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TO: CLEAN SLATE PARTICIPANTS FROM: WORKING GROUP II.A DATE: January 17, 2019 RE: LITERATURE REVIEW ON ORGANIZATIONS FOR WORKER POWER Working Group II.A. was tasked to examine organizations that help build worker power. We identified the following as most worthy of study:

(1) Organizations that participate in codetermination; (2) Unions that engage in sectoral or regional bargaining, i.e., bargaining beyond the

framework of the individual enterprise; (3) Worker organizations that administer benefits; (4) Worker organizations that certify high-road labor practices; (5) Organizations that enforce labor standards; (6) Organizations that facilitate the operation of labor markets

For each of these, we examined five factors that we consider most significant:

a. Structure of the organization b. Membership model c. Financing d. Legal status, i.e., whether there is state enforcement of the organization’s role (e.g. by a duty to bargain), whether the organization has some legal status as an exclusive representative e. What role the organization plays in delivering value to workers that encourage membership or involvemen (in other words, what is the value proposition that the organization delivers?).

We are extremely grateful to our Harvard Law School research assistants, Vail Kohnert-Yount, Luke Dowling, and Jenny Kemechko-Braun. This memo is the product of their work (which explains why the citation systems are not consistent throughout the memo). I. ORGANIZATIONS THAT PARTICIPATE IN CODETERMINATION Codetermination model structure Codetermination is a model of worker participation that varies among countries but is used primarily in Europe. Codetermination refers to a range of practices involving workers having binding rights on issues in their workplace through work councils and may also include workers having the right to vote for representatives on their employer’s board of directors. For example, companies with business operations in the European Union are required to consult annually with works councils about company progress and prospects, and more frequently if the company is contemplating significant changes that may affect jobs including planned relocations, plant closures, outsourcing, pay rates, acquisitions, divestitures, and collective dismissals.

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In codetermination systems, employees may be given seats on a board of directors in one-tier management systems, or seats on a supervisory board and sometimes management board in two-tier management systems. In a one-tier system—for example, Sweden—employees usually have only one or two representatives on a board of directors and sometimes certain committees. In a two-tier system—for example, Germany—employee representatives have a right to seats on the supervisory board of larger companies, but a shareholder representative always has the deciding vote. The role of codetermination can be viewed in several ways: to reduce management-labor conflict and expand democratic participation, to increase workers’ bargaining power relative to employers, and to correct market failures that disadvantage workers. In an October 2017 paper entitled, “Fighting Short-Termism with Worker Power: Can Germany’s Co-Determination System Fix American Corporate Governance?,” Susan R. Holmberg of the Roosevelt Institute argued that such mechanisms for giving legal rights to workers to co-manage corporations that employ them have contributed to resisting the forces at play in driving down median wages, compressing job growth, and exacerbating inequality. International examples of codetermination The practice of board level representation is used in many developed democracies, including a majority of the 28 European Union states plus Norway. Existing European codetermination structures provide a wealth of experience to draw from. Codetermination models vary widely between countries, and the supporting legal frameworks have often been changed, strengthened, or weakened over time. In ten of these countries, there is no board level representation, and in six representation is limited to state-owned or privatized companies. However, 13 states provide for employees to be represented on the boards of private companies once they have reached a certain size, although these thresholds vary significantly, e.g. over 20 employees in Denmark, over 500 in Germany, and over 5,000 in France. Most countries with codetermination laws have a single-tier board of directors structure, e.g. Sweden, France, and the Netherlands, while others have two-tier boards, e.g. Germany and Austria. Germany offers perhaps the most robust and well-known example of a codetermination system. Typically, German companies have two boards: an executive board composed of the CEO and other senior executives, and a supervisory board representing both workers and shareholders, fulfilling a similar role to U.S. corporate boards. Representatives elected by employees have a right to seats on the supervisory board of larger companies—one-third of the supervisory seats in companies with 500 to 2,000 employees, and half in companies with more than 2,000. Economists in the past four decades have tried to assess the effects that codetermination has had on the German economy, with mixed results. More often than not, studies find that codetermination and “works councils” lead to higher wages, less short-termism (in Holmberg’s view), greater productivity, even higher levels of income equality (according to Sigurt Vitols of the European Trade Union Institute for Research, Education, and Health and Safety). They may

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produce lower returns for shareholders, suggesting they lead to a shift in both power and corporate earnings away from shareholders and toward workers. Holmberg argued that “the German stakeholder system of co-determination, which gives legal rights to workers to co-manage corporations, has held back the forces of short-termism that have dominated American corporations for the past three decades, driven our inequality crisis, and weakened our economy.” Empirical evidence supports the idea that codetermination rights both at board and workplace level help redress the imbalance of workers’ power. In his 2000 article “Codetermination in Sweden: Myth and Reality,” Klas Levinson found that in Sweden, where representation on boards is more limited in a one-tier system but workplace-level codetermination is widespread, that “legal reforms and other forms of support have had the effect of extensively broadening and deepening local trade union activities related to management questions.” In their 2000 article “Class Struggle Inside the Firm: A Study of German Codetermination,” Gary Gorton and Frank Schmid found “evidence that codetermination shifts risk to capital” consistent with a real increase in the power of labor. Codetermination in the U.S. context Praised by progressive politicians including Tom Perez and Elizabeth Warren, codetermination is often proposed as an alternative to the U.S. shareholder model. In April 2018, four Senators including Elizabeth Warren sponsored the Reward Work Act that would amend federal legislation to require all public companies to have one-third board representation for workers. In August 2018, Senator Warren sponsored the Accountable Capitalism Act that would further require that 40% of the board of directors be elected by employees in federal corporations with incomes over $1 billion. In his 2018 article “Corporate Law Should Embrace Putting Workers On Boards: The Evidence Is Behind Them” for the Harvard Law School Forum on Corporate Governance and Financial Regulation, law professor Ewan McGaughey wrote about the history of worker voice and codetermination efforts in the United States. Surprisingly, the United States already has the world’s oldest codetermination law that has been continually in force, in Massachusetts, although it is voluntary and applies only to manufacturing companies. Other examples of worker representation on boards emerged in the early 20th century, but in the 1970s U.S. labor unions began to bargain for board seats, using the money in pension funds to make shareholder proposals. Employees put forward proxy proposals at GM, Ford, United Airlines, and AT&T, all of which were strongly opposed, although one union at the Providence and Worcester Railroad succeeded in winning what the Wall Street Journal called a “precedent-shattering labor agreement” for board representation. Despite opposition from Republican administrations, unions ultimately forced a number of large corporations including Chrysler to appoint workers to their board of directors pursuant to collective bargaining agreements. The Coalition of Kaiser Permanente Unions is a successful example of a voluntary codetermination effort in the United States, albeit in a unique context. In response to deteriorating labor relations with Kaiser, a coalition of 26 local unions representing 57,000

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Kaiser employees formed in 1996. Coalition leaders proposed a partnership model to Kaiser with labor’s full integration into Kaiser’s management and operations structure. Unlike union-employer “cooperation” arrangements, the unions were to participate in decision making at all levels of the organization. The partnership agreement was ratified by the members of every Coalition local union, and the Labor Management Partnership began in 1997. The 2009 book Healing Together: The Labor-Management Partnership at Kaiser Permanente by Thomas A. Kochan, Adrienne E. Eaton, Robert M. McKersie, and Paul S. Adler detailed this partnership model. Potential challenges of implementing codetermination In today’s volatile political climate, the future of national codetermination legislation is highly uncertain. Holmberg of the Roosevelt Institute described the prospect of a national law requiring the boards of public companies to include worker representatives as “politically implausible.” Although it is a well-polling economic proposal that has no budgetary cost, codetermination would likely face extreme corporate opposition as well as resistance from critics who argue reducing shareholder power over companies is a Fifth Amendment “taking.” However, she argued, workers’ advocates should still seek every opportunity to advance codetermination models to empower workers to lay their legitimate claim as corporate stakeholders. Opponents of codetermination often criticize its “inefficiency.” Business scholars Michael Jensen and Bill Meckling argued in their 1979 article “Rights and Production Functions: An Application to Labor-Managed Firms and Codetermination,” that codetermination is “less efficient than the alternatives which grow up and survive in a competitive environment.” However, in their 2005 article “Co-Determination, Efficiency and Productivity,” labor economists Felix R. Fitzroy and Kornelius Kraft found that the evidence on “efficiency” indicates that codetermination has either no effect or a positive but generally small effect on enterprise performance. Policy alternatives to codetermination that address the same issues include other worker ownership models, including employee stock ownership plans and cooperatives. The ultimate goal of any codeterminative model is to build meaningful stakeholder decision power for workers to foster a sustainable, long-term oriented system.1

1 Additional sources on various forms of worker involvement in corporate ownership or governance include:

a) Generally i) Ewan McGaughey, Democracy in America at Work: The History of Labor’s Vote in

Corporate Governance, 42 Seattle U. L. Rev. (forthcoming 2019). ii) Brett H. McDonnell, Strategies for an Employee Role in Corporate Governance, 46 Wake

Forest L. Rev. 429 (2011) iii) Steven L. Willborn, Industrial Democracy and the National Labor Relations Act: A

Preliminary Inquiry, 25 B.C. L. Rev. 725 (1984) iv) Katherine Van Wezel Stone, Labor and the Corporate Structure: Changing Conceptions and

Emerging Possibilities, 55 U. Chi. L. Rev. 73 (1988) v) Anne Marie Lofaso, Toward A Foundational Theory of Workers' Rights: The Autonomous

Dignified Worker, 76 UMKC L. Rev. 1 (2007)

