Indie Contractors in the New Economy: In the Name of Industrial Peace

Socio-Legal Perspectives in Labor Law (Fall 2013)

Professor Eric Fink

Elon University School of Law

Final Paper and Upper Level Writing Requirement

Shoshanna Silverberg

ssilverberg@elon.edu

INTRODUCTION

In this paper I look at labor relations in the New Economy, and trace out ways in which these

relations reflect both social progress for workers as well as certain major limitations. A prime

example is the plight of independent contractors in the New Economy. The issues this

demographic faces begins with the misclassification of workers purposely by employers in order

for them to avoid the responsibilities that come with being an employer. The issue is further

complicated by the changing landscape of today’s economy and the different ways in which

people are provided with opportunities to work. Some are more or less forced into ‘self-

employment’ while others elect to be ‘freelancers.’ Conflict emerges when the ethos of workers

now is tantamount to the ethos that drove a movement toward worker protections under federal

legislation in the first place, namely through the National Labor Relations Act. For these

workers, promoting industrial peace through innovative business practices and nontraditional

forms of employment is at the heart of their self-organization. And yet, under labor law, they are

left without many of the protections which other workers whose livelihoods are equally

precarious as ‘employees’ are afforded. This paper seeks to highlight these issues and propose

several ways that the needs of these workers may be addressed.

BACKGROUND

THE WAGNER ACT: HISTORY AND PURPOSE

The Wagner Act, also known as the National Labor Relations Act (NLRA), was passed in

1935 and sought to promote industrial peace.1 To achieve this it encouraged collective

1 See “Not a Limited, Confined, or Private Matter – Who is an ‘Employee’ Under the National labor Relations Act,” by Ellen Dannin, Labor Law Journal, 2008.

bargaining and unionization.2 The “heart” of the Act (Section 7) provides employees

with three distinct statutory rights: (1) to organize; (2) to bargain collectively through a

representative of their own choosing; and (3) to engage in concerted activities for mutual

aid and protection (which includes strikes, pickets, and boycotts, which are protected in

Section 13).3 The National Labor Relations Board (NLRB) was established in Sections 3

and 4, with the procedures it must follow set out in Section 10. The idea was for the

NLRB to be the primary arbitrator of justice between workers and management, with the

federal court system picking up particularly complicated or controversial cases on appeal.

The Wagner Act was amended in 1947 by the Taft-Hartley Act. The aim of Taft-Hartley

was to re-orient the Wagner Act in a more favorable lean toward employers.4 This came

shrouded in the belief that union abuses were too rampant for labor law to tolerate.5 A

taste of what the amendment offered is found in Section 7, which was modified to

explicitly give employees the right to refrain from organizing, collective bargaining, and

engaging in concerted activities for workers’ mutual aid and protection.6 Another

example is the explicit duty the amendment imposed on unions—and by extension on

workers—to bargain in good faith.7 Taft-Hartley also distinguished independent

contractors from employees and excluded the former from the protections of the Act.

2 Secunda, Paul M. and Jeffrey M. Hirsch, Labor Law: A Problem Based Approach, Chapter 1: Struggle for Control Over Employment Relationships at 16.3 Secunda and Hirsch, Chapter 1 at 16.4 See Vinel, Jean-Christian, The Employee: A Political History, University of Pennsylvania Press, Philadelphia: 2013 at 123-24.5 See Secunda at 16.6 Id. at 18.7 Id. at 18.

CURRENT DEBATES

One debate that has raged since the New Deal and that continues to be prescient today is

how independent contractors are distinguished from employees. The issue here is who is

afforded protections under the Wagner Act for organizing, collectively bargaining, and

engaging in mutual aid and protection. More specifically, the issue is who was originally

intended by Congress to receive the protections of the Act, and where do the needs of a

larger and larger independent contractor population fit into the intent of the Act today?

This question has animated discussions of unionization and union activity since 1935,

even more so since 1947, and can be examined in the New Economy by looking at New

York’s Freelancers Union. The FU is comprised of tens of thousands of independently

contracted knowledge workers (i.e. not employees) into a “union” that provides little but

health insurance and the comeraderie afforded by an alliance of workers across many

industries and from a range of income levels. This union illustrates the contemporary

landscape of labor and one way that people are self-organizing in the New Economy.

This brings us to the question: should a union of independent contractors be afforded the

same protections as employees who are similarly situated? Some would argue that these

two groups are not similarly situated, or they would not be classified differently under the

law. However, consistency has not been a hallmark of labor law in this regard. Courts

have found workers to be employees in a spectrum of circumstances, as have they found

workers to be independent contractors in a variety of settings, and under a variety of

working conditions. This is another facet of the employee-independent contractor debate

that will be discussed in this paper.

Within this discussion is an implicit debate about the proper role of congressional intent

in the interpretation of employee status under the Wagner Act. On one hand, we hear

union-friendly voices urging a return to the original intent of the Act, when empowering

workers to self-organize in the interest of industrial peace was at the heart of the

legislation.8 This is a broader type of analysis that tends to be sympathetic to the activity

of unionization. It views “industrial peace” as best served by empowering workers to

self-organize.9 On the other hand we have advocates of a different type of congressional

intent, one manifested in the passage of Taft-Hartley, which sought to limit what

organizers could lawfully achieve under the Act. This perspective lends itself to an

essentially more narrow analysis, where it is common for a worker’s status to be

determined “independent” even if there is reason to believe that allowing that worker to

unionize would be in the service of dismantling a traditional worker-servant relationship,

thus promoting industrial peace. 10 Ultimately, there seems to be a conflict between what

makes for industrial peace, and whether it is the livelihood of workers that constitutes it

or the maintenance of a hierarchical financial status quo.

Finally, this begs the question, what is the status quo in today’s world? What types of

social enterprises typify business practices in the New Economy? What roles are workers

8 See Dannin.9 Id.10 See Zatz, Noah D., “Beyond misclassification: tackling the independent contractor problem without redefining employment,” The Labor Lawyer, 26.2 (Winter 2011).

occupying and how do their roles in society match up with the protections they are or

should be afforded under labor law, specifically, under the Wagner Act? To begin, we

will look at the ethos underlying the “new economy.”

