Key Takeaways:
- We think there are two issues related to labor and employment that you should keep an eye on in 2022 — third-party delivery fees and worker classification. We expect state lawmakers to pursue legislation related to these topics during the 2022 legislative sessions.
- This post is part of our series on state policy issues to watch in 2022, where we explore seven policy areas and our predictions for the upcoming legislative year (elections, energy and environment, labor and employment, public health, social justice, tax and budgets, and technology).
As states kick off their 2022 legislative sessions, here are some of the main topics we expect lawmakers to explore in the area of labor and employment. This post is part of our series on state policy issues to watch in 2022 (click here to see all issues areas).
Third-Party Delivery Fees
Background: Consumers who were stuck at home became much more dependent on food delivery during the pandemic. A handful of delivery apps rose to prominence during that time, but local restaurants argued that the high fees from those delivery apps took advantage of businesses that were already struggling. In response, cities and states began capping the fees that third-party delivery services charge restaurants. Generally, cities and states have capped delivery fees at 15 to 20 percent of the total food order.
Why It's Trending: The pandemic brought this issue to light at a time when sympathies were high for local restaurants. The big question will be whether this issue subsides when the pandemic does or if this is a long-term and permanent trend. No state has permanently capped delivery fees so far, but two major cities have and others are debating permanent caps.
Current Landscape: Four states — Massachusetts, New Jersey, Oregon, and Washington — implemented temporary delivery fee caps during the pandemic along with at least a dozen major cities. San Francisco and New York City are the only jurisdictions to put in place a permanent 15 percent cap on third-party delivery fees.
2022 Outlook: Philadelphia and other major cities are currently debating whether to make their own caps permanent. We’re likely to see several cities follow the lead of New York and San Francisco as the pandemic justification subsides. From a political perspective, this feeds into the broader “techlash” trend as well. Jurisdictions will review the feedback and results from these temporary caps to close any loopholes and revise any permanent cap.
Worker Classification
Background: In 2019, California enacted AB 5, codifying the “ABC Test” across a variety of labor laws to determine whether or not workers should be classified as employees or independent contractors. This decision, while exempting some established professions, required “gig workers” to be classified as employees and expanded the employment benefits these workers were to receive. The law was overturned by Prop 22, which voters approved in November 2020, allowing gig workers to be classified as independent contractors; but in August, a state judge ruled that Prop 22 was unconstitutional. Since AB 5 was signed into law, various professions have been carved out of the law.
Why It's Trending: Following California’s lead, lawmakers in additional states have introduced legislation to expand their own worker classification laws and classify more workers as employees under additional employment laws. (Many states have ABC Tests codified, but only for some statutes, like unemployment insurance or workers’ compensation.) As a response to the “blue state” model, legislators in states with Republican trifectas have begun introducing and enacting legislation to harmonize the definition of “employee” across various labor laws with a less restrictive test, allowing a greater number of workers to be classified as independent contractors. Additionally, states have begun to crack down on employee misclassification with greater enforcement without requiring changes to state employment tests.
Current Landscape: This year, nine states introduced legislation to codify the ABC Test, although none of these bills advanced. Three states — Alabama (HB 408), Louisiana (HB 705), and West Virginia (SB 272) — enacted laws codifying alternative employment tests.
2022 Outlook: Expect blue states, particularly those with progressive legislatures, to continue attempts to codify the ABC Test while red states continue to codify less restrictive, harmonized employment tests. States across the country, regardless of partisan control, will continue to crack down on employee misclassification.
This post is part of our series on state policy issues to watch in 2022 (click here to see all issues areas).