News & Commentary

March 27, 2020

Rund Khayyat

Rund Khayyat is a student at Harvard Law School.

The Senate on Wednesday unanimously passed a $2 trillion dollar spending package that would assist millions of American households. The House is expected to follow suit today. The relatively fast deliberation and unanimous vote in a typically fractured Senate signals the nation’s dire need for financial help. The historic bill includes stimulus payments to individuals, expanded unemployment coverage, and student loan changes.

As part of the bill, single Americans would receive $1200, and parents would receive an additional $500 per child. The payments phase out for individuals with adjusted gross incomes of more than $75,000, and those making over $99,000 are ineligible for assistance. The thresholds double for couples. In an unprecedented expansion of unemployment insurance, the bill would give jobless workers an extra $600 a week for four months on top of their state benefits, which can generally range from $200 to $550 a week. 

The bill will make history in one more way: by providing financial assistance to gig economy workers. In an unprecedented move, the Senate extended unemployment benefits to part-time workers and self-employed Americans. This group includes gig workers, freelancers and independent contractors who typically don’t qualify for federal aid or for state aid in most jurisdictions. The language could provide certainty to millions of part-time Uber drivers, Amazon delivery drivers and more, in what has become a major segment of the digital economy. 

The provisions are responsive to a request by Uber CEO Dara Khosrowshahi, who this week asked President Trump to include drivers in the stimulus:  “My goal in writing to you is not to ask for a bailout for Uber, but rather for support for independent contractors and, once we move past the immediate crisis, the opportunity to legally provide them with a real safety net going forward,” Khosrowshahi wrote. The Uber CEO also argued for the establishment of a third employment classification for gig workers that would “update our labor laws to remove the forced choice between flexibility and protection [for workers].” 

The package is good news for gig workers, who as this blog has reported, have served on the front lines of the COVID-19 crisis by delivering needed products to Americans sheltering indoors. Gig workers have long been fighting for companies like Uber, Lyft, and DoorDash to classify them as employees in order to receive benefits. 

A California law already provides gig workers with benefits, but the companies have argued that the law, which outlines what distinguishes an employee from an independent contractor, does not apply to their businesses. Even more, the tech giants are backing a ballot initiative that would enable them to continue classifying their workers are independent contractors. 

Amongst many other provisions, the bill establishes a $500 billion lending program, which will grant non-profits and mid-sized businesses, defined as having between 500 and 10,000 employees, six month grace periods without payments. Moreover, The American Hospital Association, the American Medical Association and American Nurses Association successfully lobbied Congress to provide $100 billion for health care personnel and establishments. Finally, the bill includes housing protections against foreclosures on mortgages and evictions for renters facing financial hardship from coronavirus. 

If the House does not unanimously agree to pass the legislation, lawmakers currently in their home states for the recess could return to the Capitol to cast a recorded vote and hash out conflicted details. On Wednesday, for instance, Rep. Alexandria Ocasio-Cortez (D-NY) signaled her objections to the package.  Ocasio-Cortez acknowledged it would be unpopular to force lawmakers to travel during the pandemic. She said, however, that “essential workers are showing up and putting their health at risk every day, and if the final text of a bill is set up to hurt them, it may be something we have to do.”

Back on the ground, companies across industries are taking steps to adjust their workforces during the pandemic: 

On Thursday, GM said it would suspend production at its North American factories indefinitely, lay off 6,500 salaried employees and cut executive pay. The move comes in response to a push by  The United Automobile Workers union for General Motors, Ford and Fiat Chrysler to keep their plants closed.

“The only guideline in a boardroom should be management asking themselves, ‘Would I send my family — my son or my daughter — into the plant and be 100 percent certain they are safe,’” Union president Rory Gamble said in a statement.

GM Senior executives will take a pay cut of 5 percent or 10 percent, and defer 20 percent of their salaries. The 6,500 salaried employees on furlough will receive 75% of their normal pay. Other automakers similarly shut down their North American plants in the last few days, and scaled back plans to reopen. 

Also on Thursday, the NYT reported that some banks are offering job security to employees in exchange for working through the pandemic. Morgan Stanley issued a memo telling employees that the bank would not resort to layoffs in 2020. In a similar step, Citigroup said the bank had suspended planned layoffs for the time being.  

AT&T also announced it would pay a 20% bonus to all union employees, including those working from home. The company didn’t divulge how many workers that would cover, but the NYT reported AT&T had bargaining agreements with about 100,000 employees as of March.

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