LANDSCAPE OF THE ‘NEW ECONOMY’

Tara Gentile is a gen y blogger who writes and consults on growing businesses in the “new

economy”. In her post, “You are the New Economy: Meaning, Experience, and Connection as

Commerce in the 21st Century,” she cites the euphemism Bruce Nussbaum (founder of Fast

Company) uses—‘indie economics’-- which she re-names ‘you-centered economics’ to describe

her subject.11 12 She states, “[y]ou are not used to being at the center of the economy. You have

not been the linchpin of economic growth. You have been a mere cog in the machine. You were

a commodity to be traded.”13 She goes on. “You are becoming the heart [and] soul of a new

engine of economic growth. You are influencing giant corporations through your words [and]

actions. You are forming microbusinesses and taking earning into your own hands. You are less

dependent on ‘the system’ and more dependent on your community.” She also states, “[b]ut

‘you’ doesn’t just mean you. ‘You’ is also ‘the other.’”14

Gentile characterizes the New Economy as a paradigm of thought that promotes the

understanding that “a business is nothing if it doesn’t serve a greater good. All business is social

11 For more on Nussbaum or “indie economics” see “6 reasons why ‘indie capitalism’ is on the rise,” by Joe McKendrick, June 28, 2013, www.smartplanet.com/blog/bulletin/6-reasons-why-8216indie-capitalism-is-on-the-rise/23110.12 “The Rise of Indie Captialsim,” by Bruce Nussbaum, February 26, 2013, www.businessweek.com/printer/articles//98850-the-rise-of-indie-capitalism13 “You are the New Economy: Meaning, Experience, and Connection as Commerce in the 21st Century,” blog post by Tara Gentile, www.targentile.com/indie-economics/

14 Id.

entrepreneurship . . . All business has an obligation to create a legacy of sustainability, creativity,

innovation, and service . . . Businesses serve people. People do not serve businesses.” I suggest

that the ethos Gentile is describing is both at the heart of New Economy business models and the

changes we are seeing in the re-organization of labor and labor relations as well.

Bolstering this idea, in an online discussion of radio station KCRW’s segment featuring “The

Rise of the Sharing Economy,” one participant referenced the interlocked meaning of

“possessions, ownership, mental stability and happiness” and commented that “every single

thing any psychologist or human behavioral expert will tell you about ownership of

consumerable goods, is that they don’t make you happy. Ever.”15 This belief seems to belie the

New Economy concept of labor. The empty production of goods to facilitate an empty

consumption of goods is becoming increasingly anathema to many.

Along this same line, it seems “work” is no longer being defined by what one performs for the

pure satisfaction or benefit of an employer. “Labor” is something people want to be engaged in,

and the basis for more and more people’s participation in unions has less to do with their

relationship with an employer, or the nature of the work that someone does--and by extension

wages and working conditions—than it has to do with facilitating a more existential type of

connection and support for everyone involved. It is almost as if the ethos of the labor movement

of the 1930’s—with its emphasis on solidarity-- has evolved into an ethos that is more broadly

influencing people’s participation in society. Except now the idea of solidarity has been

supplanted by the concepts of creativity and sustainability.

15 www.kcrw.com/news/programs/tp/tp130902the_rise_of_the_shar

The futurist Paul Saffo once predicted a new ‘creator economy’ replacing the industrial and

consumer economies.16 Social entrepreneur, Bruce Nussbaum, who has written widely on the

New Economy, likes ‘indie capitalism’ because “it captures more of the social context and

values of this new economy.” He writes:

I especially like ‘indie’ because the indie music scene reflects many of the distributive and social structures of this emergent form of capitalism. It’s no accident that Portland and New York have vibrant indie music scenes and are the centers of a rising new indie capitalism . . . [Especially in light of the Occupy movement,] I think that . . . [i]ndie capitalism could be the kind of reinvigorated capitalism that we can all believe in again. To make it really work, we might need a new indie economics (of creativity and innovation), plus a new indie set of political policies.17

Nussbaum points out another characteristic of ‘indie capitalism’ -- “a heightened meaning

embedded in materials and products.” He writes that the “entire notion of brand is upended in

indie capitalism, superseded by the community surrounding the creation of a product or service.

Authenticity is the ‘brand’ in many cases.” This is interesting for a number of reasons, but one is

Nussbaum’s use of the term embeddedness, and the salute he is implicitly giving to social

theorists of the past, such as Karl Polanyi.18

Nancy Fraser, a New School Professor who writes about the re-framing phenomenon going on in

various strands of political activism of the New Economy, observes the need for a ‘third

movement’—one that is both a departure from and a rail against the neoloberalism that has

marked political upheaval in earlier generations. She calls this movement emancipatory and,

16 “4 Reasons Why the Future of Capitalism is Homegrown, Small Scale, And Independent,” by Bruce Nussbaum, December 5, 2011, http://www.fastcodesign.com/1665567/4-reasons-why-the-future-of-capitalism-is-homegrown-small-scale-and-independent

17 Id.18 See Karl Polanyi’s seminal work The Great Transformation: The Political and Economic Origins of Our Time, Rinehart, New York: 1944.

“like Polanyi’s [double movement], the triple movement serves as an analytical device for

parsing the grammar of social struggle in capitalist society.”19

For Fraser and other theorists in Polanyi’s lineage, marketization on the one hand and social

protection on the other constitute the original ‘double movement’. The third would then be some

sort of reaction against yet means to enfold and overcome both of these. The triple movement

would be a way for workers to use the social progress that has allowed them to work in a broader

and broader spectrum of ways, and leverage this increased sense of freedom in connection with

others who identify with it, and collectively, use ‘work’ as a form of resistance. In other words,

for authenticity, as Nussbaum puts it, to be embedded in the New Economy, is for work itself to

be becoming, as Fraser puts it, emancipatory. Thus, the New Economy is about making ‘work’

work for people, and not against them. It is about labor serving as a vehicle for personal growth,

and, embedded in that, is a possibility for work to, perhaps subversively, promote industrial

peace. 20

Some have criticized the burgeoning “indie” approach to capitalism for being nothing other than

what it purports to be undermining or subverting. Examples here include Airbnb and

TaskRabbit, companies that trade on the power of collaborative, embedded means to achieve

what some call nothing but the same kind of profit every other capitalist machine is invented to

“create.” Blogger Tom Slee claims Airbnb and TaskRabbit exploit the term “sharing

economy”—another name for what is afoot in the New Economy--and convert it into terms such

19 Fraser, Nancy, “A Triple Movement? Parsing the Politics of Crisis after Polanyi,” New Left Review 81, May-June 2013.20 See also “From Polanyi to Pollyanna: The False Optimism of Global Labor Studies,” by Michael Burawoy, Global Labour Journal, Vol 1, Issue 2, 2010; and “Globalization and Contestation: A Polanyian Problematic by Ronaldo Munck, Globalizations, Vol. 3, No. 2, June 2006.

as “peer power.” By doing so, he argues these capitalists are appropriating what Slee seems to

regard as a truer from of a solidarity/sharing ethos and propagating a business model that is at its

core no different from large corporations with no purported desire to advance collaborative

cultural values.21 This goes against the very grain of a “new” economy.22

In this same vein, George Smith (webmaster at “dick destiny”) wrote in a 2013 blogpost entitled

“Culture of Lickspittle, Decline and Fall, that “[t]he destruction of payment for recorded music

was the first grand achievement of the sharing economy.” He says that “placed within the larger

context of how inequality is [so] high in the US . . . those with access to the means of the sharing

economy employ it to take larger and larger pieces from an economic pie through divestment

from fair compensation for labor.” “More gallingly,” Smith intones, “you can surely say that