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There are other kinds of organizations that build worker power that would be worthy of study and that are not covered in this memorandum. At the next stage of the process, we might expand our research to include them. Among them are: cooperatives (e.g., SMART), cooperative committees (e.g., at AT&T),2 worker participation programs and quality circles, job security

i) Michael C. Harper, Reconciling Collective Bargaining with Employee Supervision of

Management, 137 U. Pa. L. Rev. 1 (1988) vi) Albert G. Bixler, Industrial Democracy and the Managerial Employee Exception to the

National Labor Relations Act, 133 U. Pa. L. Rev. 441 (1985) (Critique of NLRB’s decision in College of Osteopathic Medicine and Surgery, which held that employees that have real ability to influence policies of their employer lose the Act’s protection, for subverting the economic democracy principles).

b) ESOPs i) THE ESOP ASSOCIATION, HOW THE ESOP REALLY WORKS (1992). ii) Jeffrey M. Hirsch, Labor Law Obstacles to the Collective Negotiation and Implementation of

Employee Stock Ownership Plans: A Response to Henry Hansmann and Other "Survivalists", 67 Fordham L. Rev. 957 (1998)

iii) Henry Hansmann, When Does Worker Ownership Work? Esops, Law Firms, Codetermination, and Economic Democracy, 99 Yale L.J. 1749 (1990)

iv) Deborah Groban Olson, Union Experiences with Worker Ownership: Legal and Practical Issues Raised by Esops, Trasops, Stock Purchases and Co-Operatives, 1982 Wis. L. Rev. 729 (1982) (lengthy discussion of workers’ experiences trying to exert democratic control over enterprises through ESOPs and legal obstacles).

v) Jedidiah J. Kroncke, Esops and the Limits of Fractionalized Ownership, 2017 U. Chi. Legal F. 287, 292 (2017) ("The sum force of these distortions has reduced the employee ownership debate in the United States to battles over comparative corporate efficiency, and completely severed the link between ownership and republicanism which motivates antisubordination critiques of the modern workplace. This emphasis has further led to an abstract focus on the formal structures of ownership, rather than the lived reality of workplace decision-making. While more wide-spread and less unequal ownership of land and capital may facilitate the interdependent freedom that economic republicans imagine, such interdependence is always foundationally a matter of power. Property ownership may be a powerful proxy or indicia of personal autonomy and freedom, but it can be legally configured to promote neither. As such, the ESOP exposes the limits of property-centric versions on economic republicanism through its fractionalized version of corporate share ownership.")

vi) Michael E. Murphy, THE ESOP AT THIRTY: A DEMOCRATIC PERSPECTIVE, 41 Willamette L. Rev. 655 (inherent consequences of linking employee ownership with an employee retirement plan is a central flaw of the ESOP model).

2 Sources on cooperatives include Structure of Worker Cooperatives c) Generally

i) David Ellerman & Peter Pitegoff, The Democratic Corporation: The New Worker Cooperative Statute in Massachusetts, 11 N.Y.U. Rev. L. & Soc. Change 441 (1983).

ii) David Ellerman, Workers’ Cooperatives: The Question of Legal Structure, in Jackall & Levin, WORKER COOPERATIVES IN AMERICA (1984) (On file w/ Alex).

iii) David Ellerman, PROPERTY AND CONTRACT IN ECONOMICS: THE CASE FOR ECONOMIC DEMOCRACY (??) (On file w/ Alex).

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councils (such as in Sweden), guilds that are not unions (e.g., the Dramatists Guild, or the independent driver guild that the IAM is supporting among app-based ride-hailing drivers), semi-autonomous work groups (as at GM-Toyota and Fair Pay Agreements). II. UNIONS THAT BARGAIN SECTORALLY AND/OR REGIONALLY

Sectoral bargaining seeks to set terms of employment at an industry-wide level via negotiations between unions and (generally) associations of employers that represent the interests of all employers within that industry. These agreements can apply nationally or simply regionally. A review of the scholarly literature on sectoral bargaining indicated that most of economic and labor policy analysis focuses on European models of sectoral bargaining rather than the few areas of the United States economy, e.g., the Las Vegas hotel and casino sector, that have managed to utilize a sectoral bargaining model. As such, the literature reviewed in this section deals entirely with analyses of European sectoral bargaining. We note that another Working Group is studying sectoral bargaining. Nevertheless, we included a study of it here because our judgment is that a number of the structures and organizations we study (e.g., co-determination, or the Fair Food Program) could be expanded into forms of sectoral bargaining.

We also note that other kinds of extant organizations that we have not studied might work with sectoral bargaining structures, including wage boards (as in New York) and labor advisory boards or commissions. a. Benefits of Sectoral Bargaining

iv) Industrial Cooperatives Association, ICA MODEL BYLAWS FOR A WORKER

COOPERATIVE (3rd Ed. 1995) (On file w/ Alex). v) Peter Pitegoff, Taxation of Worker Cooperatives, Employee Ownership (1982) vi) David Ellerman, “The Mondragon Cooperative Movement,” Harvard Business

School Case Study (1982) (On file w/ Alex). vii) Richard Feldman, “An Illustrated Guide to the Internal Capital Account System for

Worker-Owned Cooperatives,” The ICA Group (1988) viii) Lewis D. Solomon & Melissa B. Kirgis, Business Cooperatives: A Primer, 6

DePaul Bus. L.J. 233 (1994). ix) Henry Hansmann, When Does Worker Ownership Work? Esops, Law Firms,

Codetermination, and Economic Democracy, 99 Yale L.J. 1749 (1990) d) Union Coops

i) David P. Ellerman, The Legitimate Opposition at Work: The Union’s Role in Large Democratic Firms, 9 ECONOMIC AND INDUSTRIAL DEMOCRACY 437 (1988) (Posits that unions can play the role of the “legitimate opposition” to worker controlled management because, beyond offering basic workplace due process rights, they also offer a structure to support dissenting and differing views of how the company should be run).

ii) Deborah Groban Olson, Union Experiences with Worker Ownership: Legal and Practical Issues Raised by Esops, Trasops, Stock Purchases and Co-Operatives, 1982 Wis. L. Rev. 729 (1982).

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The primary benefits of sectoral bargaining are well established in the literature.[1] For unions, sectoral bargaining allows for standardized terms of employment across the entire sector, reaching smaller firms that would be hard to organize under an enterprise-bargaining regime, and, thereby, is considerably cheaper than organizing and subsequently bargaining with each individual employer in the sector.[2] For employers, the benefits are that employers no longer need be concerned about being placed at competitive disadvantage relative to other employers by their individual collective bargaining agreements and by bargaining in a block employers have increased bargaining power.[3] Finally, the state can reap benefits in the form of social peace facilitated by a single negotiation between two large, more easily regulated entities rather than numerous smaller negotiations each presenting the potential for labor unrest.[4] Sectoral bargaining also strengthens the negotiating power of unions and workers relative to enterprise bargaining by rendering many “union avoidance” tactics deployed by employers either less effective or considerably more onerous. For instance, under an enterprise bargaining model, employers can attempt to withhold or withdraw union recognition or threaten to relocate their enterprise to a non-union environment as a negotiating tactic.[5] When collective bargaining agreements apply to a whole sector of the economy in a country, these tactics have considerably less force. To start, there is no way to remain in the same economic sector and country while relocating to a “non-union environment” as there would be under the enterprise model.[6] Instead, employers are forced to resort to other, more expensive tactics, like outsourcing labor to other countries with less restrictive (or no) collective bargaining agreements, relying on subcontracting, or renegotiating the sector agreement.[7] Sectoral organizing also can serve to obviate some potential concerns with enterprise level organizing; namely, that by organizing around the issues of a specific workplace, enterprise organizing can be mildly myopic and forgoes opportunities to build more robust forms of solidarity between workers.[8] Uniting and organizing workers around issues common to their sector allows for the creation of more organic forms of solidarity and allows for the resulting unions to more effectively address issues that affect workers across entire sectors such as automation.[9] b. Disadvantages of Sectoral Bargaining

One potential disadvantage of sectoral bargaining relative to enterprise bargaining is that, at least on some theoretical economic models, unemployment is higher by somewhere between 1 and 3 percent when wages are set at the sectoral level than at the enterprise level.[10] Roughly, the purported explanation is that, under an enterprise bargaining model, decreases in individual firm efficiency are matched by similar, negotiated decreases in the wages paid by the specific firm.[11] In contrast, under the sectoral bargaining model, where wages are uniform across the whole sector, wage levels are not necessarily as responsive to decreases in individual firm productivity.[12] As such, jobs at worse performing firms are cut rather than simply having their wages decrease.[13] However, these same models indicate that a sectoral bargaining system that allows for opting out of sector level agreements by mutual assent of firms and workers has the very same level of unemployment as an enterprise bargaining system.[14]

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It is worth noting that an increase in the ability to opt out of sectoral level agreements via mutual agreement is one of the central developments in German labor law that some commentators believe led to the decline in sectoral-level representation in Germany.[15] In the 1990s, seeking more local flexibility in working time arrangements, German unions and employers started to reach “opening clauses” that allowed them to fall below the standards set by sectoral agreements.[16] Although initially these consisted of “hardship waivers” that required the assent of the umbrella union and employer organization that negotiated the collective agreement, over time opening clauses became more widespread and oversight decreased, opening what were once-binding sectoral agreements to constant renegotiation at the local level.[17] Taking these two data points together points to a tension in the design of a sectoral bargaining regime, balancing the need for firm-level flexibility on one hand with the fact that too much flexibility in opting out of sector-level collective bargaining agreements completely undercuts the benefits provided by a sectoral bargaining system.[18] Other considerations which some commentators have pointed to in order to explain the decentralization of European collective bargaining—and, correspondingly, potential issues with traditional sectoral level bargaining—include the rise of large companies that operate in multiple sectors and, therefore, are subject to multiple, potentially contradictory sectoral collective bargaining agreements as well as increasingly international product markets that render the benefit of leveling the cost of labor within a sector in a single country considerably less attractive.[19]

[1] Paul Marginson et al., Between Decentralization and Eurpoeanization: Sectoral Bargaining in Four Countries and Two Sectors, 9 EUR. J. INDUS. REL. 163, 164 (2003). [2] Id. [3] Id. [4] Id. [5] Jelle Visser, What Happened to Collective Bargaining During the Great Recession? 5 IZA J. LAB. POL. 1, 5 (2016) [6] Id. [7] Id. [8] Melanie Simms, Imagined Solidarities: Where is the Class in Union Organizing? 36 Cap. & Class 97, 99–100 (2011) [9] Id. at 111. [10] Juan F. Jimeno & Carlos Thomas, Collective Bargaining, Firm Heterogeneity, and Unemployment, 59 EUR. ECON. R. 63, 64–65 (2013). [11] Id. at 64 [12] Id. [13] Id. [14] Id. [15] See John T. Addison et al., The Demise of a Model? The State of Collective Bargaining and Worker Representation in Germany, 38 ECON. & INDUS. DEMOCRACY 193, 196–197 (2017) [16] Id. at 196. [17] Id. at 197.

