Texas AFL-CIO Testimony on Gig Economy Rules

On behalf of the Texas AFL-CIO, a federation of public and private-sector labor unions, I am here to submit oral testimony that supplements the public comments we have submitted on the proposed unemployment insurance rules relating to the so-called “gig economy last month. Specifically, we wish to object to the proposed rules for amending Chapter 815 of the Texas Administrative Code in their entirety.

Allowing employers who use “digital networks” to designate workers as “marketplace contractors,” rather than “employees,” we believe, will result in higher numbers of Texas workers losing access to unemployment insurance benefits. For all practical purposes, a so-called “marketplace contractor” is nothing more than an independent contractor.

The proposed rule will serve as a license for companies to convert their business model to digital platforms in order to classify workers as independent contractors. In addition to unemployment insurance, workers risk losing other benefits such as a half-portion of Social Security and Medicare taxes, overtime pay, retirement and health insurance benefits, and Workers’ Compensation. In addition, once workers are determined to qualify as “marketplace contractors,” they may well lose employment benefits that businesses elect to offer to compete for workers.

We also argue that the Texas Workforce Commission should leave this policy change proposal to the Texas Legislature because the agency exceeds its rule-making authority, and also because it is of such magnitude that it should be deliberated by state legislators.

When the Texas Legislature’s passed House Bill 100 addressing transportation network companies last session, it required the following: 

  • permits;
  • payment of fees;
  • electronic receipts;
  • confirmation that the contractor is at least 18 years of age;
  • criminal background checks of contractors; and
  • protection of consumer information.

The TWC would require none of these items of proof in the proposed rule.

The proposed rules also do not require web-based businesses to maintain proof of legal citizenship, permanent residency, or valid employment authorization for “marketplace contractors.” The rule will create an incentive for businesses to hire undocumented workers while they shed all liability for issues related to their immigration status. 

Undocumented immigrant workers are exploited enough. We don’t need employers to expand that population. This proposed rule would do that.

Finally, we also believe that small businesses will be at a serious competitive disadvantage against companies that operate through a digital platform.

For all of these reasons, we urge the Texas Workforce Commission to drop completely its proposed changes to Chapter 815 relating to Unemployment Insurance of the Texas Administrative Code.