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U.S. Congress debates federal independent contractor model

Uber was chastised for not showing up on Capitol Hill. Credit: Shutterstock

After Uber and Lyft executives failed to appear at a hearing on Capitol Hill at which they were to be chastised for lax safety oversight, lawmakers turned their attention to the merits of making it more difficult for employers to hire independent contractors.

The hearing, held by the Highways and Transit subcommittee of the House Transportation & Infrastructure (T&I) Committee on October 16, focused in part on the need for driver background checks for so-called “transportation network companies,” or TNCs, in the wake of homicides and assaults committed by drivers or those posing as drivers.

However, with Uber CEO Dara Khosrowshahi and Lyft CEO Logan Green declining to attend, the committee was given “little choice but to make these policy decisions without [their] input,” House T&I Committee Chairman Peter DeFazio (D-Oregon) wrote in a letter to the executives days before the hearing.

“It’s hard to imagine that Uber and Lyft didn’t actually show up here today – it’s really disrespectful to the committee and a bad play on their part,” said Thomas Suozzi (D-New York). Suozzi and Chris Smith (R-New Jersey) testified in support of a law they were introducing requiring enhanced vehicle identification to make it more difficult to impersonate a legitimate driver. A college student from Smith’s district was killed earlier this year by a person pretending to be an Uber driver.

But in addition to potential legislation addressing public safety for companies like Uber and Lyft, worker classification was also debated, in the wake of California’s AB5 legislation. The law, which goes into effect on January 1, lowers the threshold in California for classifying a worker as an employee, which has major cost implications not only for ride-sharing companies but for trucking companies that rely instead on independent contractors.

“I frankly think AB5 was the right thing to do in clarifying the difference between independent and employee,” said Representative John Garamendi (D-California) during the hearing. “It certainly affects Uber and Lyft, and it does affect others. We haven’t really gotten into this in detail yet as a committee, but we might need to do so in order to write decent legislation. We should have greater clarity on a national level.”

Frederica Wilson (D-Florida) who chairs the Health, Employment, Labor and Pensions subcommittee of the House Education and Labor Committee, used the opportunity to promote the “Protecting the Right to Organize Act,” a bill introduced earlier this year that would expand the definition of “employee” and “employer” to discourage the classification of workers as independent contractors. It includes language that mirrors the three-pronged “ABC” test in AB5 to determine independent contractor status.

Larry Willis, president of the Transportation Trades Department of the AFL-CIO, testified that the legislation would open the door to union representation, which the International Brotherhood of Teamsters has been attempting to do for years within the port truck drayage sector. “We know union workers across the board do better on wages, benefits and working conditions than their nonunion counterparts, and we think that’s an important path forward for these [ride-sharing company] drivers,” Willis said.

The debate on whether to elevate stricter tests on independent contractor status beyond California was predictable along party lines, however, with Republicans generally opposing the effort. “I don’t necessarily think that this committee should blindly follow the state of California,” said Pete Stauber (R-Minnesota). My state is much different than the state of California. It’s much more rural, and I think we have to have a broader look at this issue and the transportation network companies, and how we can serve not only urban but rural communities.”

Carol Miller (R-West Virginia) worries that reclassifying independent contractors “will take away the flexibility the drivers rely on to drive when they’re not at their main job, and will drastically increase the time riders will need to wait for a ride.”

DeFazio pointed out that Uber, which reported more than $5 billion in losses in the second quarter, with Lyft reporting losses of $650 million, have asked lawmakers to consider subsidizing their operations if they partner with transit agencies and local governments.

“Overcoming our congestion and mobility challenges, particularly in urban areas, will require some innovative solutions,” DeFazio said in a statement. “However, this hearing should put TNCs on notice that for their long-term survival, and for any hope of ever partnering with agencies who utilize federal funds, they are going to have to clean up their acts.”


  1. Art

    Independent contractor is how illegals have jobs… Any job citizens do, an illegal will do cheaper to win the job.
    If government was serious about immigration control and employee misclassification, this loophole would be closed.