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[18] See John T. Addison, Collective Bargaining Systems and Macroeconomic and Microeconomic Flexibility: The Quest for Appropriate Institutional Forms in Advanced Economies, 5 IZA J. LAB. POL. 1, 44–47 (2016). [19] Marginson et al., Between Decentralization and Eurpoeanization: Sectoral Bargaining in Four Countries and Two Sectors at 165. III. WORKERS’ ORGANIZATIONS THAT ADMINISTER BENEFITS A prefatory note on scope

Workers’ organizations that administer benefits are discussed here: namely, Taft-Hartley Plans and the Black Car Fund. These two, it is important to underscore, represent different degrees of “private” management and “public” subsidy of excludible benefits. For example, the Taft-Hartley Plan is a private means of administering benefits that might conceivably or hypothetically be offered and managed through government agencies. This does not mean, of course, that the public laws are not shaping the private pensions – in a concrete, express way: the Taft-Hartley Plan is a creature of the Taft-Hartley Act and ERISA.

The Working Group might consider whether further inquiry into the so-called public/private distinction could inform Next Steps. Because “[t]he purpose of this working group is to consider what forms of worker organizations can best empower workers and how those organizations should relate to each other,” and because “the question of federalism: at which level(s) of government should . . . solutions be pursued” is an “overarching” project issue, it might be helpful to consider whether the private administration of benefits empowers workers economically, socially, or politically because they are private or because they are benefits. Variations of the question would ask: (1) whether statutory authorization of excludible benefits organizations raises bargaining power because it protects workers from precarity, even if the funds are privately sourced; (2) whether organizations that administer publicly subsidized or funded benefits better or worse raise bargaining power or protect from precarity; (3) whether organizations that administer benefits empower workers through collectivizing and uniting their interests; (4) whether the answer to question (3) changes depending on the source of funding or the composition of administrators.

The Working Group may also consider whether a focus should also be on unions/workers’ organizations that do or could administer different types of public, individual and social benefits, e.g. legal services, safety and health, political advocacy, training, etc. and whether there could be a tie to unionization (Ghent unemployment compensation system) or to a specific sector, for example. Although this is a focus for a different working group, it overlaps with the assignment of this Working Group, which is how to strengthen existing unions. Finally, this memorandum does not address members-only unions because in the view of some Working Group members, members-only unions are thoroughly studied by others and may not be the most promising way to build worker power.

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At the outer bounds of the topic of administering benefits, the literature addressing how social welfare programs interact with the status of the workforce, the democracy, or the social order more broadly, is robust, long-running, and varied. 3 Normative stances on how new or expanded benefits might empower or impair workers, and, in turn, improve or derail society, have also been a mainstay of modern political and economic thought. Indeed, in some debates, writers ask whether “benefits” (or, different distribution models) might replace or supplant – or, are necessary to dismantle – the very condition of “work” in the industrial capital society. 4 Outside the bounds of the topic, recent literature that routes around for different forms of economic organization and distribution might shape questions of what alternative forms of worker organization could (or should) accomplish.5

3 See, e.g., Carol C. Gould, Solidarity and the Problem of Structural Injustice in Healthcare, 32 BIOETHICS 541 (2018) (applying concepts of labor solidarity to understand the relation of health care access to justice); Philipp Rehm, Jacon S. Hacker, & Mark Schlesinger, Insecure Alliances: Risk, Inequality, and Support for the Welfare State, 106 AM. POL. SCI. REV. 386 (2012) (demonstrating that, across nations, popular support for the welfare state is broader and less polarized when the economically disadvantaged, or low income, and the economically insecure, or, high risk, represent two distinct groups); see generally TON NOTERMANS, MONEY, MARKETS, AND THE STATE: SOCIAL DEMOCRATIC ECONOMIC POLICIES SINCE 1918 (2000). 4 See, e.g., Eric Dacheux & Daniel Goujon, Allocation Universelle et Economie Solidaire: une Alliance au nom de la Démocratie, 73 MOUVEMENTS 130 (2013) (advocating for, in response to the global financial crisis, a paradigmatic shift of economic science in order to prepare for a post-capitalist society that is more democratic because which wages are complemented by a universal basic income); Jacques Rancière, NIGHTS OF LABOR: THE WORKERS’ DREAM IN 19TH CENTURY FRANCE (J. Drury trans., 1989) (documenting that the workers at the center of the Revolution of 1830 and early European socialism were seeking to rid themselves of labor altogether). 5 In other words, it may be worth parsing, identifying, and defending (at least in broad strokes) the political philosophy behind any project that looks for new worker organizations. It is unclear whether the worthwhileness of such efforts are raised or lowered if prominent wings of political philosophy have squarely accepted that the current global capitalist structure should not be accepted as is, and that it is prudent to address what should be sought in its stead, then See Stéphane Haber, Emancipation from Capitalism?, 15 CRTICAL HORIZONS 194, 194 (2014) (“The impression that the current economic arrangement has many things seriously wrong with it is broadly shared. So much so that, for example, it is impossible to see how a political philosophy with any normative pretention could now avoid adding its voice to the concert of those seeking alternatives to the way the contemporary economic world operates, and even avoid redefining itself according to such research.”). We might very well do better to leave the ideological terms of the alternative seeking to the philosophers and theorists. See RICHARD RORTY, 91-92 (advising the Left to reaffirm democratic liberal reform by connecting with labor unions and through a “moratorium on theory” for it “should kick its philosophy habit”). See also Richard J. Bernstein, Rorty’s Inspirational Liberalism, in RICHARD RORTY 127 (Charles Guignon & David R. Hiley eds., 2003) (observing that Rorty, a philosopher, chastised the Left’s philosophy habit but failed at “coming up with feasible practical alternatives” for addressing economic inequality and insecurity).

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But, when attending more usefully and modestly to the descriptive reality of particular organizations and the actual political economy and financial arrangements of contemporary nations – the U.S., especially – it is harder to find in the literature clear “yeas” or “nays” to the Working Group’s question on hand: will an organization that administers benefits boost worker power in some way? (And, if we assume so, how?) Instead, normative assessments of the success or failure of these organizations tend to focus on the success or failure of the financial arrangement, compared to other available but strictly analogous modes of financing, cultivating, or distributing a benefit. For example, much of the literature on Taft-Hartley trusts models econometrically whether trustee management of a pooled fund yields higher returns more efficiently than participant-directed 401(k) plans yield. The literature rarely asks what those higher returns or that improved efficiency do.6 The literature also avoids asking what those returns don’t do. And, insofar as the actual trustee board of a Taft-Hartley Plan might represent a particular form of governance over/through/by labor, the literature’s silence on the question suggests that that form of governance does not matter much; few who have touched upon these particular pensions find the trustee board worth examining in any depth.7

The following literature review attempts to summarize and synthesize some of the main conclusions or points of contention over the past half century (in the case of Taft-Hartley plans) or the past half decade (in the case of Black Car fund)8 as to the successes and utility of organizations that administer benefits. At the outset, though, it is worth noting that the on-point (as in, on the relevant organization) literature may either operate within a fixed set of analogous markers – e.g., comparing one form of pension or insurance fund to another – or within a pre-set value narrative that avoids alternative explanations or proposals in order to deflect ambivalence and incompletion – e.g., the gig economy presents one problem for workers and the Black Car

6 But see 7 This may be an overstatement. Literature on governance of pensions more generally is certainly available. European researchers address in depth the effect of governance on private pension fund performance. And, good fund performance, through good governance, facilitates other positive outcomes, including the reduced need for government supervision. See F. Stewart & J. Yermo, Pension Fund Governance: Challenges and Potential Solutions, 18 OECD WORKING PAPERS ON INSURANCE & PRIVATE PENSIONS (2008), http://www.oecd.org/finance/private-pensions/41013956.pdf. However, this Memo writer’s difficulty in finding work tying private pension trustee boards to issues other than the fund’s performance might not be her obvious fumble, considering that Professors Anzia and Moe recently lamented, “Public pension funds (other than Social Security) have rarely been studied by political scientists. Yet they are critical elements of every state government, as well as many local governments.” Sarah F. Anzia & Terry M. Moe, Interest Groups on the Inside: the Governance of Public Pension Funds 1 (Working Paper) (2017)). 8 The New York Black Car Fund (“NYCBF”) is actually two decades old. But, as this Memo later describes, the NYBCF is gathering considerable new attention as the conditions of workers for Uber, Lyft, as well as for contracting or gig firms outside the transportation industry have been gathering new attention.

