Category: reason

In “Delegation and Time” (forthcoming in the Iowa Law Review), Christopher Walker and I argue that one of the more important, yet overlooked aspects of delegation is the passage of time, and suggest that the legislative branch (as opposed to the judiciary) may be best suited to address such concerns through greater use of mandatory reauthorizations and sunset provisions.

This week, The Regulatory Review is sponsoring an online symposium discussing our paper and the implications of our arguments. The symposium features comments from a wide range of administrative law experts.

Thus far, the series includes the following:

• Our introductory essay, Reviving Congressional Ambition;
• How Long is Too Long for Legislative Delegation? by Simon F. Haeder, Pennsylvania State University, and Susan Webb Yackee, University of Wisconsin-Madison;
• Delegation and Time … and Staff by Josh Chafetz, Cornell Law School;
• Institutional Gridlock by Joseph Postell, University of Colorado at Colorado Springs;

Additional essays will be posted over the next few days. These will include:

• Delegation, Time, and Congressional Capacity by Richard J. Pierce, Jr., George Washington University Law School;
• Punishing the Innocent by Richard W. Parker, University of Connecticut School of Law;
• A Reply to Our Interlocutors.

I’ll add those links when they are available. They will also be available here.

We appreciate the time and effort these scholars took to engage with our work and look forward to continuing discussions about these issues. I”ll also be speaking about the paper at the Second Annual Legislative Branch Review Conference: Modernizing the First Branch, on March 12 in Washington, DC.

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3/5/1934: Nebbia v. New York decided.

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A new California law intended to force employers to hire workers as employees rather than treat them as contractors is killing freelance jobs across the Golden State and leaving those contractors in limbo.

Assembly Bill 5 (A.B. 5), which took effect January 1, was drafted in response to Dynamex Operations West Inc. v. Superior Court of Los Angeles, a landmark court case that established a three-pronged test to determine whether companies are correctly classifying employees and contractors. That test says that contractors must control their workload, not perform work within the business’s primary scope of operations, and be “customarily engaged” in the occupation.

Under the law, ride-share companies such as Uber and Lyft will have to reclassify their hundreds of thousands of California drivers as employees, pay them the legal minimum wage, and provide them with health care, paid time off, reimbursement for expenses, and other benefits.

“California is home to more millionaires and billionaires than anywhere else in the United States. But we also have the highest poverty rate in the country,” Assemblywoman Lorena Gonzalez (D–San Diego), the architect of the law, wrote in a Washington Post op-ed last year. “One contributing factor is we have allowed a great many companies—including ‘gig’ companies such as Uber, Lyft, DoorDash, Handy and others—to rely on a contract workforce, which enables them to skirt labor laws, exploit working people and leave taxpayers holding the bag.”

Experts in the ride-sharing industry estimate that labor costs will rise by 20–30 percent. As of now, Uber and Lyft are refusing to comply, in hopes that pending litigation or a potential November ballot measure may preserve their existing business model. If that fails, they would likely be forced to begin scheduling workers in shifts, limiting employee hours, and otherwise stripping driver jobs of the flexibility that made app-based work so alluring to begin with. Perhaps more dire is that the legislation will put people out of work: About 6,461 Lyft drivers in Gonzalez’s district alone would lose their jobs, according to a study the company commissioned from the consulting firm Beacon Economics LLC.

That’s a dramatic change for a business model that was built on allowing workers to set their own hours and simultaneously contract for competing companies. Uber’s door is currently wide open, so long as you are 21, have a driver’s license, and own a decent car. That accessibility to the job market has been a game changer for vulnerable populations. In Manhattan, for instance, first-generation immigrants who speak English as a second language make up 90 percent of app-based drivers, according to the New York City Taxi and Limousine Commission.

While A.B. 5 primarily targets gig economy behemoths like Uber, it also affects numerous other industries. It is now illegal for many types of freelancers to create more than 35 pieces of content in a year for a single company unless the company hires them as an employee. According to a new lawsuit against the state of California, many creative contractors say the limit has already wrought havoc on their livelihoods.

“By enforcing the 35-submission limit, Defendant, acting under color of state law, unconstitutionally deprives Plaintiffs’ members of their freedom of speech as protected by the First and Fourteenth Amendments to the U.S. Constitution,” states a suit filed by the Pacific Legal Foundation on behalf of the American Society of Journalists and Authors and the National Press Photographers Association.

In December, Vox Media announced it would not renew the contracts of around 200 California-based journalists who write for the sports website SB Nation, instead replacing those contractors with 20 part-time and full-time employees. Rev, which provides transcription services, and Scripted, which connects freelance copywriters with clients, similarly notified their California contractors that they would no longer give them work.

“Companies can simply blacklist California writers and work with writers in other states, and that’s exactly what’s happening,” Alisha Grauso, a co-leader of California Freelance Writers United (CAFWU), says. “I don’t blame them.”

Gonzalez, the bill’s sponsor, responded to such complaints by tweeting, “These were never good jobs. No one has ever suggested that, even freelancers.”

But freelancers beg to differ. “I’ve been able to earn nearly three times the amount I did working a day job, doing what I absolutely love, and having more [time] to volunteer and spend time with loved ones,” tweeted Jackie Lam, a financial journalist. Kelly Butler, a copywriter, echoed those sentiments: “Thousands of CA female freelancer writers, single moms, minorities, stand to lose their livelihood due to this bill,” she tweeted. “I was told by a client because I live in CA they can’t use me. I made $20K from them this year.”

Grauso says CAFWU—the group fighting against A.B. 5— is composed primarily of the people that Gonzalez claimed her bill would help. Its membership is 72.3 percent women, which Grauso says is no coincidence. “The reality is it still falls primarily on women to be the caretakers and caregivers of their families, and freelancing allows women to be stay-at-home mothers or to care for an aging parent,” she notes. “Being made employees kills their flexibility and ability to be home when needed. I cannot stress enough how anti-women this bill is.”