Apple and iTunes store funneling digital music purchases through a country with a legal

mechanism for tax evasion is innovation. And Google’s development of YouTube as a service

that provides a great deal of free pirated music with the salve that by attaching a link to a copy of

it at the iTunes store is certainly some kind of wee innovation. But you can also call such things

parasitic or predatory.”23

To clarify, this concept of ‘peer power’ and the term ‘sharing economy’ are euphemisms being

used, as bloggers such as Slee and Smith point out, to describe both the actions of worker-21 “Why the Sharing Economy Isn’t,” by Tom Slee, August 30, 2013, http://tomslee.net/2013/08/why-the-sharing-economy-isnt.html

22 Another blog post, this one by Lita Kurth, quotes an interview subject about employees/independent contractors working for TaskRabbit: ‘They have no insurance. They walk into unknown situations and often get paid less than minimum wage to do unthinkable tasks. This person found themselves knee deep in cat diarrhea.’ “No minimum wage is required, no one is monitoring the posters for truthfulness about the task (all they need is an email and a credit card).” See “Destroying Labor Law in the ‘Sharing Economy’” at www.classism.org/destroying-labor-law-sharing-economy. 23 CAHY: Labor the ‘sharing economy’, by George Smith (webmaster at dick destiny) on Culture of Lickspittle, Decline and Fall, July 5, 2013 (dickdestiny.com/blog1/?p=15540)

consumers and the larger movement these actors’ habits and decisions are creating.24

“Collaborative consumption” is another term of art that has gained cache, popularized by Rachel

Botsman in her book What’s Mine is Yours. As MIT Center for Civic Media blogger Denise

Cheng explains in her “Glossary for the Sharing Economy,” collaborative consumption “is an

economy where there is net-zero production. On a company level, this looks like the upfront

cost of equipment that will be rented out countless times, what Botsman calls a ‘product service

system’ (think car sharing or bike sharing). On an individual level, this could be renting out a

spare room or other idling asset. [But i]n both of these situations, continual production is

avoided.”25 26

What this trend also avoids is placing one’s trust in a company that promises to provide a service

or product. Instead, one is connected with other individuals who have needs compatible with her

own. This transaction allows for both parties to get what they need at minimal cost and with

non-traditional profits—that is, profit in terms other than dollars. In fact, Botsman argues that

the very currency of the New Economy is trust.27 And she is not alone.

Ulf Zimmerman wrote a book review of three recently published volumes: Frans de Waal’s The

Age of Empathy: Nature’s Lessons for a Kinder Society; Jeremy Rifkin’s The Empathic

Civilization: The Race to Global Consciousness in a World in Crisis; and J.D. Trout’s The

24 Other terms being used are “solidarity economy,” “gig economy,” “collaborative economy,” “informal economy,” “hustling economy,” “circular economy,” “anarchy economy,” and “guelaguetza,” as practiced in Oaxaca, Mexico. See http://civic.mit.edu/blog/hidenise/terminology-101-a-glossary-for-the-sharing-economy.25 http://civic.mit.edu/blog/hidenise/terminology-101-a-glossary-for-the-sharing-economy26 For more on Rachel Botsman’s work see http://www.ted.com/talks/rachel_botsman_the_case_for_collaborative_consumption.html27 http://www.ted.com/talks/rachel_botsman_the_currency_of_the_new_economy_is_trust.html

Empathy Gap: Building Bridges to the Good Life and the Good Society.28 Zimmerman himself is

a leadership and ethics professor at Kennesaw State University in its MPA program. One of the

points Zimmerman discusses from de Waal’s book is that today, “one year’s peasant could be

another year’s prince—or at least ‘industrial baron’,” (498) and that “[s]elf-interest and wealth

do not suffice, [de Waal] aptly reminds us, to make a society successful; surveys consistently

show that the greatest happiness is found not in the wealthiest nations but in those with the

highest levels of trust among citizens.”29

Zimmerman notes Rifkin’s observation that “we do not seek autonomy [even as infants] so much

as companionship.”30 “Thus, survival of the fittest is ‘as much about pro-social behavior and

cooperation as physical brawn and competition’ (81).”31 Elucidating a common thread

connecting all three of these authors’ work, Zimmerman surmises that “the purpose of freedom is

[therefore] not just to attain autonomy, but to fulfill life through companionship, affection, and

belonging, and this freedom is based on trust.”32

Going further, Zimmerman notes that “Americans have ‘the pursuit of happiness’ . . . and one

could read Trout’s book as making the case that more empathic government and policies would

facilitate that pursuit.”33 Another way of looking at this is from de Waal’s view that “Thomas

Jefferson’s formulation of ‘all men’s’ unalienable rights to life, liberty, and the pursuit of

happiness added the notion that are creatures in search of self-fulfillment—a new narrative that

28 Zimmermann, Ulf, “Empathy, Ethics, Emotional Labor, and the Ethos of Democracy,” Public Administration Review, May/June 2011.29 Id.30 Id.31 Id.32 Id.33 Id.

yokes together rationalism and romanticism” (499). This, he says, “gave rise to a new surge of

empathy that corresponded to the takeoff of the Industrial Revolution.”34 De Waal goes on to

explain:

For Rifkin, a second Industrial Revolution had an equally large impact on our empathic consciousness: ‘The coming together of the electricity revolution with the oil-powered internal combustion engine would give birth to a new communications/energy regime and bring with it still another leap in human cognition’ (366). Telephones and automobiles quickened the pace of life, allowing the average individual to become much more widely enmeshed in social networks. This led to a leveling of social hierarchies, a democratization of human experience, as we were increasingly exposed to others, and, while we looked more into ourselves, we also looked more at them. This new self-reflective psychological age ‘peaked in the 1960s and 1970s with the surge of the counter-culture and social activism among the baby-boom generation’ (366).”35

Now, de Waal offers, “we are in the ‘age of empathy’ and, by way of illustration, [Rifkin] cites

the virtually global mourning of the death of Princess Diana. More concretely, today the

majority of people live in urban areas, which increases cosmopolitanism, signifying an

increasing appreciation of diversity,” and [a]nthropologists contend that social exchange always

precedes commercial exchange—that is, trust building precedes capital building (499-500).”

Here, we begin to verge on Ronald Inglehart’s theory of ‘culture shift’ “from materialist to

postmaterialist . . . which mirrors this shift to more empathic consciousness (500).”

In this vein, “Rifkin sees . . . our only hope in a ‘Third Industrial Revolution’ with ‘distributed

energies’ and ‘distributed capitalism,’ . . . which is . . . more about sharing and collaboration than

about competition, as we already have seen in phenomena such as Linux and the whole new

information and communication technology….”36 De Waal summarizes by stating, “[t]here will

still be money made, but by selling not a CD but access to a time segment of music, not be

34 Id.35 Id.36 Id.

selling a set of the Encyclopedia Britanica but access to it, not, to add an even more salient

example I have seen, by buying or renting a car, but by ‘sharing’ a Zipcar . . ..”37 38 Claims that

the rise of Wikipedia and the Open Source software movement illustrate the recent emergence of

“large-scale peer production and the growth of gift economies” have been made by others as

well.39 These all hinge on a sense of opening at the heart of what we regard as “the economy.”