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fund is its “solution.”9 The parameters and scope of the literature’s discussions are not an obstacle to the Working Group’s task, but the literature (and this review) does leave space for more inquiry into the relationship among “worker power,” “worker organizations,” and benefits, as well as between forms of organization and the sociopolitical aim of any one organization.

A. Taft-Hartley Plans

Definition

Established under Section 302 the Taft-Hartley Act of 194710, “Taft-Hartley Plans”11 are multiemployer pension plans sponsored and managed by a board of trustees.12 These plans are 9 NYBCF seems to attract a rhetorical framing of “the issue” that at once narrows and broadens other questions of political economy and social welfare as they relate to contract workers. See Stacey Vanek Smith, PLANET MONEY (NPR) (Jan. 29, 2018), https://www.npr.org/templates/transcript/transcript.php?storyId=581626325 (using the lede “[t]here’s lots of talk about the problems of the gig economy. On today’s show, we talk about a solution.”). This is a narrowing in that issues Uber and other gig workers face seem to be reduced to one – the lack of insurance – and a broadening (or flattening) in that the livery workers in New York state benefited from a solution that all types of contract workers are presumed to need. The organization itself embraces this line. For example, it hosted a session at the International Association of Industrial Accident Boards and Commissions 2018 Convention entitled “The Black Car Fund - An Innovative Compensation Solution for a Rapidly Evolving Gig Economy World.” See The Black Car Fund (@NYBCF), TWITTER (Oct. 3, 2018), https://twitter.com/NYBCF/status/1047531741320241154. 10 29 § U.S.C. 141-197. The Taft-Hartley Act, so called after its sponsors Senator Robert A. Taft (Ohio) and Representative Fred A. Hartley, Jr. (New Jersey), is formally known as the Labor Management Relations Act of 1947. The Taft-Hartley Act was the first to revise the Wagner Act, 29 U.S.C. § 141, which since 1935 had promoted collective bargaining and incentivized workers to form labor unions. By comparison, the 1947 amendments were solidly pro-employer and pro-business, as they restricted union activities and protected individual, non-union workers by eliminating the “closed shop,” wherein union membership was a condition of employment; the amendments also applied unfair labor practices standards to unions. For a contemporaneous assessment of the significance of the Taft-Hartley Act to labor relations, see Comment, Developments in the Law: the Taft-Hartley Act, 64 HARV. L. REV. 781 (1951). See also Note, Sections 8(B)(4) and 303: Independent Remedies against Union Practices Under the Taft-Hartley Act, 61 YALE L. J. 745, 745 (1952) (“a principal aim was to curb union practices considered injurious to employers and the public”). 11 Additional names include “multi-employer funds, Taft-Hartley trusts, joint trusts, jointly trusted plans, ERISA trust funds and labor-management employees benefit plans.” The Massachusetts Coalition of Taft-Hartley Trust Funds, Inc., Taft-Hartley Trust Funds, Macoalthf.org, http://www.macoalthtf.org/taft-hartley-trust-funds.html, archived at Section 302 of the Taft-Hartley Act 12 Introduction to Multiemployer Pension Plans, PENSION BENEFIT GUARANTY CORPORATION: A U.S. GOVERNMENT AGENCY, https://www.pbgc.gov/prac/multiemployer/introduction-to-multiemployer-plans, archived at https://perma.cc/VV8Q-LEJY. See Multiemployer Pension

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collectively bargained for by two or more employers and a union.13 Typically, the plans involve “one or more local unions that are part of the same national or international labor union.”14 Employers tend to share industries or trades – e.g., construction. More than one employer contributes to the plan; more than one union may also contribute.

A defining characteristic of a Taft-Hartley Plan, like other multiemployer plans, is that it is subject to a collective bargaining agreement (CBA). In contrast, multiple employer plans (MEPs) and multiple employer welfare arrangements (MEWAs) are not subject to an underlying CBA.15 The second defining characteristic of a Taft-Hartley Plan, unlike other multiemployer plans, is that a Board of Trustees, composed equally of management and employee representatives, operates and administers the fund.

Not all multiemployer plans are Taft-Hartley Plans.16 In the sports industry, for example, plans are subject to a CBA and require contributions from multiple employers, but they are not managed by a trust governed by an equal management-labor fiduciary board.17 Many public pension funds are multiemployer plans, but they are not Taft-Hartley Plans.

Plans, Practical Law Practice Note 8-570-6805 (“Multiemployer plans are also often referred to as Taft-Hartley plans (after the collective bargaining act) if the plan sponsor is a joint board of trustees with equal representation from union and management trustees and is responsible for the operation and administration of the plan.”), 13 Multiemployer Plans, PENSION BENEFIT GUARANTY CORPORATION: A U.S. GOVERNMENT AGENCY , https://www.pbgc.gov/prac/multiemployer. 14 What is a Multiemployer Plan?, INTERNATIONAL FOUNDATION OF EMPLOYEE BENEFIT PLANS, http://www.ifebp.org/news/featuredtopics/multiemployer/Pages/default.aspx, archived at https://perma.cc/9U8H-P3VM. 15 See 29 U.S.C. § 1002(40)(A) (defining a “multiple employer welfare arrangement” as an employee welfare benefit plan that is not “established or maintained . . under or pursuant to one or more agreements which the Secretary [of Labor] finds to be collective bargaining agreements”). “MEPs are pension plans that are both: Maintained by two or more employers who are not related under the Code's controlled group rules . . . [and are n]ot subject to an underlying CBA. . . . MEWAs are welfare plans that are maintained by two or more employers that are not subject to an underlying CBA.” Multiemployer Pension Plans, Practical Law Practice Note 8-570-6805. 16 ERISA defines a multiemployer plan as a plan: “(i) to which more than one employer is required to contribute, (ii) which is maintained pursuant to one or more collective bargaining agreements between one or more employee organizations and more than one employer, and (iii) which satisfies such other requirements as the Secretary [of Labor] may prescribe by regulation.” 29 U.S.C. § 1002(37)(A) (1982). Notably, the plan’s trust or administrative structure are not features of the definition. 17 See What is a Multiemployer Plan?,

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In addition to the Taft-Hartley Act, the Employee Retirement Income Security Act of 1974 (ERISA) and subsequent amendments, including the Multiemployer Pension Plan Amendments Act of 1980 (MPPAA), set requirements for fund operation and status.18

On definitions & fund/plan comparisons/categories

As discussed throughout this Section of the Memo, some of the benefits and risks of multiemployer plans, generally, might be critical to assessing how Taft-Hartley Plans, specifically, do or do not provide a worthwhile, tangible outcome of – or vehicle for – worker collective power.

Moreover, not all literature on multiemployer pension plans distinguishes between plans that are Trustee-directed and those that are participant-directed, or between defined contribution plans and defined benefit plans.19 Even if, as a formal matter, the equally-represented management-labor board is a defining feature of a Taft-Hartley Plan, analyses of these plans rarely focus on the success, values, and risks of this administrative scheme, specifically. Instead, analyses that look to administration may focus on how centralizing fund management allows for economies of scale, or how smaller employers value multiemployer plans because independently managing a fund is cost prohibitive.

As this Section proceeds, when a distinction is appropriate or helpful to discussion, Taft-Hartley Plans will be differentiated from other multiemployer pension plans. When more general pension principles apply to considerations or issues, such distinctions may be unnecessary.

Operation

A Board of Trustees is responsible for managing and operating the multiemployer plan. The Board is equally composed of management and employee representatives. The plan, however, must be operated for the benefit of the employees and beneficiaries, not for the union nor the employer.

18 For contemporaneous overviews of the MPPAA, see generally Cooper, The Multiemployer Pension Plan Amendments Act of 1980: An Overview, 12 J. PENSION PLAN & COMPLIANCE 17 (1986) (analyzing main provisions); Shuttz & Golden, Current Developments in Employee Benefits: Muliemployer Pension Plan Amendments Act of 1980-Broad Implications for Plan Sponsors, 6 EMPLOYEE RELAT. L. J. 494 (1981) (briefly summarizing amendments). MPAA’s purpose was to strengthen pension protection of multiemployer plans so strengthened protections by: raising funding requirements for plans; setting new rules for funding and benefit adjustments for financially weak plans; incentivizing employers to continue to fund multiemployer plans through a revision of the termination insurance system; establishing withdrawal liability for employers who do withdraw from multiemployer plans. See Introduction, supra at note 10. 19 See, e.g., John J. Topoleski, Congressional Research Service, Multiemployer Defined Benefit (DB) Pension Plans: a Primer (Sept. 24, 2018), https://fas.org/sgp/crs/misc/R43305.pdf (observing in the paper’s final footnote that “typically a multiemployer pension plan’s board of trustees has equal representation from labor and management”).