    Border wall is a distraction from poor government oversight.
    Visa over stayers are illegals, border wall does not help with that. Illegals are all nationalities not just Mexican, Mr Trump.

  2. Noble1

    Check what Canada intends on doing

    “Bank of Canada exploring digital currency that would replace cash, track how people spend money”

    They will share this information with Canada Revenue and law enforcement .

    What I believe this will lead to is empowering organized crime . They could potentially invent their own medium of exchange to trade on the black market and or filter the digital currency to appear as if one bought X while one actually bought Y . Whatever the case may be ,organized crime has always been one step ahead ………….

    No “law” can beat street smarts .

    The moment banks created interac in the 80’s I knew that eventually they were heading towards paperless currency in order to have a better control over it . Which leads to having more control over YOU / US as people . They managed to fool the masses that is was to simplify their lives ,and the masses bought right into it like sheep . It’s quite sad .

    In my humble opinion …………………….

  3. Noble1

    This may be a little to futuristic at the moment , however, if government were ethical and not bought out there would be an interesting solution to all this especially concerning commercial road transportation . But first we need good ethical government .

    I was listening to the presidential democratic debate the other day and some have some good ideas . I wouldn’t vote for any of them though . Clearly they’re slowly moving towards socialism which I firmly believe will be the next era that we will transition to after this one . I can’t express my opinion concerning republicans because I haven’t listened to their debate .

    Rather than creating a “wealth tax” , government should become a business competitor for the people . They should start buying out major carriers and manufacturers etc and eventually set themselves up to control commercial road transport entirely and generate income other than exploiting its people through taxes . At the beginning it would load government up with debt galore depending on how they structure , however , the businesses acquired would eventually pay off the acquired debt with generated profits . There would no longer be any competition as far as commercial road transportation is concerned in its country nor for necessities . And they will have assured that NOBODY would be in a position to attempt to use transportation(necessities) to bring its country to its knees through a strike of some sort .

    They should do the same will all businesses that cater to necessities ,ie: education , supermarkets , food processing , agriculture , construction , ,mining , health care ,insurance etc . They should take control of the basics in their country and push their people to evolve with ease through free education .

    The people will always have a guaranteed “job” . There will be more than enough profit generated by government “acquired businesses”to pay employees an extremely good wage with benefits and even eliminate taxes . The government sets itself up to really take care of its people as they should wisely .

    Drive the people to evolve through a whole different educational curriculum . Don’t suppress them in an attempt to remain in control . Not only would education be completely free , you would be paid to educate yourselves . Call it an “investment” . This way you could support yourselves well while being educated versus burning yourselves out with part time jobs while educating yourselves and accumulating debt .

    But but but then we will have an over population dilemma because if we really take care of the people then they won’t die as quickly or age as quickly etc etc etc . HEY ! We aren’t at the center of the universe ! There is a whole universe to explore , DEVELOP , and expand our species ! It’s not because you haven’t figured out how yet that it means it’s impossible . Thousands of years ago it was impossible to fly on this planet ! Aircraft what ?

    We were fighting and killing each other based on a silly argument of whether the planet was flat or round ! All this silly waste of energy fighting each other and causing division among each other could be put to better use . And we would be far more advanced than we are today !

    To me it isn’t a challenge to screw each other anymore .We’ve been doing it since the beginning of time . It’s dividing us . The ultimate challenge would be in uniting us and prospering and evolving as a human species as whole more rapidly than ever before for the welfare of everyone .

    People can certainly continue to own businesses but not necessities .

    With the “proper” propaganda we can achieve this . We can change !

    If I were to manage to unite truck drivers and create a major alliance among them , that would be the direction I would be heading towards . Putting our puppets in government ,partnering with them and changing the system for the benefit of the people as a whole more rapidly than you can imagine ………

    In my humble opinion …………

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John Gallagher

Based in Washington, D.C., John specializes in regulation and legislation affecting all sectors of freight transportation. He has covered rail, trucking and maritime issues since 1993 for a variety of publications based in the U.S. and the U.K. John began business reporting in 1993 at Broadcasting & Cable Magazine. He graduated from Florida State University majoring in English and business.