No longer is our trust in democracy tethered to what ‘the economy’ can do for us or what we

must do for it. Rather, individuals’ pursuit of happiness and prosperity is more and more tied up

in the ethos of what we can collectively achieve as participants in the New Economy, both as

workers and as consumers.

The ethos we are discussing, that is now at the heart of economics for many citizens of this

country, strikes a similar chord to what the ethos was for labor organizing in the 1930’s. Here

we shift gears and begin to look at the landscape of unions in the New Economy.

UNIONS IN THE ‘NEW ECONOMY’

Only 6.9 percent of private sector workers are now in unions. This percentage is lower now than

it was at the start of the Great Depression.40 Only 12.3 percent of American wage and salary

workers belong to unions today, according to the Bureau of Labor Statistics, down from a peak

37 Id.38 For a more nuanced analysis of Zipcar see Harvard Business Review blogposts http://blogs.hbr.org/2013/01/from-zipcar-to-the-sharing-eco/ and http://hbr.org/2010/10/beyond-zipcar-collaborative-consumption/39 Stigmergic Collaboration: The Evolution of Group Work, by Mark Elliott, 9 Media Culture Journal 2, May, 2006 (http://journal.media-culture.org/au/0605/03-elliott.php40 Bill Moyers - Full Show: Is Labor A Lost Cause? July 6, 2012, billmoyers.com/wp-content/themes/billmoyers/transcript-print.php?post=10317

of about one-third of the work force in 1955.41 Popular setiment toward organized labor is also

at an all-time low of 45%.42

In a recent online discussion, Bill Moyers asked his listeners, “with corporations continuing to

put the squeeze on employees, with joblessness and inequality rampant, now would seem the

perfect time for people to turn back to unions to fight for them against the monied interests.

Why haven’t they?”

One response to Moyers’ question came from Diane Kalen-Sukra, “a self-described ’20-year

veteran of labor and union rep for N.A.’s largest unions.’” She wrote:

Everybody knows that union density and power has been on a steady decline for the past 30 years. Like a fighter past his prime, we spend a lot of time remembering and reminding others [of] our past battles and achievements—the eight hour workday, employment insurance, and social security to name a few. Trade union policy papers endlessly blame this decline on the severity of the neo-liberal attack on the social welfare state, unions and workers’ rights and encourage ways to address this by supporting progressive politicians, organizing the unorganized and encouraging young workers to ‘get involved’… Why is it, for instance, that the Occupy movement was able to do more to educate, inspire and change the public is discourse around social and economic inequality, the corporate agenda, the casino economy and threats to our democracy, in the first few months of its relatively unorganized and unfunded existence, than the entire labour movement, with its wealth, army of researchers and octopus-like communications apparatus, was able to do in a generation?

Another contributor wrote, “[s]mall farmers, small business owners, freelancers and others who

work in the gig economy need to be recognized as workers, too.43 Unions in the US focused on

large industries and the public sector, and when small business people are considered at all, they

41 “When Unions Mattered, Prosperity Was Shared,” by E.J. Dionne Jr., The Washington Post, Monday, September 6, 2010.

42 “The ‘I’ in Union, by Atossa Araxia Abrahamian, Dissent Magazine, Winter 2012. See www.dissentmagazine.org/article/the-i-in-union.43 “Gig economy” is another term used to describe the New Economy – see Chang, Miniglossary.

are lumped together (as employers or potential employers) with the large corporations, rather

than seeing they have much more in common with workers.”

Moyers engaged further on this topic with Stephen Lerner, a long-time community organizer and

architect of the Justice for Janitors campaign, and Bill Fletcher Jr., a Harvard Law alum who has

worked as a shipyard welder and become an activist fighting for racial justice and union

democracy. Both have also worked with the SEIU. Lerner opens the conversation by stating

that “[t]he question is less is it the right moment to organize, but what are the ways we organize

and what are the things that we have to start doing that really let us take on corporate power.” In

response to Moyers’ question, “Why isn’t th[e current moment in history] the opportunity for an

old fashioned, good old fight for the working people?” Lerner says, “We need . . . [a] new level

of vitality, a new level of tactics, new strategies, new forms of organization that we have not

previously used. That’s where we are.”44

There are many claims against the practices if not the role of traditional unions. There is a

sentiment that the old economy’s approach to unionizing “demand[ ] that union employees

tolerate their own exploitation as a necessary condition of working to free others from

exploitation.”45 This might be referred to as a “’[s]hit happens’ defense, a less ideologically

charged cousin of the appeal to shared sacrifice.”46 Also to this point, it has been said that “[t]rue

unionists tend to (rightfully) view staff-run unions as oligarchies, disconnected from the

44 Bill Moyers - Full Show: Is Labor A Lost Cause? July 6, 2012, billmoyers.com/wp-content/themes/billmoyers/transcript-print.php?post=1031745 “When the Union’s the Boss,” by Ned Resnikoff, jacobin/a magazine of culture and polemic, jacobinmag.com/2013/04/when-the-unions-the-boss/

46 Id.

concerns of their members and little better than other hierarchical private entities.”47 And that

“[i]f workplace democracy is to survive and grow over the next few decades, it requires the

cooperation of a diverse coalition in its favor. Firm principles unify such coalitions. Unions

abandon them at their peril.”48

While it seems there are traditional unions and union organizers who are out there organizing

workers in tune with the views espoused above, the intricacies of this approach to organizing, the

success rates and the challenges are beyond the scope of this paper.49 However, other responses

to these concerns are within the scope of this paper, and they can be addressed by what

Freelancers Union Founder, Sara Horowitz, calls “new mutualism.”

Horowitz leads one of the nation’s fastest-growing labor organizations and expects to hit the one

million member mark within three years. This growth is occurring amidst high rates of

unemployment, and parallels the decline of union membership across Labor’s traditional strong

hold industries, such as construction and manufacturing.

Because the Freelancers are, by definition of being “freelancers,” not employees, the Union does

not bargain with employers. What it does do, however, is provide what members deem their

number one priority: affordable health insurance. Horowitz says that having health insurance

makes it far easier for her members to be part of what she calls the ‘gig economy.’50 We may

47 Id.48 Id.49 For a great synopsis of what is happening in this regard (i.e. using Worker Centers) see Confronting the Gloves-Off Economy: America’s Broken Labor Standards and How to Fix Them, edited by Annette Bernhardt, Heather Boushey, Laura Dresser & Chris Tilly; written by Scott Martelle and published by the Labor and Employment Relations Association in 2008.50 “Tackling Concerns of Independent Workers,” by Steven Greenhouse, The New York Times, March 23, 2013.

also think of this as what some, like Nussbaum, calls the ‘indie economy,’ and what Gentile

describes as the “new economy.”

