Conservative Democrat Introduces Labor Bill That Would Exempt Millions from a Minimum Wage

In late July, Democratic Texas Rep. Henry Cuellar along with Republican co-sponsors Elise Stefanik of New York and Michelle Steel of California introduced a bill that, if passed, would gut labor law and exempt millions of workers from a federal minimum wage, overtime, and basic labor rights.

The bill is relatively straightforward: It would amend the Fair Labor Standards Act of 1938 (FLSA)—the labor law that established minimum wage and overtime protections—to create “worker flexibility arrangements” whereby workers are no longer treated as employees "for federal tax purposes" and thus not protected by the FLSA’s protections. 

“Texas workers have expanded into the gig economy at rapid speed for the flexibility and opportunities that it provides. This legislation promotes that type of independent work,” Cuellar said in a press release. “The bipartisan Worker Flexibility and Choice Act is important to ensure that our gig economy has the room and resources to expand.”

There's no reason to think, however, that only gig companies would take advantage of this law. Former New York Times labor reporter Steven Greenhouse warned the bill "seems to empower any employer—not just gig companies—to tell any worker: If you want to work for me, you must agree we won't follow minimum wage or OT rules—that sucks for workers."

The bill also goes so far as to ensure it "shall supersede all Federal, State, and local laws” and override attempts to modify its amendment of U.S. labor law in an effort to permanently codify these changes. UC Hastings law professor Veena Dubal has argued extensively that this effort is part of a long history in the United States of undermining basic labor laws in sectors that employ predominantly Black and brown workers, and so “we must conceptualize these corporate efforts not only as broad attacks on economic security but also as the insidious development of empires of capital upon the bodies of subordinated racial minorities.” By abandoning basic labor laws and reverting to pre-New Deal regulatory regimes that prioritize “piecework,” the hope is that labor costs can be cut by increasing the amount of unpaid labor each worker does.

“This bill would radically erode fundamental worker protections in the United States to the benefit of big corporations, allowing them to require workers to sign away basic rights as a condition of work,” the National Employment Labor Project wrote in a statement shortly after its introduction. “The bill would also establish a second-tier employment class of disproportionately Black and immigrant workers working in arduous and underpaid jobs without minimum labor protections—growing poverty and racialized economic inequality.”

It might not surprise those familiar with Cuellar that he introduced this bill. In March, Cuellar was the lone Democrat House vote against the Protecting the Right to Organize Act (PRO Act); in Texas, Speaker Nancy Pelosi supported him over a primary challenger even as he’s made it clear he opposes not only labor rights but also abortion rights.

What may be a surprise, however, is who else is backing the bill: the Coalition for Workforce Innovation (CWI), formed in 2019 as part of a wave of corporate pushback to a surge of labor organizing in exploitative industries across the economy. CWI in particular was formed in the wake of advancements in California labor law that threatened to end misclassification of independent contractors across a host of sectors and has since swelled in size. It boasts a sprawling roster of member companies that spans multiple sectors and includes major corporations such as Amazon, Walmart, Target, Google, Apple, Microsoft, Facebook, Uber, Lyft, TaskRabbit, Postmates, and FedEx, as well as trade groups such as the Retail Industry Leaders Association.

"The CWI's attacks on workers' rights build on a history of racist carve-outs from statutory labor protections that have disproportionately hurt Black workers,'' reads a recent report from the National Employment Labor Project (NELP) and Gig Workers Rising on CWI. "The group is a new front in an ongoing effort by big business to reshape U.S. labor law in its own image—to clear the regulatory path for risk-shifting, exploitative labor outsourcing practices through modern-era ‘carve-out’ policies that excise certain workers and employers from labor regulation.”

Many of these carve-out policies first came into focus in 2014 as Uber sought to lock certain workers out of employee classification at the state level in a bid to erode rights, protections, and odious labor costs in the way of these firms and profits—and inspired companies to follow its lead. Carveout policies center on creating a new name for a type of worker or company then articulating exemptions for that new category from labor law. Another type of carve-out policy operates by weakening state worker classification tests used to determine whether workers are employees or independent contractors, along with legislation that prevents future modifications by state authorities. 

Thanks to Uber’s successful rollout of the "transportation network company" category in 2014, over 40 states between 2014 and 2017 introduced carveout policies that stripped drivers of employee rights, benefits, and locked out state regulators from attempting to regulate digital ride-hail platforms. Inspired by TNC carveouts, more app-based carveouts followed. Since 2019, "marketplace contractor" carveouts have been advanced in eight states. Since 2017, at least six states have pursued "uniform worker classification" models that let employers classify workers as independent contractors to undermine rights and protections under federal and state labor laws. 

In 2020, app-based companies reached new heights after introducing a "third way" carve-out via Proposition 22 which locked app-based workers out of employee classification and barred the state from ever upending the law. NELP notes that Utah, Texas, Georgia, Hawaii, and New Jersey consider additional carveouts that lock workers on digital platforms into classifications that deny them basic rights and protections, as well as access to unemployment insurance benefits.