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Costs of managing the plan are attributed to the trust.20

Taft-Hartley Plans are typically defined benefit funds.21 These pension plans do not depend directly on employee contributions.22 An employee who is eligible for benefits per the fund’s requirements, will receive pre-fixed benefits when she retires. The promised, specified monthly benefit she receives may depend on individual factors, such as salary and length of employment, or it may be a fixed dollar amount.23

Many trusts are managed by professional investing firms.24 “Representation” of labor does not require direct presence of labor.25 That said, the United States Department of Labor 2006 guidance on the Labor Management Reporting and Disclosure Act, posited that “a union trustee is considered a union official if the union trustee is appointed by the union, even if the union trustee is not otherwise a union officer.”26 Questions of just who is a fiduciary representative can implicate issues involving conflicts of interests with regards to claims determinations.27

Variations in form

20 See Olivia S. Mitchell & Emily S. Andrews, Scale Economies in Private Multi-Employer Pension Systems, 34 INDUST. LABOR RELAT. REV. 522, 524 (1981) (describing multiemployer plan trust structure). 21 Gary S. Fealk, Union Pension Fund Issues, 21 MICH. EMP. L. LETTER 3 (2010). But see Daniel A. Notto & Tom Villanova, Multiemployer DC Plans: Considering Participant Directed vs. Trustee-Directed Investments, 55 BENEFITS MAGAZINE 24 (Nov. 2018) (“Defined contribution (DC) plans are being created by more multiemployer plans for their participants.”). 22 Id. [note 18] 23 Securities and Exchange Commission, Employer-Sponsored Plans, INVESTOR.GOV, https://www.investor.gov/introduction-investing/retirement-plans/employer-sponsored-plans, archived at 24 See, e.g., Mass Mutual, Experience MassMutual Taft-Hartley Plan Solutions, https://www.massmutual.com/business/retirement-services/taft-hartley-plans (promoting the service of Taft-Hartley fund management). 25 C.f. 26 Proskauer Rose, Client Alert: The United States Dep’t of Labor Issues Further Guidance Regarding Employers’ Reporting Obligations under the LMRDA 2 (March 2006) (interpreting the DOL guidance document). See also U.S. Dep’t of Labor, Office of Labor Management Standards, Form LM-10—Employer Reports Frequently Asked Questions, https://www.dol.gov/olms/regs/compliance/lm10_faq.htm. 27 See Durakovic v. Building Service 32 BJ Pension Fund, No. 09-3651-cv, 2010 WL 2519645 (2d Cir. June 24, 2010) (finding in a case of first impression that Taft-Hartley funds are “inherently conflicted” under Metro. Life Ins. Co. v. Glenn, 489 U.S. 105 (2008) because the same entity both pays and determines entitlements).

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In multiemployer pension funds, the parties bargain to determine who contributes how much.28 Contribution structure might therefore vary.

Multiemployer defined benefit plans are not necessarily the exclusive source of bargained-for benefits for participating employees. Under [2006 LAW?], employees may have both the defined benefits of the multiemployer plan, and, separately funded, a 401(k) plan, for example.29

Prevalence & Perceptions

Today, commentators and reporters on multiemployer pension funds often ring alarm bells.30 Even those who announce cautious optimism that defined-benefit, multi-employer plans can remain viable qualify such optimism with a glance back at the plans’ height and then nadir: “the funding status [of these] programs, on average, is yet to reach 2007 levels, with the likelihood that some plans may never recover.”31

According to Goldman Sachs Asset Management, “[a]ctive participants in multiemployer plans have declined to 29% in 2013 from 76% in 1980.”32 Most members are retired.

28 See, e.g., MLBPA, MLB Announce Details of New Labor Agreement (Dec. 2, 2016), http://www.mlbplayers.com/ViewArticle.dbml?DB_OEM_ID=34000&ATCLID=211336390, archived at (reporting that the Major League Baseball Players’ Association and Major League Baseball agreed as part of new CBA that each baseball club would contribute $200 million yearly to pension and medical benefits); Harry Bradford, NBA Players Now Forced to Put Some Money into Retirement Fund, HUFFPOST (July 12, 2012), https://www.huffingtonpost.com/2012/07/12/nba-retirement-funds_n_1669312.html, archived at (describing negotiations between the National Basketball Association Players’ Association and the NBA resulting in increased contributions from players’ salaries to pension funds). 29 See, e.g., NBA 30 See, e.g., Paul M. Secunda, The Forgotten Employee Benefit Crisis: Multiemployer Benefit Plans on the Brink, 21 Cornell J.L. & Pub. Pol'y 77, 79–80 (2011) (“these plans are increasingly mired in financial trouble and are finding it more difficult to successfully negotiate new legislative and navigate judicially-imposed obstacles. Although these plans once represented ‘one of the great triumphs in American labor relations’ in providing employee benefits to workers of small employers in itinerant industries--like building and construction, trucking, retail, and the entertainment industry--such plans are quickly becoming *80 just another part of the growing employee benefits crisis confronting the United States.”); Cheiron, Inc., Cheiron Study Finds 121 Multiemployer Pension Plans May Fail within 20 Years, PRNEWSWIRE (Nov. 1, 2018), https://www.prnewswire.com/news-releases/cheiron-study-finds-121-multiemployer-pension-plans-may-fail-within-20-years-300742169.html, archived at (announcing that actuarial consulting firm Cheiron projects that as many as 1.3 million multiemployer plan participants may lose benefits). 31 Daniel Hennessy, Taking Stock: the Taft-Hartley Pension Plans, the Long and Difficult Road Traveled, NEPC.COM (September 13, 2018), https://www.nepc.com/insights/taft-hartley-long-difficult-road-travelled, available at 32 Danielle Kane, Euormoney Institutional Investor, PLC, Trouble for Taft-Hartley Plan Retirees—A.M. [Asset Management] Cheat Sheet, MONEY MANAGEMENT LETTER (Apr. 15, 2015), citing Goldman Sachs Asset Management.

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Defined benefit plans, overall, have been giving way to defined contribution plans – a shift that has been “ongoing over the past 40 years.”33 Still, Taft-Hartley plans remain common in the industries of construction (involving the bricklayers, electricians, and laborers unions), retail (involving the United Food and Commercial Workers International Union), and trucking and warehouse (involving the Teamsters Union).34

Value Propositions

Workers who Change Bosses Value Portable, Consistent Plans

For employees, the multiemployer plans offer plan “portability” and “consistency”: employees who switch employers can maintain the same benefits, without risk that coverage will be interrupted.35 If an employer goes out of business, the worker will not lose accumulated benefits.36 If the employee experiences gaps in employment, she will not suffer gaps in coverage.37

Limitation of this value:

Traditional multiemployer pension plans do not offer unbounded portability, however.38 The multiple employers who join one fund are within one trade or industry. Thus, a worker who moves from a job in construction to a job in transportation will not be able to carry her benefits with her.

Employees Value the Predictability of (Multiemployer) Defined Benefit Plans

The predictable result of a DB plan can help workers anticipate how to prepare for retirement.39 The predictability of the promised benefit also frees workers from risk that changes in personal or family needs, and thus changes in ability to contribute from salary, will affect the retirement benefit. Similarly, her benefits will not fluctuate with changes in the stock and bond markets. (And, PBGC insurance should protect her benefits, should her employer fail to remain in

33 Employee Benefits Security Administration, U.S. Dep’t of Labor, 1 PRIVATE PENSION PLAN BULLETIN (December 2018), https://www.dol.gov/sites/default/files/ebsa/researchers/statistics/retirement-bulletins/private-pension-plan-bulletins-abstract-2016.pdf, archived at 34 Massachusetts Coalition, supra note 9. 35 Multiemployer Pension Plans, Practical Law Practice Note 8-570-6805. 36 See Rolf, infra note 36 at 8. 37 See Rolf, infra note 36 at 8. 38 Cf. DAVID ROLF, SHELBY CLARK, & CORRIE WATTERSON BRYANT, PORTABLE BENEFITS IN THE 21ST CENTURY: SHAPING A NEW SYSTEM OF BENEFITS FOR INDEPENDENT WORKERS 3 (2016) (stressing the value of portable benefits for gig economy workers who “may derive their income from multiple source simultaneously or who may regularly switch jobs or employers”). 39 See PBGC, A Predictable, Secure Pension for Life: Defined Benefit Pensions (2000), https://www.pbgc.gov/documents/A_Predictable_Secure_Pension_for_Life.pdf.

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business or afford the benefits.40) But, this predictable result may be elusive without portability; if a worker will change jobs a dozen times before she retires, she cannot predict much from the plan employer number two offers her.41 In this sense, the multiemployer plan and the DB plan synergize each other’s value.

The portability of multiemployer defined benefit plans is not available in an individual DB plan, but may be otherwise available in a defined contribution plan. Proponents of DC plans highlight “flexibility and convenience, with respect to options for participation, contribution amounts and allocations of funds.”42 As the Department of Labor recently observed, “[c]hanges in workforce mobility have also contributed to this shift from DB to DC plans, as workers tend to change jobs more frequently and DB plans are not transferable across employers.”43 Because many of the advantages of DC plans are available through multi-employer DB plans, if a DB plan offers other advantages over a DC plan, then a worker need not sacrifice that set of positive aspects just because she values flexibility and convenience.

Employers Value Uniformity and Portability in Tight Labor Markets

Smaller employers “who are forced to recruit experienced, skilled labor from a relatively small pool of applicants within a set geographical area” can attract workers who are both willing to switch jobs, and who will not be comparing competing benefits plans’ among jobs.44

Centralized Plans Reduce Individual Employers’ (and Participants’) Administrative Costs

Economists have long modeled, and demonstrated, that multiemployer pension plans operate with significant economies of scale.45

40 See id. See generally John J. Topoleski, Congressional Research Service, Multiemployer Defined Benefit (DB) Pension Plans: a Primer (Sept. 24, 2018), https://fas.org/sgp/crs/misc/R43305.pdf (describing current challenges to PBGC protection of multiemployer DB plans relative to the challenges of individual employer DB plans). 41 See Bureau of Labor Statistics, National Longitudinal Studies (summarizing available data on job changes), https://www.bls.gov/nls/nlsfaqs.htm#anch43. But see PBGC, Predictable, supra note 37 at 4 (“A worker can earn a reasonable retirement benefit under a defined benefit plan, even if the worker has not had an adequate retirement plan or was not covered by a retirement plan earlier in a career.”). 42 Pension Plan Bulletin, supra note 29 at 1. 43 See Pension Plan Bulletin, supra note 29 at 1 (citing John Broadbent, Michael Palumbo & Elizabeth Woodman, The Shift from Defined Benefit to Defined Contribution Pension Plans – Implications for Asset Allocation and Risk Management, paper for https://www.bis.org/publ/wgpapers/cgfs27broadbent3.pdf 44 Jeffrey D. Linton, Implying a Statutory Right for Employers for the Return of Mistaken Overcontributions to Multiemployer-Employee Benefit Plan, 62 NOTRE DAME L. REV. 396, 397 (1986). 45 See, e.g., Mitchell & Andrews, supra note 17 at 528 (explaining that “[p]ension expenses for multi-employer plans in 1975 averaged around $20 per participant each year but where as much as seven times as large for small plans with only 100 members . . . [and] costs per person were

