The push against independent contractors (ICs)—typically in the name of rideshare drivers who are only a small part of the category—keeps returning like a bad flashback from one of the Terminator films, to jam metaphors together. A new approach is the invention of a term, “algorithmic wage discrimination.”
Created by an academic who has been strongly behind draconian rules that would make tens of millions of independent business owners incapable of staying in business, it is another attempt to claim that “everyone” in IC status is oppressed. In truth, there are people who are miscategorized—something over which federal and state governments regularly take heavy action. But this current attempt, like the others that have gone before, is like claiming that because some drivers operate a vehicle under the influence of alcohol, everyone should be required to only take trains, buses, taxis, or bicycles.
The attempts to largely if not completely eliminate IC status has been a union-driven goal that has percolated up through the Democratic party for years. There was the utter disaster of the AB5 bill in California that saw many thousands of truly independent contractors who were happy running their own businesses (and, yes, paying taxes and health insurance) suddenly out on the sidelines of enforced idleness. At the heart was the ABC Test, a 1930s era approach to identifying employees that said those who were in the same line of business as a company for which they performed some work had to be treated as employees.
Eventually the state granted what reportedly became more than 100 exemptions to many occupations, and even now there are many people blocked from making a living. By the way, the claim that the rule would turn former ICs into employees didn’t seem to create a single job, let alone union-paying, which seemed to be one of the intents of the Teamsters-backed legislation.
Then came multiple attempts at passing the PRO Act. Proponents claimed that the included ABC Test—the theme that keeps saying, “I’ll be back”—would only allow ICs to join unions and work within collective bargaining. Tax and employment law attorneys, some who worked for corporations and others for employees and unions, seemed to agree that no one could predict the ultimate impact because of the way laws at the federal level can interact and influence judicial opinions that then have precedence.
Then came the attempt of the Biden administration’s Department of Labor to effectively codify the ABC Test into the Fair Labor Standards Act, or FLSA
FLSA
Now there’s a new twist: “algorithmic wage discrimination,” a phrase that seems to have first appeared in a January 2023 paper by Veena Dubal, a professor of law at the UC College of the Law, San Francisco. Dubal has long looked at “(1) the impact of digital technologies and emerging legal frameworks on the lives of workers, (2) the co-constitutive influences of law and work on identity, and (3) the role of law and lawyers in solidarity movements,” according to her bio at the institution’s website.
As she wrote in her paper, drawing on her “ethnographic study of organizing on-demand workers,” she looked at “the historical rupture in wage calculation, coordination, and distribution arising from the logic of informational capitalism: the use of granular data to produce unpredictable, variable, and personalized hourly pay.” An ethnographic study would not likely know the specific ways that companies collected and applied data. That would be non-ethnographic information requiring cooperation on the part of corporations, which would likely not be willing to share.
Although the article seems to have published in January, various news outlets picked up on it in April, possibly because of a PR push. CBS News wrote, “How companies get inside gig workers’ heads with ‘algorithmic wage discrimination.’” The New York Times Magazine didn’t mention Dubal’s paper but did mention that “workers may find themselves entirely dependent on the largess and the algorithms of the platforms they use.” The LA Times ran a column titled, “If you work for Uber
UBER
AMZN
People opposing IC status have frequently conflated platform work like ridesharing, dog walking, handyperson tasks, and food delivery with the much larger category of independent contracting. According to a 2019 IRS study represented 8.6% of the “1099 workforce,” meaning “self-employed individuals [who] do work for firms or intermediated by firms.”
Supposed “solutions” to issues perceived by some as endemic in platform work turn into calls for contractors being treated as employees—even though big majorities of ICs, including those working through platforms, have repeatedly said they prefer being independent. And then, because of the conflation, that becomes proposals for changes in public policy and apply the same approach to the much bigger self-employment pool.
No doubt that constant data monitoring by big companies can turn into a boiling mess of uncertainty and micromanagement on a level that no comfortable executive has ever experience. Nevertheless, given the focus on organizing, this seems to be one of those places where lawyers are supposed to play a part in solidarity movements, in this case unionization. But that immediately casts a shadow over the work, which is a shame because it does seem likely that large corporations that thrive on technology will use it to find ways to reduce costs.
But it is also unrealistic to say that some visions of “equal pay for equal work” have existed anywhere, including in companies whose employees have strong union representation and collective bargaining.
Take a step back. Algorithmic means something using an algorithm. Merriam-Webster defines algorithm as “a step-by-step procedure for solving a problem or accomplishing some end.”
There have always been rules to determine pay. Merit pay, bonuses, and goal-driven compensation have been around virtually forever. The choices were often based on an owner’s or manager’s perception and whim.
For a long time, companies have used information of one type or another to determine how well people contributed to the bottom line. The smart businesses would then provide incentives to keep the better workers. In any case, they’d use whatever information they had to determine how to split up work and ensure everything got done. Often, employees might not know their relative standings and not push for raises that better reflected their value.
Even in companies where employees were unionized, paper-based collective bargaining contracts, which sometimes can be found at the Department of Labor’s website, offer simpler versions of algorithms that still strictly spell out how much people can be paid in different positions. Often there is a base rate and then a top rate, along with shift differentials, additional amounts paid when out of the office or factory, and schedules for raises, although no guarantees that two people even with the same job title will get the same amount, only a minimum addition.
There are always rules. Do some companies misuse data and treat people like machines? Undoubtedly, and someone working as a contractor at such a firm should, if really an IC and not a misclassified employee, look for other clients and more pleasant experiences.
That does not excuse the many attempts to incorrectly misclassify truly independent contractors as people who need protection, a permanent employer, and presumably the steady guiding hand of a union.
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