensation when injured on the job. This leaves independent contractors in a far more vulnerable status, as compared with employees, when it comes to basic rights and protections on the job.

Table 1

Survey description

Much is still unknown about workers’ experience of gig work and its prevalence in the economy because there are few nationally representative surveys on this segment of the workforce compared with W-2 employees.

The Bureau of Labor Statistics (BLS) tries to capture the gig workforce through the Contingent Worker Supplement to the Current Population Survey (CWS), which measures workers in alternative work arrangements such as independent contracting, on-call arrangements, and employment arrangements through temporary agencies or contracted firms. However, the survey reflects only the type of work individuals do as their main or sole job and does not capture any supplemental work. The latest CWS data in 2017 showed that alternative work arrangements make up 10% of all employment (BLS 2018).

Other studies estimate that 16% (Anderson et al. 2021) to 36% (Upwork 2020) of the workforce participate in the gig economy. Even with the limited, albeit growing, research on the gig workforce, the rise of digital platform companies and their use of independent contractor classification have serious ramifications for workers.

In order to understand how workers were faring during the pandemic, in May 2020 the Shift Project collected survey data from two groups of workers: gig workers and service-sector employees.1 Both groups of workers responded to surveys elicited from Facebook and Instagram advertisements. The surveys included modules on demographics, job characteristics, and economic security issues and resulted in a sample of 288 gig worker respondents, which we call the gig worker sample, and 4,201 service-sector employees, which we call the W-2 service-sector sample.2

In contrast to much of the previous research on gig workers, the survey results we present here provide a comprehensive, national portrait of gig workers and their job characteristics. Other studies and surveys have provided extremely useful profiles of gig workers, but most of these have been limited to gig workers in a single city such as Chicago, New York City, San Francisco, or Seattle. Due to data limitations, the small set of nationally representative studies has focused on ride-hail drivers, such as Uber drivers.3

Taken in isolation, the levels of hardship reported by gig workers in our survey sample mostly illustrate the extreme difficulties faced by workers at the beginning of the pandemic, when employment opportunities and earnings dropped precipitously. But by comparing two groups of workers that both faced significant increases in hardships during the pandemic—gig workers compared with restaurant and other service-sector workers—⁠we can reasonably assess the relative ability of gig work or W-2 service-sector work to provide decent working conditions during a time of economic hardship.

Employment fields in Facebook data determined whether respondents worked as gig workers or as service-sector employees.4 Gig workers were listed as working at firms such as Uber, DoorDash, Lyft, Instacart, and Uber Eats. W-2 service-sector workers were listed as working at one of 58 large retail and food service companies, such as Target, Walmart, Publix, Kroger/QFC, Arby’s, McDonald’s, Chick-Fil-A, Walgreens, Starbucks, and Home Depot.

Survey results

Many gig workers have lower hourly earnings than W-2 service-sector workers. Table 2 shows that 14% of surveyed gig workers earned less than the federal minimum wage of $7.25 per hour. In contrast, 0% of W-2 service-sector workers reported earning less than the federal minimum wage. More than twice as many gig workers (26%) as those in the W-2 sample (11%) earned less than $10.00 per hour.

Table 2

The prevalence of low wages is especially severe when comparing the hourly wages of gig workers against applicable state minimum wage laws. Table 3 shows that more than a quarter of gig workers (29%) earned less than the state minimum wage that would likely be applicable were they a W-2-based employee. In comparison, only 1% of W-2 employees in the service-sector sample reported hourly wages below state minimum wage thresholds.

Table 3

The median degree of underpayment for gig workers was $2.17 per hour (not shown). On an annual basis, this underpayment amount is the equivalent of roughly $3,400, assuming year-round work with the median-reported 30-hour workweek.

For W-2 service-sector workers, the data in Tables 2 and 3 are from current hourly earnings reported by these workers; for gig workers, it is their previous week’s earnings divided by their “usual hours worked” on a weekly basis over the past year. One potential concern, given that the survey was conducted just two months into the pandemic, is that we may overestimate the share of gig workers earning subminimum wages if they are reporting their “usual hours” based on their pre-pandemic hours and if their hours in May 2020 are lower than their usual hours due to pandemic conditions.

While it is impossible to verify whether the hours reported (“usual weekly hours”) were the same as actual hours worked in the prior week, the survey data do provide three additional reasons to think that the prevalence of subminimum wage work is higher among gig workers.

First, the large magnitude of underpayment, relative to effective minimum wages, suggests measurement error in reported hours is unlikely to explain the entire gap between estimated hourly wages and applicable minimum wage levels. Given that the median degree of underpayment is $2.17 per hour, as noted above, even if we artificially increased hourly wages by more than $2, half of gig workers earning less than their state’s minimum wage would still have been paid less than that statutory threshold.