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Employers can pool risks and resources.46 Smaller employers have access to more sophisticated investment tools and strategies, and do not need to commit what would be disproportionately substantial (likely, too-burdensome) costs for professional investment and administrative services.47

Limitations of the administrative efficiency/economy of scale value

If scale economies in plan administration are significant, they could be more so. In 1981, labor relations economists Mitchell and Andrews referred to three proposals to embrace the advantages of scale:

(1) fostering “plan mergers,” including by “combining the assets of several small pension plans within in an essentially fully funded framework . . . [such that] while pension assets could be pooled under a central administration, while record keeping and benefit calculations could be maintained at the individual firm level”;

(2) “integration of plans operated by local union-management boards into a national fund”;

(3) “the growth of large scale defined contribution plans, which probably require fewer participant-related services [than small-scale defined contribution plans].”48

Trustee-Direction Leads to More Efficient Investment Activity

J.P. Morgan’s Asset Management analysts indicate that trustee-directed funds allows for diversification of risk, and therefore, through the acceptance of less liquid, higher-risk, or alternative investment categories, the fund may ultimately perform better than it would if directed by participants, only.49

Employee Representation Better Protects – and Communicates – Interests of the Fund’s Beneficiaries

“Employee or member representation can ensure a better alignment of the interest of the governing board with those of the fund‘s beneficiaries . . . They can also act as a conduit for $88 per year lower for 1000-member plans than for 100-member plans”); Jerry W. Caswell, Economic Efficiency in Pension Plan Administration: a Study of the Construction Industry, 43 J. RISK & INS. 257 (1976) (finding through econometric analysis that long-run average costs in administrative expenses decreased in decreasing amounts as the scale of operations increased). 46 See Concrete Pipe & Prod. of Cal., Inc. v. Constr. Laborers Pens. Trust for S. Cal., 508 U.S. 602, 637-38 (1993) ("[T]he nature of multiemployer plans ... [is to] operate by pooling contributions and liabilities."). 47 See also Hennessy, supra note 32 (“Pension plans pool participant risks, which are backed by investment portfolios with access to lower-cost institutional investment options that typically outperform the average 401(k) elections.”). 48 Id. [note 17] at 529. 49 Dan Notto & Thomas Villanova, Taft-Hartley Defined Contribution Plans: the Pros and Cons of Trustee- vs. Participant-Directed Investment, INSTITUTIONAL ASSET MANAGEMENT INSIGHTS & RESEARCH (April 4, 2018), https://am.jpmorgan.com/us/institutional/library/taft-hartley-defined-contribution-plan-investments-trustee-or-participant-directed, archived at

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delivering information to plan members, strengthening the accountability of the governing board.”50

Limitation of this value:

If the fund’s beneficiaries are, ultimately, retirees, their interests may not align with the trustees of the union. This is particularly the case with regards to possibilities for reduction in benefits (as enabled, with restrictions, by Section 201 of the MPRA).

Burdens & Risks

Defined benefit plans suffer from under-funding.

DB plans, some suggest, may also inspire participant apathy toward how the trustees select investments and manage the fund: if the worker expects to receive fixed, promised benefits, she may not have reason to focus on the fund’s failures or successes – total failure or complete underfunding notwithstanding.51

Employers and the unions shoulder the investment risks, unlike in 401(k) plans.

Trustees are legally liable for decisions.

The Taft-Hartley Plans operate under/because of a legal structure that affords more rights to unionized employees than to non-union employees or independent contractors. Only employees who are represented by a union can be eligible for this form of a plan, as the legal authorization of the plan now exists.

Traditionally, Taft-Hartley Plans trust formation restricted the funds to traditional types of investments – e.g., stocks, U.S. bonds. Over time, rules regulating investments have loosened, attitudes have shifted, and now alternative investments are now available.

In the 2008 financial crisis, the average Taft-Hartley Plan lost 24% of its value.

Case Studies / Examples

New England Teamsters & Trucking Industry Pension Fund

United Mine Workers of America 1974

Screen Actors Guild-Producers (SAG) Pension & Health Plan

B. Black Car Funds

50 Stewart & Yermo, supra at 16 51 See Notto & Villanova, supra note 45.

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The New York Black Car Operators’ Injury Compensation Fund (“the Fund”) is a not-for-profit, tax-exempt52 corporation established by state statute in 1999. 53 The Fund provides insurance benefits for work-related injuries, including Workers’ Compensation, to New York “Black Car” operators.54 Article 6-F of the Executive Law (“The Black Car Law”) has been in full effect since January 20, 2000, when the fund began to supply coverage.55 The law requires that for-hire car services join the Fund, and that passengers pay a surcharge on their fares in order to generate fund revenue. The Fund currently sets the surcharge rate to 2.5%.56

“Black cars” offer for-hire taxi service, available only by pre-arrangement.57 (Yellow cabs, in contrast, are authorized to pick up fares on the street; unlike other black cars and other livery vehicles, in exchange for this customer base the city strictly controls their number.58) While 98% of affiliated black cars – i.e., drivers who have joined a Black Car Fund Member Base – operate inside New York City, the statute is state-wide.59 Upwards of 30,000 drivers have Workers’ Compensation coverage through the Fund.60 In recent years, since the rise of the “gig economy” and attendant concerns regarding the vulnerability of contract workers and their insecure access to the benefits and protections available to employees, diverse parties have been newly examining the structure and success of the NYBCF.61 In 2018, NYCBF began expanding

52 N.Y. Exec. L. § 160-ll. 53 N.Y. Exec. L. § 160-cc. § 160-cc defines “black car operator” as “the registered owner of a for-hire vehicle, or a driver designated by such registered owner to operate the registered owner's for-hire vehicle as the registered owner's authorized designee, whose injury arose out of and in the course of providing covered services to a central dispatch facility that is a registered member of the New York black car operators' injury compensation fund, inc.” 54 N.Y. Exec. L. § 160-cc. 55 See History, NYCBF.ORG, http://www.nybcf.org/history/. 56 See N.Y. Exec. L. § 160-cc. 57 See Yellow Cabs and Black Cars: a Quick Lesson, N.Y. TIMES (Nov. 17, 1998), https://nyti.ms/2ME6rq8. For a more detailed but still concise account of the history of black car and limousine service in New York City, see IMMANUEL NESS, Black-Car Drivers: Industrial Restructuring and New Worker Organizing, in IMMIGRANTS UNIONS & THE NEW U.S. LABOR MARKET 130-141 (2005). 58 See id. 59 See History, supra note 4. 60 Id. Quoted numbers on affiliate drivers covered by the NYBCF’s workers’ compensation vary from 30,000 to 130,000. Compare id. (referring to 130,000 drivers) with About, NYBCF Http://www.nybcf.org/about/ (referring to 70,000+ affiliated drivers). Approximately 30,000 is common cited. See, e.g., David Rolf, Shelby Clark, & Corrie Watterson Bryant, Portable Benefits in the 21st Century: Shaping a New System of Benefits for Independent Workers (2016), https://assets.aspeninstitute.org/content/uploads/files/content/upload/Portable_Benefits_final2.pdf (referring to 33,000 drivers). Possibly, the inconsistent numbers results from the fluctuations and/or opacity of who works through Uber and Lyft. 61 See, e.g., Natalie Foster & David Rolf, A Fund for NYC Drivers Models How Benefits Could Work in the Gig Economy, QUARTZ, https://qz.com/work/1394763/the-black-car-fund-is-an-important-model-for-how-portable-benefits-could-work/ (explaining why portable and universal

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the types of benefits it offers its members.62 Affiliated drivers now have vision care coverage, as well as access to a “telemedicine” service, which connects patients with common ailments to doctors for phone or internet appointments.63

Operating Structure

Purpose

NYBCF is a not-for-profit corporation.64 Its purpose is, first, “to secure the payment of workers compensation to black car operators injured while performing services for central dispatch facilities that are members of the Fund, and to conduct other activities related to injury reduction and claim cost reduction.”65 In addition to claims administration, these activities include the creation of driver safety programs and risk management programs relating to driver health – e.g., provision of eye examinations and eyeglasses.66

Second, since April 2018, the Fund’s second purpose is to offer its administrative services to self-insurers and group-self-insurers. The Fund can, upon agreement, represent the group/self-insurers and administer claims on their behalf. These group/self-insurers are independently responsible for providing and securing compensation for injured workers.67

Board of Directors

The Fund is managed by an 11-person Board of Directors.68 Six directors are selected by the black car assistance corporation and four by the New York governor, “including one chosen upon the recommendation of the temporary president of the senate and one chosen upon the recommendation of the speaker of the assembly; one chosen to represent a transportation network company.”69 One member is the secretary, who serves ex officio.70 The directors serve staggered terms of three and two years.71

Membership

benefits, including through operations like the Black Car Fund, are necessary in the new economy). 62 See NYC Drivers for Uber, Other Apps, to get Vision Care Coverage, ABC NEWS (June 29, 2018), https://www.usnews.com/news/best-states/new-york/articles/2018-06-29/nyc-drivers-for-uber-other-apps-to-get-vision-care-coverage, archived at https://perma.cc/8CBA-5JTR. 63 See id. 64 N.Y. Exec. L. § 160-dd (2012). 65 NYBCF, Plan of Operation 11 (effective 2018), https://static1.squarespace.com/static/53b4520ae4b0c36b0038d37a/t/5b621e9d8a922d3c8ef7a78e/1533157296180/Plan_of_Operation_2018.pdf. 66 See id. 67 See id. 68 Nine directors are required by law. N.Y. Exec. L § 160-FF (2012). 69 N.Y. Exec. L § 160-F. 70 N.Y. Exec. L § 160-FF. 71 For current Board composition, see http://www.nybcf.org/our-board/.