Horowitz is adamant that the FU “is indeed a labor union because, like other unions, it is a large,

influential, self-supporting organization of workers that pushes to advance their interests, [even

though] its members work for numerous employers in many industries.”51 Janice R. Fine, a

professor of employment relations at Rutgers University, says, “It reminds me of the old guilds

[…] that focused on workers’ individual autonomy, trying to build their own careers, with the

backing of a collective organization to assist them.”52 Yet in lockstep with the buzzwords

various economists and business types are coining to describe the New Economy, a colleague of

Horowitz’s characterizes her as “more like an entrepreneur than an old-style union leader.”53

WHO IS BEING SERVED AND WHY THIS DEMOGRAPHIC IS IMPORTANT

Horowitz, was shocked when she was hired by a Manhattan law firm twenty years ago and found

out the firm intended to treat her not as an employee, but as an independent contractor. As the

New York Times reports it, “She [then] realized that she was part of a trend in which American

employers relied increasingly on independent contractors, temporary workers, contract

employees and freelancers to cut costs. Somewhat bewildered and somewhat angry, she and two

other young lawyers who were also hired as independent contractors jokingly formed what they

called the ‘Transient Workers Union, with the facetious motto, ‘The union makes us not so

weak.’”54 Since then, her satirical union has grown into a source to be reckoned with.

51 Id.52 Id.53 Id.54 “Tackling Concerns of Independent Workers,” by Steven Greenhouse, The New York Times, March 23, 2013.

The FU recently conducted an internal survey to get a sense of the socio-economic makeup of its

membership. Findings included the fact that 58% of FU members earn less than $50,000 per

annum (in New York), that 29% earn less than $25,000 annually, and that 12% received food

stamps during the recession, many of whom were college graduates in their 30s and 40s.55

Horowitz contextualizes these statistics by stating, “In today’s economy, there’s a huge chunk of

the middle class that’s being pushed down into the working class and working poor […] and

freelancers are the first group that’s happening to.” Again, not all of these workers are

freelancers by choice; in many cases companies have pushed them into this status because they

either cannot or will not cover the costs requisite for hiring someone as an employee rather than

as an independent contractor. What is new though, is how desperate for basic needs such as food

and health care these middle class “knowledge” workers have become.

Horowitz says her union addresses the needs of people who, like her twenty years ago, have

every hope of being actual employees, but have been shut off from that possibility by companies

whose bottom lines are fattened by reducing its work force to part-time hours or simply refusing

to hire individuals if they are not willing to work as independent contractors.56 This brings us to

a New Economy problem: the combination of misclassified workers and self-selecting

freelancers create a work force that is shut out of the protections of labor law while these

workers, however privileged in certain ways, need these protections.

55 Id.56 For support see Jost, Micah Prieb Stoltzfux, “Independent Contractors, Employees, and Entrepreneurialism Under the National Labor Relations Act: A Worker-by-Worker Approach,” 68 Wash. & Lee L. Rev. 311 (2011); also see Zatz, Noah D., “Beyond misclassification: tackling the independent contractor problem without redefining employment,” The Labor Lawyer, 26.2 (Winter 2011).

WORKERS WHO ARE CLASSIFIED AS INDEPENDENT CONTRACTORS

As Horowitz’s story demonstrates, one problem facing many workers is misclassification. That

is, the use of the term ‘independent contractor’ to classify workers that might easily also be

called ‘employees’ simply to fatten companies’ bottomlines. Companies who misclassify their

workers purposely in order to gain various benefits of not having “employees” on their payrolls

do so to avoid certain federal and state taxes, and the obligation to provide employee benefits

such as health care, as well as workers’ compensation or unemployment insurance

contributions.57 It is true that independent contractors may enjoy various benefits of the

classification themselves, from being their own bosses, to owning their own client lists, or even

retaining exclusive copyright ownership of any work they may create.58 59 The problem though is

that while employees are afforded protections in labor law—for activities such as providing

mutual aid and protection, collective bargaining, and conducting strikes—independent

contractors are not.

One way this issue presents itself is encapsulated below:

State and federal antitrust statutes currently render unlawful certain anticompetitive contracts, combinations, and conspiracies. While human labor is not considered to be a commodity subject to these laws, courts have found collective negotiation and concerted action by independent contractors to constitute illegal price fixing and an unlawful restraint on trade.60

57 Id.58 Id.59 See Comty. For Creative Non-Violence v. Reid, 490 U.S. 730 (1989).60 See Jost.

Thus one major factor apart from the issue of benefits and taxes that companies may bank on

when deciding whether or not to classify their workers as independent contractors is the threat of

unionization, which misclassification allows employers to undermine or forestall.61

But there are other reasons for workers to be hired on as independent contractors as well.

Charles Heckscher, director of the Center for Workplace Transformation at Rutgers University,

sits on the board of the FU and argues:

‘[C]ompanies have clearly and widely moved away from taking responsibility for long-term careers. These certainly include crude cost-cutting considerations, but they also reflect the deeper economic changes with skills and demand metamorphosing so rapidly in so many domains, it is often more effective to look for those with needed skills on the open market rather than developing them internally. Once companies begin to do that, they tend to break the whole pattern of expectations and commitments which grounded the classic system.’62

In The Precariat: The New Dangerous Class, professor of economic security at the University of

Bath, Guy Standing, explains that there are three types of workers in the New Economy. These

are the ‘salariat,’ who “hold steady, old-fashioned jobs at a fixed workplace; the ‘proficians,’

who are highly educated and sell advanced skills that have grown in value in the so-called

‘knowledge economy’; and the ‘precariat,’ for whom employment is typically short-lived,

uncertain, and delivered without a benefits package.”63 In short:

[C]ompanies saw the benefits of using freelancers and began to do so in order to remain competitive. The trend remains strong: the most recent round of layoffs at the Los Angeles Times—where the paper’s entire book section was let go, then given the option to be re-hired without benefits—is a perfect, if localized, example of such cost-cutting.

61 See Zatz.62 See Abrahamian.63 Id.

Desperate for work and unable to find any elsewhere, much of the staff stayed on.64

Standing says there is overlap between these categories, which we can see in the statistical

breakdown of the FU provided earlier. The problem is, regardless of which category these

workers fit into, while they may enjoy to some degree their ‘precarious’ status, they must also

suffer from a certain amount of uncertainty professionally. They are workers who contribute to

the development of many diverse fields. They have typically invested significant time and

money in their educations, and their ability to hold down consistent employment, let alone

employment that compensates them adequately to stay current with their school loans or keep up

with their rent or mortgages, is severely compromised not simply by their choice to become

‘freelancers’ or their employers’ choices to hire them as contractors, but by the nature of the

New Economy. Labor relations have changed, and people’s choices as far as how to realistically

support themselves, have also changed.