Second, as we explain below, gig workers are significantly more likely than W-2 service-sector workers to face material hardships, consistent with the idea that the wages of gig workers are even lower than those of typically low-paid W-2 employees.

Third, one reason for the high share of subminimum wage work among gig workers is that gig workers are not being paid for some work hours. Many gig workers reported losing earnings because of “technical difficulties clocking in or out” of work. Table 4 shows that more than 3 out of every 5 gig workers (62%) had not been paid for their work on the job at least once. In contrast, less than 1 in 5 W-2 service-sector workers (19%) failed to receive pay due to difficulties clocking in or out of work. More than one-third (36%) of gig workers surveyed had lost pay three or more times.

At low-wage jobs, the failure to be paid for certain hours of work can easily push a given worker’s wages below the effective minimum wage. In both instances, the loss of pay due to technical difficulties can be considered a form of wage theft. However, unlike employees, gig workers have no legal recourse to recover their lost wages due to their independent contractor classification.

Table 4

Subminimum wages and difficulties obtaining pay have led to significant hardships for gig workers, even in comparison with generally low-paid service-sector workers. Table 5 shows that, relative to W-2 service-sector workers (13%), gig workers were more likely (18%) to live in a household in which someone did not see a doctor or go to the hospital in the last month because of the cost. About 1 in 5 gig workers (19%) went hungry in the last month because they could not afford enough to eat. Thirty percent of gig workers used SNAP within a month of the survey, twice the rate of W-2 service-sector workers (15%).

Table 5

Low pay for gig workers also made it very difficult to pay utility bills. Table 5 shows that nearly one-third of gig workers (31%) did not pay the full amount of gas, oil, or electric utility bills in the last month; the corresponding percentage for W-2 service-sector workers is 17%. Table 6 shows that, relative to W-2 service-sector workers, gig workers were significantly more likely to report it was “very difficult” to cover expenses and pay bills.

Table 6

Consistent with the higher levels of material hardship and low levels of pay, many gig workers expected to leave gig work for another job soon. Table 7 shows that gig workers intended to leave their current job at a higher rate than W-2 service-sector workers, who already normally have high rates of employee turnover (BLS 2022). More than half (55%) of gig workers intended to find a new job in the next three months, compared with 36% of W-2 service-sector workers.

Table 7

The race and age composition of the gig workforce and the W-2 service-sector workforce tend to be relatively similar. The first two “unweighted” columns of Table 8 show the demographic composition of the raw gig and W-2 service-sector sample data for those observations for which there is complete demographic information. The majority of gig and W-2 service-sector workers in the sample are white and non-Hispanic, and the mean and median age of each sample ranges from 39 to 41 years old. Women make up the majority of each sample, but gig workers are more likely to be men (45%) than W-2 service-sector workers are (31%). Gig workers in the sample are more likely to have some college education (73%) than W-2 service-sector workers (59%).

Table 8

We confirmed that the raw survey results provide a reasonable basis for inference about the national population of the gig and service-sector workforces by reweighting the samples to match what is known about service-sector demographics in the U.S. and then observing that the results that follow on economic hardship and pay are not sensitive to this reweighting.

For transparency, we show in columns 3 and 4 of Table 8 the demographic profiles of the surveys if the data are reweighted to match the race, age, and gender distributions of the American Community Survey.5 The gig worker and W-2 service-sector samples tend to be more white and more female than a nationally representative sample of service-sector workers. While reweighting mechanically changes some of the demographic shares in Table 8, reassuringly the reweighting does little to change any of the results; therefore, we report the raw, unweighted results in Tables 2–7.6

Policy solutions

Much is still unknown about digital platform workers. As noted above, the Bureau of Labor Statistics has sought to gain a better understanding of this workforce through the Contingent Worker Supplement. However, as discussed, the CWS data reflect only the type of work individuals do as their main or sole job and does not capture any supplemental work. Further, the CWS data are not routinely collected, with the last update in 2017 and the prior in 2005. Resources should be directed to BLS to allow for a more comprehensive and annual report of this workforce.

While more comprehensive data is required to develop appropriate policy solutions to ensure that gig workers have access to fundamental worker protections, some things are clear: Gig workers often are paid low wages, in some instances less than the minimum wage⁠; they face economic insecurity at high rates; and they routinely report losing earnings because of technical difficulties with digital platforms.

One key to improving conditions for these workers is enforcement of existing federal wage and hour laws. DOL must hold companies accountable for misclassification and ensure that workers have access to fundamental workplace protections guaranteed them under federal law. This includes the right to a union. It is well documented that unions are an essential tool for workers to improve their pay, benefits, and working conditions (McNicholas et al. 2020). However, under current federal labor law, independent contractors are not covered under the National Labor Relations Act (NLRA) and are thereby restricted from forming a union.

The Protecting the Right to Organize (PRO) Act, which passed the House last year but has not advanced in the Senate, would require employers to follow the “ABC” test, which is a strong, protective test for determining employee status.7 This would better protect workers’ fundamental right to organize and collectively bargain.