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The Fund’s members are the state’s “central dispatch facilities,” which means “a central facility, wherever located, including a transportation network company, that (a) dispatches the registered owners of for-hire vehicles, or drivers acting as the designated agent of such registered owners, to both pick-up and discharge passengers in the state, and (b) has certified to the satisfaction of the department of state that more than ninety percent of its for-hire business is on a payment basis other than direct cash payment by a passenger; provided, however, that a central dispatch facility shall not include any such central facility that owns fifty percent or more of the cars it dispatches.”72

All central dispatch facilities must be Fund members. “Each central dispatch facility shall be required, as a condition of doing business within this state, to pay the department [of state] a two hundred dollar annual fee for the purpose of registering as a member of the fund and receiving a certificate of registration.”73

Surcharges

After the Fund has reasonably estimated the total funding necessary for operations, the Fund establishes “a proposed uniform percentage surcharge to be added to (a) the invoices or billings for covered services sent to the customers of the Fund’s members by a member or its agents and (b) the credit payments for covered services received by a member or its agent.”74

Monthly, Central Dispatch Facilities must submit to the Fund a surcharge payment, with a “detailed accounting of the charge and surcharge amounts charged to and received from customers for covered services during the previous month.”75

The fee is passed on to the customers (who pay a 9% state tax in addition).76 The current surcharge is 2.5%, added to all billings, invoices, and credit payments for covered services.77 “Covered services” excludes tips, taxes, and toll fees, and refers only to picking up, transporting, and dropping off passengers.

Workers’ compensation benefits available to members

Workers who experience work-related injuries or illnesses may be able to receive:

● compensation for missed wages due to “job-related disablement,” “calculated at two-thirds of . . . average weekly wage (AWW) in New York State, subject to statutory

72 N.Y. Exec. L. § 160-cc. 73 N.Y. Exec. L. § 160-hh. 74 Plan, supra note 14 at 14. 75 Id. at 15. 76 See Stacey Vanek Smith, PLANET MONEY (NPR) (Jan. 29, 2018), https://www.npr.org/templates/transcript/transcript.php?storyId=581626325, archived at https://perma.cc/7Q23-MJ5Y (explaining that anyone who is driven in a New York black car, including an Uber or a Lyft, has paid this fee). 77 Id.

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maximums . . . not paid for the first seven calendar days of the job-related disability, unless the disability extends beyond 14 calendar days”;78

● medical benefits, which “may include hospitalization, doctor services, dentist services, physical therapy, chiropractic treatment, x-rays, laboratory tests, nursing service, durable medical goods and prescribed drugs”79;

● death and survivor benefits, payable to dependents (surviving spouse and/or minor children, or, in their absence, others as defined by law), in the case of death from a work-related injury or illness (currently guaranteed at $50,000 for drivers killed on the job80);

● pharmacy benefits via a pharmacy management program, which prevents workers from having to pay out-of-pocket for medication.

Wellness, Safety, Education Programming

Since 2007, NYBCF has been operating The Black Car Safety & Wellness Center, which works “to ensure a safer, more professional workforce within the industry.”81 The Center offers free or low-cost defensive driving courses, which are required regularly for a New York City Taxi and Limousine Operator’s license. Other incentives, facilitated through the nationwide campaign Vision Zero, encourage regular driver education.82

The Fund’s Wellness, Safety and Education Program offers additional access to wellness seminars. Programs cover a range of transportation-related tools and skills, as well as training to enable drivers to perform as first responders, “ready and able to provide and direct urgent medical care and act as critical sentries able to assist police in keeping watch over . . . communities.”83

Enforcement

Member Compliance

The Black Car Law that created the Fund in 1999 delegates certain monitoring actions to the Board. The Board is responsible for identifying “central dispatch facilities subject” to the statute, and must “on a regular and ongoing basis, confirm that all such entities have registered in accordance.”84

Other monitoring and enforcement actions are managed by the either the Fund’s Secretary or the Secretary in concert with public licensing authorities. The Black Car Law conditions licensing,

78 Claiman Benefits, NYCBF.ORG, http://www.nybcf.org/claimant-benefits/. 79 Id. 80 The Black Car Fund Announces $50,000 Driver Death Benefit, NYCBF INDUSTRY NEWS (Feb. 14, 2017), http://www.nybcf.org/industry-news/, archived at https://perma.cc/277D-DYMM. 81 http://www.nybcf.org/education/ 82 https://www1.nyc.gov/site/visionzero/index.page Vision Zero defines itself as “a collaborative campaign aimed at building the momentum and advancing this game-changing shift toward safe, healthy, equitable mobility for all.” 83 http://www.nybcf.org/wellness/ 84 NY Exec L. § 160-hh.

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through the Department of State and/or local authorities, on compliance with proper Fund membership and surcharge collection. Any central dispatch facility throughout New York State that fails to a) add the required surcharge to “every invoice and billing for covered services . . . and every [customer] credit payment”; and, (b) pay to the Fund the surcharges monthly, will lose its license or certificate for operation.85

The statute authorizes monetary penalties for noncompliance, as well.86 For example, members (facilities) that do not pay on time are subject to a fine of up to $5,000 for each 20 days overdue, in addition to revocation of Fund membership and operational licensing.87 The Black Car Law affords to alleged violators certain procedural due process rights (e.g., a hearing and an appeal).88

Additional regulations impose standards and enforcement provisions on not only the NYBCF, but also on drivers and the “base stations” that manage and operate drivers. For example, New York City’s Taxi and Limousine Commission (“TLC”) promulgates rules for how to execute the stand mandate, imposing additional registration, filing, and auditing requirements on for-hire vehicles.89

Financial Oversight

The Fund must submit annually a plan of operation to the New York State Governor and Legislature.90 Financial documents, prepared by a certified public accountant, are also due; to assist this process, members must submit at the end of each calendar year books, records, and other documents.91

The Black Car Law requires that the Fund communicate rights and duties to members, and also file a plan of operation with the Department of State.92

The Fund owes fiduciary duties to member bases, and thus, in the case of fund mismanagement that would give rise to a cause of action under New York State law, may face private enforcement actions. The Fund’s directors, officers, and agents are indemnified from liability, and the Fund must maintain liability insurance.93

Controversies: who will care who pays what?

While the state and/or municipalities (NYC, especially) police member base registration and Fund collections, recent controversies suggest that private enforcement may help deter accounting and assessment abuses. 85 NY Exec L. § 160-jj. 86 NY Exec L. § 160-oo. 87 NY Exec L. § 160-oo. 88 See id. 89 See, e.g., New York City Taxi and Limousine Commission, Notice of Promulgation Rules (2010), http://www.nyc.gov/html/tlc/downloads/pdf/proposed_rule_liv_wc_fund.pdf. 90 NY Exec. L. § 160-kk. 91 NY Exec. L. § 160-kk. 92 NY Exec. L. § 160-hh. 93 NY Exec. L. § 160-mm.

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In 2017, a drivers’ advocacy group, the New York Taxi Workers Alliance, asserted that Uber was not collecting the 2.5% surcharge from passenger fares, but was instead deducting the amount from the driver’s take-home pay.94 Uber denied that this was the case, though recognized that their means of documenting who was paying what via the software might be “confusing.”95 Addressing these practices (and the entire controversy, which also involved how the passengers’ tax burden was being levied on the drivers), one commentator suggested “state authorities might be reluctant to pursue the case because the state does not appear to have been cheated out of tax revenue. But . . . drivers could have a solid claim that Uber had misrepresented the way they were being compensated.”96

In general, Uber and Lyft’s innovative algorithms and software-driven services may occlude accounting and collection abuses, which might require both the Fund and the State to reconsider its monitoring practices.97

Consumers have also alleged that they are overpaying in the name of the black car surcharge, and are thus being taxed unlawfully. In September 2018, one passenger filed suit against NYBCF for tacking the surcharge onto a base that includes tips.98

Value Propositions

Independent Contractors Don’t Face Injury Independently

“The for-hire industry’s drivers are independent contractors; however, for the purposes of the state statute, our Member Bases’ affiliated drivers are The Fund’s employees and therefore, are

94 Noam Scheiber, Uber to Repay Millions to Drivers, Who Could be Owed Far More, NY TIMES (May 23, 2017), https://nyti.ms/2qTtCV1. The advocacy group also asserted that Uber’s means of calculating its commission “amounted to wage theft.” Uber conceded that it was improperly calculating its 25% commission from a figure that included state taxes; Uber agreed to repay drivers for their lost earnings. However, both the New York Taxi Workers Alliance and the New York Times documented additional unfair and illegal practices, including those relating to the surcharge. See id. 95 See id. (“[A]n Uber official made available by the company said the sales tax and black-car surcharge were incorporated into the passenger’s overall fare and then subtracted from the drivers’ take so that Uber could remit the money to the state. This, the official said, meant the passenger was actually paying the charges even though they appeared to be coming from the drivers. The official compared the practice to selling a slice of pizza for $1 with tax included, but acknowledged that it was confusing.”). 96 See id. (paraphrasing attorney Richard Emery). 97 For a discussion on how one of Uber’s changes in pricing schemes is “ripe for abuse,” see The Rideshare Guy, How Much Money are Drivers Losing from Upfront Pricing? (May 3, 2017), https://therideshareguy.com/how-much-money-are-drivers-losing-from-upfront-pricing/, archived at https://perma.cc/B3LU-Z9SX. 98 For the latest filings on the docket, see https://www.pacermonitor.com/public/case/25549241/Kasiotis_v_New_York_Black_Car_Operators_Injury_Compensation_Fund,_Inc [accessible through paid service only].