WHAT IT MEANS TO BE AN INDEPENDENT CONTRACTOR UNDER THE LAW

At base, an independent contractor is a worker who retains a certain amount of control

over her or his working conditions, whereas an employee lacks a certain amount of

control.65 Labor law in the United States rests on this distinction. While it would seem

that the National Labor Relations Board and the Supreme Court should be able to easily

separate the wheat from the chaff and decide these cases of employee versus indie

contractor in equitable terms, historically the issue has been treated with anything but

64 Id.65 Bryan, Sarah P., “The fundamentals of independent contractors,” Labor & Employment Law, 40.1 (Fall 2011).

clear-cut rules or certitude. To understand the relevance of this issue today, we will take

a look at the NLRB v. Hearst Publications case of 1944.66

In Hearst, the Supreme Court affirmed an earlier Labor Board decision that Los Angeles

newsies (“newsboys”) were indeed employees under the Wagner Act. At least in large

part, the Court came to this conclusion based on an application of the “common law

agency test,” which it declared is not “simple, uniform and easily applicable.”67 In fact,

particularly out of the attempted transfer of tort law principles determining employment

status to the field of labor law, Justice Rutledge admitted, “[f]ew problems in the law

have given greater variety of application and conflict in results than the cases arising in

the borderland between what is clearly an employer-employee relationship and what is

clearly one of independent, entrepreneurial dealing. This is true within the limited field

of determining vicarious liability in tort. It becomes more so when the field is expanded

to include all of the possible applications of the distinction.”68

Justice Routledge went on to state that “congress had in mind a wider field than the

narrow technical legal relation of ‘master and servant,’ as the common law had worked

this out in all its variations, and the same time a narrower one than the entire area of

rendering service to others.”69 He wrote that the question as to who is considered an

employee and who an independent contractor “comes down . . . to how much [is]

included of the intermediate region between what is clearly and unequivocally

66 NLRB v. Hearst Publ’ns, Inc., 322 U.S. 111 (1944).67 Id. at 120.68 Id. at 121.69 Id. at 124.

‘employment,’ by any appropriate test, and what is as clearly entrepreneurial enterprise

and not employment.” His sensitivity and the sensitivity of the Court itself, seems to

have been focused on supporting the aims of a Congress that “sought to find a broad

solution, one that would bring industrial peace by substituting, so far as its power could

reach, the rights of workers to self-organization and collective bargaining . . . .”70

Yet, “only partial solutions [c]ould be provided if large segments of workers about whose

technical legal position such local differences exist should be wholly excluded from

coverage by reason of such differences.”71 If this happened, or if the Court relied on too

technical of a definition that was not attenuated closely enough to the particular facts of

each one of its cases, “[t]he consequences would be ultimately to defeat, in part at least,

the achievement of the statute’s objective.”72 With this said, the Court’s rationale was

that in Hearst, newsboys were employees. It felt that “the broad language of the

[Wagner] Act’s definitions, which in terms reject conventional limitations on such

conceptions as ‘employee,’ [and] ‘employer,’ . . . leaves no doubt that its applicability is

to be determined broadly, in doubtful situations, by underlying economic facts rather than

technically and exclusively by previously established legal classification.”73

Specifically, the Court found that newsboys were employees because they “work[ed]

continuously and regularly, rel[ied] upon their earnings for the support of themselves and

their families, and ha[d] their total wages influenced in large measure by the publishers,

70 Id. at 125.71 Id.72 Id.73 Id. at 129, citing NLRB v. Blount, 131 F.2d 585 (8th Cir. 1942).

who dictate[d] their buying and selling prices, fix[ed] their markets and control[led] their

supply of papers.”74 The Court’s decision was also based on the fact that newsboys’

“hours of work and their efforts on the job [were] supervised and to some extent

prescribed by the publishers or their agents. Much of their sales equipment and

advertising materials [were] furnished by the publishers with the intention that it be used

for the publisher’s benefit.”75

This decision came despite the fact that the terms and conditions of the newsboys’ work

were variable, depending on whether they wanted to work part-time or fulltime, or were

inclined to work on a permanent basis or a temporary one, and their activities of actually

selling their papers were in public spaces—street corners—where they were free to move

and communicate as they saw fit. While the Court applied the common law agency test,

also known as the “control test”, in order to assess whether newsboys were employees or

independent contractors, it also viewed the totality of facts in this case as indicating a

relationship of economic dependence existed between Hearst and its workers. These

workers were more dependent upon their employer for a livelihood than they were

afforded the opportunity to make money or generate some type of independent livelihood

through this arrangement for themselves. This meant that even if under the common law

test they could have been found to be independent contractors, their overall condition

more heavily reflected the confines of a master-servant relationship than one in which the

workers were in a position to achieve results for their own entrepreneurial benefit.

74 Id. at 131.75 Id.

The significance of Hearst is twofold. First, the Court in Hearst demonstrated a classic

application of the common law agency/control test, providing clarity as far as what

factors could be looked to when deciding whether a worker was an employee or

independent contractor. But second, the Court was in this case willing to give greater

weight to certain factors from the control test – namely, the entrepreneurial opportunity,

or economic dependence/realities test—so that it could identify genuine imbalances of

bargaining power and remedy them by affording the relatively disempowered workers

protections to organize under the law. Another way of explaining this is that the Court

used congressional intent to justify its broader examination of the facts in this case and

came up with a ruling that reflected an attunement to the totality of circumstances that

create a worker’s position in relation to his/her employer/manager (i.e. the master-servant

relationship).76 Therefore, despite findings that could have amounted to a decision for

newsboys being independent contractors, a broader reading of the case led to a decision

that recognized newsboys’ as statutory employees with the right to organize and

collectively bargain.77

A third legacy of the Hearst case, however, is told through the enactment of the Taft-

Hartley Act in 1947, just three years after Hearst was decided. As backlash against

Hearst, Taft-Hartley amended the Wagner Act to exclude independent contractors from

its definition of employees.78 Then the Court, in NLRB v. United Ins. Co. of Am., made it

clear that only the common law test was to govern who was an employee versus an

independent contractor. It did so by ruling in United Ins. that “[t]he obvious purpose of

76 See Jost generally.77 See Zatz generally.78 Contingent Workforce Sec. 7.04, Law Journal Press, 2013.

[the Act as amended] was to have the NLRB and the courts apply [only] general agency

principles in distinguishing between employees and independent contractors . . . “79. The

implication of the Court’s decision in United Ins. was that, within this analysis, no one

factor should be decisive.80 And so, the broad interpretation of the original Wagner Act

was waylaid by the design of an amendment that sought to keep independent contractors

from unionizing. Furthermore, the economic realities test, also interpreted as an

entrepreneurial opportunity test, was re-casted as simply one factor amongst many that

should be evaluated with equal weight in subsequent cases. In this sense, the question of

whether one’s overall position within the employment scheme was more consistent with

the identity of a master or a servant, was relegated into obscurity.

An additional outcome of the United Ins. case was that the Supreme Court set forth a

standard of review for deciding similar cases: “lower courts should uphold Board status

determinations only if it can be said that the Board made a ‘choice between two fairly

conflicting views.’”81 In application, this means that when the courts receive cases that

have already been decided by the Labor Board, the case must have major points on both

sides of the employee/independent contractor issue for workers’ rights as employees to be

upheld. The significance of this can be viewed through the prism of cases such as

Corporate Express Delivery Sys. v. NLRB and FedEx Home Delivery v. NLRB.82 83

79 Jost at fn 60 quoting NLRB v. United Ins. Co. of Am., 390 U.S. 254, 256 (1968).80 See HN2, NLRB v. United Ins. Co., 390 U.S. 254 (1968 LEXIS 3014).81 Bosley, Jeffrey S., “District of Columbia Court of Appeals reverses National Labor Relations Board and finds delivery drivers are independent contractors,” Employee Relations Law Journal, 35.3 (Winter 2009).82 Corporate Express Delivery Sys. v. NLRB, 292 F.3d 777; 2002 U.S. App. LEXIS 11139.83 FedEx Home Delivery v. NLRB, 563 F.3d 492; 385 U.S. App. D.C. 283; 2009 U.S. App. LEXIS 8272.