Digital platform companies have established a business model based on denying workers fundamental protections. While the technology these companies utilize may be innovative, a business model that creates profit by denying workers basic wage and hour protections is far from inventive. Corporations have long looked for ways to exempt themselves from worker protections, and they spend hundreds of millions of dollars each year to deny their workforce union representation (McNicholas et al. 2019).

Contrary to the narrative they have set forth, gig companies have not created entrepreneurial opportunities with family-sustaining pay. Instead, more than a quarter of gig workers earn less than the state minimum wage. These workers and their families experience high levels of economic insecurity. Most telling, more than half of these workers intend to find a new job in the next three months. These data demonstrate that the reality of working for these digital platform companies is far from the great “gig” they advertise. Policymakers must address the reality of gig work and prevent these companies from denying their workers basic protections through misclassifying their workforce.

Notes

1. The Shift Project, a joint project at Harvard Kennedy School and UCSF, examines the nature and consequences of precarious employment in the service sector, with a focus on how policymakers and firms can improve job quality. Since 2016, Shift has surveyed over 160,000 workers using an innovative recruitment method to target employees at the largest chain retail and food service firms. The survey asks workers across the United States about their working conditions, economic security, health, and family life.

2. In the results presented in this report, most of gig worker and W-2 service-sector responses are from samples and surveys collected in May 2020. The only exception is the set of survey responses on losing pay because of technical difficulties: The gig worker sample for this question is from May 2020, but the W-2 service-sector sample is a different set of workers, from March and April 2020.

3. See NELP 2021 for a comprehensive list of studies and surveys focusing on app-based workers.

4. See Schneider and Harknett 2022 for details about the survey design and collection.

5. See the appendix of Schneider and Harknett 2019 for details on reweighting the survey respondents.

6. For example, reweighting does little to change the estimated shares of workers earning less than the effective state minimum wage. That share for gig workers is 29% using the unweighted data or 34% using the weighted data. For W-2 service-sector employees, the share is 1% in both the unweighted and weighted samples.

7. The ABC test establishes a presumption that an individual performing services for an employer is an employee, not an independent contractor, unless the employer can establish three factors: (1) The work is done without the direction and control of the employer. (2) The work is performed outside the usual course of the employer’s business. (3) The work is done by someone who has their own, independent business or trade doing that kind of work.

References

Anderson, Monica, Colleen McClain, Michelle Faverio, and Risa Gelles-Watnick. 2021. The State of Gig Work in 2021. Pew Research Center, December 2021. 

Bureau of Labor Statistics (BLS). 2018. “Contingent and Alternative Employment Arrangements—May 2017” (news release). June 7, 2018.

Bureau of Labor Statistics (BLS). 2022. “Table 16. Annual Total Separations Rates by Industry and Region, Not Seasonally Adjusted” (economic news release). Last modified March 10, 2022.

McNicholas, Celine, Margaret Poydock, Julia Wolfe, Ben Zipperer, Gordon Lafer, and Lola Loustaunau. 2019. Unlawful: U.S. Employers Are Charged with Violating Federal Law in 41.5% of All Union Election Campaigns. Economic Policy Institute, December 2019.

McNicholas, Celine, Lynn Rhinehart, Margaret Poydock, Heidi Shierholz, and Daniel Perez. 2020. Why Unions Are Good for Workers—Especially in a Crisis Like COVID-19: 12 Policies That Would Boost Worker Rights, Safety, and Wages. Economic Policy Institute, August 2020.

Mishel, Lawrence, and Celine McNicholas. 2019. Uber Drivers Are Not Entrepreneurs: NLRB General Counsel Ignores the Realities of Driving for Uber. Economic Policy Institute, September 2019.

National Employment Law Project (NELP). 2021. App-Based Workers Speak: Studies Reveal Anxiety, Frustration, and a Desire for Good Jobs. Produced in collaboration with Gig Workers Rising, Gig Workers Collective, Mobile Workers Alliance, We Drive Progress, Rideshare Drivers United, and Philadelphia Drivers Union, October 2021.

Rosenblat, Alex. 2018. “When Your Boss Is an Algorithm.” New York Times, October 12, 2018.

Schneider, Daniel, and Kristen Harknett. 2019. “Consequences of Routine Work-Schedule Instability for Worker Health and Well-Being.” American Sociological Review 84, no. 1 (February 2019): 82–114, https://doi.org/10.1177/0003122418823184.

Schneider, Daniel, and Kristen Harknett. 2022. “What’s to Like? Facebook as a Tool for Survey Data Collection.” Sociological Methods and Research 51, no. 1 (February 2022): 108–140, https://journals.sagepub.com/doi/full/10.1177/0049124119882477.

Upwork. 2020. Freelance Forward 2020: The U.S. Independent Workforce Report. September 2020.