The 35-piece-per-company limit comes out to less than one piece per week. That means anyone who writes a weekly column, for instance, is likely out of a job unless her publisher hires her as an employee. The law also penalizes freelancers who create content in nontraditional formats, such as blog posts, transcriptions, and listicles—the latter of which are often requested in bulk and take only “about 20 minutes to compile,” according to freelance journalist and brand strategist Vanessa McGrady.

According to The Hollywood Reporter, Gonzalez initially set the annual limit at 26 pieces but later changed it to 35 after a backlash. “Was it a little arbitrary? Yeah,” Gonzalez admitted to the Reporter. “Writing bills with numbers like that are a little bit arbitrary.”

In December, the assemblywoman tweeted that unemployment trending down is “useless” because “people have to work 2-3 jobs or a side hustle” to make ends meet. According to the most recent Census data, only 8.3 percent of American workers have more than one job. But freelancers “shouldn’t fucking have to” work multiple jobs, Gonzalez told a detractor on Twitter. “And until you or anyone else that wants to bitch about AB5 puts out cognizant policy proposals to curb this chaos, you can keep your criticism anonymous.”

Fortunately, critics did not stay quiet, and on February 7,  Gonzalez announced on Twitter that “based on dozens of meetings with freelance journalists & photographers,” she was moving to “cut out the 35 submission cap.” There was no indication as of press time that ride-share drivers could expect a similar reprieve.

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City officials in Pevely, Missouri, have agreed to pay $75,000 to settle a lawsuit by a man who claims a police officer detained him and seized his cellphone after the cop noticed him recording a traffic stop in 2019. Matthew Rankin said Officer Wayne Casey pried his phone out of his hand and threatened him with arrest. Casey went through the contents of Rankin’s phone and searched for his information on a police database, according to the lawsuit. The police department later fired Casey after he was caught on video sitting at a desk in a booking area as another officer choked a prisoner.

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Following increased interest in expanding access to paid family and medical leave, Rep. Rosa DeLauro (D–Conn.) joined forces with Sen. Kirsten Gillibrand (D­–N.Y.) to promote the Family and Medical Insurance Leave, or FAMILY, Act. If we believe the act’s supporters, it would cost close to nothing and provide essential benefits to employees who don’t currently receive them.

Unfortunately, these claims are bogus.

Under the FAMILY Act, the federal government would offer 12 weeks of paid time off to enable workers to care for infants, recover from major illnesses, and care for severely ill relatives. During that time, employees would receive benefits administered by the Social Security Administration equal to 66 percent of their regular earnings, with a minimum monthly benefit of $580 and a maximum monthly benefit of $4,000. To pay for this new handout, the federal government would impose a 0.4 percent payroll tax to be divided evenly between employers and employees.

Gillibrand argues that the act would provide greatly needed benefits to employees at a minimal cost to them. One of her favorite talking points about the proposal is that it would cost employees only $4 a week, or the equivalent of a cup of coffee.

Unfortunately, the senator’s assertion is quite misleading. For starters, a 0.4 percent hike in the payroll tax would not be enough to pay for the federal spending under the plan. The Congressional Budget Office, or the CBO, released a score of the bill as introduced and found that the FAMILY Act would increase spending by $547 billion in benefits and administrative costs over 10 years, but it would only increase net federal revenues by $319 billion during that time. That means that $228 billion in spending wouldn’t be paid for by the FAMILY Act’s new tax.

While the federal government is no stranger to deficits, in this case—and contrary to what FAMILY Act supporters seem to believe—this deficit will require either more tax revenues or fewer government benefits. The CBO points out that the act “would limit program outlays to amounts in the trust fund,” which the Heritage Foundation’s Rachel Greszler explains in her recently released paper “is the accumulation of the FAMILY Act’s payroll taxes.” This means that one way or another, spending must equal tax revenues. Therefore, Congress will have to either ration benefits or raise the payroll tax.

By how much? It would double within four years of the first benefits, which would be paid in October 2022.

Greszler calculates that as the number of people claiming the benefit increases, if benefits aren’t rationed, “In 2023, the initial 0.4 percentage point payroll tax would have to rise by 25 percent to 0.5 percentage points. By 2026, the necessary payroll tax would need to double to 0.8 percentage points, and by 2028, it would need to rise to about 240 percent of its initial level, to 0.95 percentage points.” And that’s just the beginning. This, of course, is on top of the already steep and regressive existing payroll tax.

Moreover, even though employees and employers split the FAMILY Act’s payroll tax, most of the employer’s share of the tax will still fall on workers. That’s because, over time, employers shift the costs of new taxes onto employees in the form of lower wages. In other words, employees will shoulder most of the payroll-tax increase. The CBO accounts for some of this shifting as it projects a $42 billion reduction in federal revenues because employers will reduce workers’ wages and benefits.

The FAMILY Act would also lead to other undesirable changes, like a shift in resources from those with lesser means to those who already have more. Greszler explains that in the United States, “where substantial employer-provided paid family leave exists, a government program could be even more regressive because it would provide windfall benefits to larger companies and higher-income employees who already have paid family leave policies.” This is currently happening with state-based paid family leave programs. Companies that used to provide the benefits are now asking their employees to tap into the taxpayer provided program first.

Finally, but importantly, economic research reveals that employees—and women in particular—in countries where government has implemented such benefits face more discrimination, fewer advancement opportunities, fewer hours of employment, and lower wages. These are the unseen costs of such programs that the act’s supporters ignore.

All of these facts together make for a very expensive cup of coffee.

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