In Corporate Express, we see somewhat of a comeback of Hearst logic being applied by

the D.C. Appeals Court. In this case, as in Hearst, there were many factors of the control

test that could be handed to both sides of the debate over whether a company’s workers

were employees versus independent contractors. In accordance with United Ins., the

evidence created a choice between two fairly conflicting views.84 What the court allowed

to decide this case, however, was the entrepreneurial opportunity factor, which provided

for another layer of analysis to be applied over application of the control test. The court

wrote:

We uphold as reasonable the Board’s decision, at the urging of the General Counsel, to focus not upon the employer’s control of the means and manner of the work but instead upon whether the putative independent contractors have a ‘significant entrepreneurial opportunity for gain or loss.’ We agree with the Board’s suggestion that the latter factor better captures the distinction between an employee and an independent contractor. For example, as the Board points out, ‘the full-time cook is regarded as a servant [brackets part of opinion: rather than as an independent contractor] although it is understood that the employer will exercise no control over the cooking,’ RESTATEMENT (SECOND) OF AGENCY SEC 202(1) cmt. D (1957). Similarly, a corporate executive is an employee despite enjoying substantial control over the manner in which he does his job. Conversely, a lawn-care provider who periodically services each of several sites is an independent contractor regardless of how closely his clients supervise and control his work. The full-time cook and the executive are employees and the lawn-care provider is an independent contractor not because of the degree of supervision under which each labors but because of the degree to which each functions as an entrepreneur – that is, takes economic risk and has the corresponding opportunity to profit from working smarter, not just harder.85

The D.C. Circuit followed its own approach in Corporate Express in FedEx, where it

held that “’both this court and the Board, while retaining all of the common law factors,

“shifted the emphasis” away from the unwieldy control inquiry in favor of a more

84 See Corporate Express at 779.85 Id. at 780.

accurate proxy: whether the “putative independent contractors have significant

entrepreneurial opportunity for gain or loss.”’”86

This decision has been criticized for allowing employers more opportunity to exclude

workers who would typically be considered employees.87 I wonder, however, if it may

also present an opportunity for a broader interpretation of employees to be applied in the

future. I wonder this because, while looking at the entrepreneurial opportunity factor in

isolation or as a magic sort of rubric for deciding what might otherwise lie in the province

of a traditional control test, could we not at the same time be hearing a message from the

courts that an economic realities test might also provide a basis for deciding whether or

not a master-servant relationship exists, and from there, determining how much

entrepreneurial opportunity actually exists? The court in FedEx said no, but with

purposeful misclassification so high and an abundance of freelancers whose economic

realities dictate their identities align closer to servant than to master, perhaps there is

hope. At the least, there is a need for this type of broader interpretation and these cases

may indicate the beginning of a trend in this direction.

Another recent case that highlights the issue of how courts and the Labor Board interpret

decisions concerning workers who might be classified as either employees or

independent contractors, is The Greater Lancaster Federation of Musicians complaint

against the Lancaster Symphony Orchestra. In Lancaster, despite the fact that musicians

sign a one-year contract indicating their status as independent contractors, the Board

86 Hirsch, Jeffrey M., “Employee or Entrepreneur?” 68 Wash. & Lee L. Rev. 353 (2011) quoting Fed Ex at 497 quoting Corporate Express at 780.87 See Hirsch at 355 and see Jost generally.

found that they are in a practical sense employees who should be afforded the protections

of the Wagner Act for their self-organization. While factors of the common law test

mounted up on both sides of the issue, when it considered entrepreneurial activity as one

of the factors, the Board seemed to see a larger context for its interpretation of this

question. It wrote:

The fact that the musicians can decide not to work in a particular program or request to work in more programs does not mean that they enjoy an opportunity for entrepreneurial gain suggesting a finding that they are independent contractors. The choice to work more hours or faster does not turn an employee into in an independent contractor. To find otherwise would suggest that employees who volunteer for overtime or employees who speed up their work in order to benefit from piece-rate wages, and longshoremen who more regularly appear at the ‘shape up’ on the docks, would be independent contractors. We reject that notion.88

What we can take from these cases is for one thing, significant confusion. By applying a

common law test that is itself not definitive in its factors or in how they should be

applied, we have a baseline level of ambiguity concerning how to correctly address

questions of employment relationships under the Wagner Act. We also have an internal

conflict in which courts and the NLRB are aware that the issue of whether someone is

more a servant than a master is indicative of how much “control” they actually have over

their destinies in general, and specifically, in the context of their work. We have

identified this historically as the economic realities issue. “Dependence” is another word

we have used to get at it. But now, while we see a return to the entrepreneurial

opportunity question as a factor in this same analysis, we run into the problem of not

being sure how to apply the yardstick of opportunity.

88 Lancaster Symphony Orchestra and The Greater Lancaster Federation of Musicians, Local, 294, AFM, AFL-CIO, Case 4-RC-21311, December 27, 2011 (Decision on Review and Order) at 7 [357 NLRB No. 152 (N.L.R.B.), 192 L.R.R.M. (BNA) 1105, 2010-11 NLRB Dec. P 15520, 2011 WL 6808002.

Workers who are sufficiently disempowered that they can easily be called ‘employees’

and have the right to organize, may be less precarious in their employment and in the

benefits their employment provides than those who are deemed by the common law

agency test to be less disempowered (i.e. indie contractors or freelancers), yet their status

as non-employees confers to them a lesser degree of rights and protections under law. In

Lancaster, the Board recognized that simply because these musicians could under, their

contracts, find work elsewhere, this did not mean they were enjoying an unlimited degree

of entrepreneurial freedom or opportunity. This is because their opportunity was not

conferred to them as a benefit for working in the Lancaster Symphony. Rather, their

employment with the Symphony did not bar them from other entrepreneurial pursuits,

which they needed to engage in because their contracts with the Symphony simply did

not provide sufficiently for their material needs.

A crucial difference exists here between independent contractors who build their work

contracts around the understanding that they will engage with many different clients as

part of the nature of their work, as opposed to their need for more employment because

the benefits and protections they are getting from the first source of employment fails to

give them what they need for survival. In this sense, the musicians are not dissimilar to

newsboys. While both could be considered independent contractors if only common law

agency were used to assess their status, a fuller look at the totality of their employment

situations might easily lead us to see their options, and thus their status, differently.

With this as our context, we may return now to the case of Horowitz’s freelancers.

A fair attack to make on freelancers’ claims for needing a union is that there is a privilege

in being a ‘freelancer,’ in getting to reject the norms of establishment-driven big business

and opt instead for an existence that is precarious by choice. However, there are both

practical and historical responses to counter this argument.

On a practical level, we know that many companies misclassify their workers to avoid the

responsibilities of being an employer. That is probably why the term “employee” is not

defined in the Wagner Act itself. The courts must then have decent latitude for

operationalizing the term ‘employee’ because otherwise it would be too easy to say who

is not an employee and leave it at that. On an historical level, in the New Economy we

are seeing higher and higher unemployment rates while the rate of freelancers increases.

The Atlantic published an article in February of 2013 in which it analyzed the numbers of

independent contractors in the U.S. across over twenty professions. Though the

magazine was not able to pinpoint the numbers on freelancers per se, it was able to

crunch numbers on those who are self-employed.89

In traditionally stronghold areas of union organization such as construction and

extraction, 22.6% of those in the field are currently “self-employed.”90 17.6% of those in

building and grounds cleaning are self-employed; and, interestingly, 16.2% of those in

management are self-employed—although whose staffs or projects these workers are

managing and to what degree they are not in some true sense “employed” is

questionable.91 On a general level, it seems fair to ask how many of these “self-

89 “The Geography of America’s Freelance Economy” by Richard Florida, The Atlantic, February 25, 2013.90 Id. 91 Id.

employed” workers enjoy a truly substantial degree of entrepreneurial opportunity. On a

more concrete level, we can see that for someone to be ‘self-employed,’ one need not

possess a great deal of entrepreneurial opportunity. This is an assumption based on

statistics, but it is a logical one given the nature of the work these workers are engaged in;

not everyone can afford to strike out on their own as entrepreneurs, and it is not likely

that “managers”, for instance, are one such group who is truly self-employed.

We can also address this issue by looking at the evolution of foreman’s rights in the

context of American labor law. To wit, regarding passage of the Taft-Hartley Act –

. . . businessmen pressured Congress into amending the National Labor Relations Act [also known as the Wagner Act] so that foremen in the nation’s leading automobile, steel, and mining companies would not be allowed to organize and make common cause with ran-and-file workers. Relying on a concept inherited from the colonial master and servant doctrine (the body of rules and statutes relating to the relationships between masters/employers and workers/servants), corporate America insisted that unless they were production workers, employees owed a duty of fealty and loyalty to their employers, making their participation in unions impossible. “A man can’t serve two masters,” businessmen repeatedly argued to press their case, suggesting that for supervisors, foremen, and managers, unionism was incompatible with the faithful exercise of duty because it would result in “divided loyalties,” that is, these workers would be torn between their allegiance to the union and their responsibilities toward their employer. The loyalty argument was premised on the notion that democracy and individual rights can be accepted only to the extent that they do not disturb existing social and economic structures.92

Historically, those who have been associated in the popular imagination with the master

side of the master-servant relationship have not been easily seen by their employers as

needing to be active in their workplaces politically because organizing labor is associated

with activity fit for those who are imagined in closer alignment to the servant. Being

92 Vinel, Jean-Christian, The Employee: A Political History, University of Pennsylvania Press, Philadelphia: 2013 (see page 2).

“educated” is one such marker that throws the equation here off.93 For foremen’s loyalty

to be “split” would mean that a stereotype would need to be severed, and alliances

between individuals would need to be calculated in terms of people’s real-life interests,

rather than the symbolic interests being protected at any length by the wealthy and

politically connected. In the New Economy, we are seeing stereotypes splinter apart

down similar lines.

For tens of thousands of “educated” New Yorkers already, “self-employment” is a way

of life, and being part of a union, even if all it is able to provide for its members at this

point in time is access to good healthcare, is protection these workers are getting from

somewhere other than their employers or the federal government. In the New Economy,

unions are apparently not code for worker protection, but code for health insurance.

Currently, this is all that “unions” for independent contractors can offer. This is because

only ‘employees’ are protected under the Wagner Act.

CONCLUSION: WHAT PROTECTIONS SHOULD INDEPENDENT CONTRACTORS BE OFFERED IN THE NEW ECONOMY?

The first conscious change we might apply to labor law where independent contractors

are concerned is to take away the explicit exclusion of these workers from the language

of the Wagner Act. This would allow the FU, for instance, to begin to collectively

bargain, or insist on various other employment benefits for their members. It would also

facilitate political mobilization of members to achieve advances across one another’s 93 As Janelle Orsi points out in her book, Practicing Law in the Sharing Economy: Helping People Build Cooperatives, Social Enterprise, and Local Sustainable Economies, the question of whether a master-servant relationship exists and how exactly our courts tend to and should analyze this issue is one the sharing economy movement could benefit from having developed further (see page 387: “What Is a Master-Servant Relationship?”).

industries. In short, it would empower a legal form of revolution, upsetting the

imbalance of bargaining power present in traditional master-servant relationships.

Except the master here is corporate power and the servant a wildly expanding “creative

class.”

Critics of this idea would say that industrial peace is not preserved through the fomenting

of rebellions. They would say that the Wagner Act was intended to prevent industrial

strife, and that empowering more workers to organize would be counter-productive.

However, the intent of the Act also has grounding in the belief that annihilating the

master-servant relationship is a foundational step in securing equal rights for all people.

In this sense, facilitating more equal bargaining power between whatever parties are

involved in a transaction or contract is a laudable aim when we are discussing the concept

of industrial peace.

A more expansive view of the Wagner Act, a la Hearst, might offer the courts an efficient

way to promote industrial peace in the New Economy. By allowing ‘economic realities’

to impact courts’ decision-making and weighing ‘economic dependence’ against

‘entrepreneurial opportunity,’ a middle ground may be reached. This is because while

many, for instance, FedEx delivery personnel, would likely be considered independent

contractors, there is a chance they would not be. As newsboys could have been classified

as independent contractors but were not because of their general positioning in society as

manifested in their work situations (i.e. their economic dependence), freelancers could be

classified this way as well. The precarious nature of their employment would cut for

them being granted the right to organize, despite their class positioning in regard to

education, socioeconomic background, etc.

A third way we could approach this issue is by contemplating the values that go into many

freelancers’ decisions to live a life of precarious employment. There is a significant population

that elects the insecurity of an indie capitalist existence and does not have it foisted upon them

due to lack of education, connections, etc. They are tech entrepreneurs, artists, farmers, even

lawyers. These workers may be different from newsboys or FedEx workers in that these are

largely knowledge workers with privilege in American society that makes them anything but

“servants” in a larger economic realities sense. And yet, to be trading on a currency of trust over

dollars, to be investing time and energy in sharing enterprises that reduce people’s carbon

footprints and enhance community in cities across the country, and to do so while living in New

York City and making under twenty-five thousand dollars a year, is to labor against a concept of

employment that requires there be a servant present at all. It is to be engaged in a form of

revolution that is at the heart of the New Economy and is consistent with the original intent of

the Wagner Act. Logically, the Wagner Act should be able to support those efforts.