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able to be afforded Workers’ Compensation coverage if injured while working.”99 As David Rolf and Natalie Foster have observed, “[w]ithout this arrangement, New York’s drivers would be completely on their own if they were injured on the job—like they are everywhere else.”100

Drivers retain the same coverage while working for multiple companies; thus, drivers who are truly “independent” are safeguarded by the coverage’s within-industry portability.

The Fund Protects Risky, but Essential Work

Councilman I. Daneek Miller (D- St. Albans) has commented, “City drivers often provide central but dangerous services, and it is our responsibility to support them and their families so they are able to live the quality of life they deserve.”101 Similarly, NYBCF Chairman Berj Haroutunian has noted, “black car drivers are working people who face high risk conditions daily. They are always there for New Yorkers and we that’s why we must be there for them and their families when they need it most.”102

The Public Values that the Fund Reduces Risk

NYBCF has increasingly expanded its offerings to promote risk-reduction programs. These programs focus on driving safety, as well as drivers’ positions to intervene in various crises. Wellness trainings include “hands only CPR” training and the “Transportation on Patrol program”; the fund uses these programs to promote “drivers as valuable stewards of their community.”103

The Industry Values the Universal Mandate on Participation

According to Jim Conigliaro, Jr., Governor-appointed NYBCF Board member and General Counsel to the Machinist Union and District 15 “owners liked [the Black Car Law] because it was clean across the board. Clients rates went up a bit, but it was everyone across the board. There is no competitive edge.”104

Moreover, as efforts to scale funds like NYBCF’s advance, “gig-economy companies often support these bills because they want to make working through their platforms more appealing.”105 Thus, the platforms or companies can draw more workers into the market, generally, and then also avoid having to boost benefits (or perquisites attractive in benefits’ absence) over and above rival companies.

The Fund Cuts Down on Classification Contests, Errors, and the Costs of Management

99 The Black Car Fund, History, NYCBF.ORG, http://www.nybcf.org/history/. 100 Rolf & Foster, supra note 10. 101 See Announces $50,000, supra note 27 (quoting Miller). 102 See id. (quoting Haroutunian). 103 http://www.nybcf.org/wellness/ 104 Rolf, et al., Portable, supra note 9 at 10. 105 Alana Semuels, Could a Tax Fix the Gig Economy?, ATLANTIC (Nov. 6, 2017), https://www.theatlantic.com/business/archive/2017/11/gig-economy/544895/.

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The legislative establishment of the fund provides the above values while also partially voiding the fight over who’s whose employee and who deserves what. “This Fund serves as an important intermediary to mitigate potential classification issues. As identified in the statute, for the purposes of benefits, the BCF serves as a driver’s employer. Misclassification is avoided because the surcharge is paid by a dispatcher or WIP [Work Intermediation Platform] to the fund, which directly provides benefits.”106 “Similar to the lawsuits currently facing many leading companies in the “on-demand” economy, prior to the Black Car Fund, there were regular legal battles over the employment classification of drivers.”107 Some have suggested that, in the livery industry, the Black Car Law has resolved disputes over classifications and considerably reduced litigation involving workers’ compensation.108

Customers Value that the Surcharge is Slight; They May Not Value Highly the Dollars Lost

Traditionally, black car and limousine franchises engage a high-end business clientele.109 “Black-car fares are usually paid by corporations, which provide their employees and clients vouchers to pay for rides.”110 That the black-car services (Uber and Lyft excepting) already charge higher rates than neighborhood car services111 indicates that the 2.5% additional ercentage fee may not be especially burdensome to those who pay it.

“Disruptive” Industry Players May Value Opportunities to Mitigate or Redistribute the Costs of Gig Work

Those who have decried platform-based companies’ campaigns to offer freedom and mobility for users/contractors112 have highlighted, among other problems, that these companies’ business models rely on the flexibilities of a non-employee and/or non-full-time workforce; such an insistence on the independent status of workers leaves workers vulnerable in a national system that attaches health care and other benefits to employment. Efforts to scale the NYBCF to cover more contract workers – drivers outside of New York State, but also non-livery contractors – may offer firms an opportunity to restyle the public image that some labor activists,

106 Thomas Coughlin, Caroline Johnson-Hall, Jennifer Kippenberg, Zueyang Li, & Camille Moore, Developing a Benefits Delivery System for Independent Contract Workers in the U.S. (2018), https://assets.aspeninstitute.org/content/uploads/2018/05/CMU-Heinz-College-Portable-Benefits-in-the-Gig-Economy.pdf. 107 Rolf, et al., Portable, supra note 9 at 10. 108 See id. (quoting Conigliaro as observing that the law “seemed to solve a lot of issues around employment classification. There was a lot of litigation around workers comp.”). 109 See Ness, supra 6 at 139. 110 See Ness, supra 6 at 139. 111 See id. 112 See, e.g., Uber Advertisement Earning/Chilling, https://vimeo.com/185547342. Professor Sachs discusses the “flexibility” trope sold in this advertisement in his OnLabor blog post, Uber, Flexibility and Employee Status (May 18, 2018), https://onlabor.org/uber-flexibility-and-employee-status/.

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investigators, and workers paint – an image of law-flouting tech entrepreneurs whose business genius lies in abilities to defeat regulations while gouging and manipulating laborers.113

Uber CEO Dara Khosrowshahi, together with David Rolf and venture capitalist Nick Hanauer, have begun to advocate in Washington state for legislation establishing a portable benefits system that could be akin to the NYBCF’s system.114 Were firms like Uber, with their tactical political prowess115, to push for NYBCF-like benefits programs, they may be able to entrench the position that workers should be characterized as non-employees. 116 (Uber spokesperson indicated that such a benefits bill should “make clear that workers like Uber drivers are not employees.”117) At the same time, while protecting its business model, Uber could generate valuable good will with consumers, drivers/users, and other stakeholders.118

IV. WORKER AND OTHER ORGANIZATIONS THAT CERTIFY HIGH-ROAD PRACTICES

High-road practice certification organizations attempt to improve employment conditions by obtaining voluntary buy-in from businesses for employment standards above what is required by law, providing some form of oversight that businesses are complying with these standards, and creating some way for businesses to advertise their compliance. Broadly speaking, organizations that certify high-road practices come in two forms. On one hand, there are worker-driven community organizations like the Coalition of Immokalee Workers (“CIW”) and the Workers Defense Project (“WDP”) that utilize high-road practice certification as a tool to advocate for their constituent members.[1] There are also Global 113 See Janet Burns, While Uber Invests in Lobbying and AI, Drivers are Fighting for Decent Pay, FORBES (Jan. 23, 2018), https://www.forbes.com/sites/janetwburns/2018/01/23/while-uber-targets-laws-and-ai-drivers-are-fighting-to-win-fair-pay/#73c9501867f6, archived at https://perma.cc/T47D-T7RJ (summarizing criticisms lodged at Uber in recent years). 114 See Khosrowshahi, Rolf, & Hanauer, Building a Portable Benefits System for Today’s World, Open Letter (Jan. 23, 2018), https://www.uber.com/newsroom/building-portable-benefits-system-todays-world/. 115 See Joy Borkholder, Mariah Montgomery, Miya Saika Chen, & Rebecca Smith, National Employment Law project and the Partnership for Working Families’, Uber State Interference: How Transportation Network Companies Buy, Bully, and Bamboozle their Way to Deregulation (Jan. 2018), http://www.forworkingfamilies.org/sites/pwf/files/publications/images/Uber%20State%20Interference%20Jan%202018_0.jpg, archived at https://perma.cc/2YRE-3YWX. See also Sharon Block & Benjamin Sachs, Uber’s Political Program in the States, ONLABOR (Jan. 19, 2018), https://onlabor.org/ubers-political-program-in-the-states/ (discussing the report). 116 See Josh Eidelson, Uber-Union Proposal on Benefits Met with Skepticism from Labor, BLOOMBERG (Jan. 25, 2018), https://www.bloomberg.com/news/articles/2018-01-25/uber-union-proposal-on-benefits-met-with-skepticism-from-labor. 117 See Eidelson, supra note 56 (paraphrasing an unnamed spokesperson). 118 See Stephen Edelstein, Lyft President John Zimmer Hopes to Appeal to Rideshare Customers’ Values, THE DRIVE (March 29, 2017), www.thedrive.com/tech/8760/lyft-president-john-zimmer-hopes-to-appeal-to-rideshare-customers-values?iid=sr-link1.

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Framework Agreements that often include some form of certification of high road practices, although without worker involvement and worker-driven processes, the reliability of such certifications is dubious. On the other, there are non-profit organizations such as B Lab that do not have constituent members and, therefore, utilize high-road practice certification as a tool to fulfill more general social goals such as, in the case of B Lab, incentivizing the formation of socially-aware corporations.[2] It is worth noting that there is often overlap between organizations that enforce labor standards[3] and organizations that certify high-road practices. Both the CIW and WDP work to ensure that employers comply with labor standards while also administering high-road certification programs. Indeed, certification programs are often a method of ensuring compliance with labor standards as well as raising industry standards. For instance, compliance with existing labor standards is one of the requirements for employers to qualify for the CIW’s Fair Food Program[4] or the WDP’s Better Builder certification.[5] a. Examples of High-road Practice Certification

The CIW’s Fair Food Program seeks to improve the wages and working conditions of farmworkers via binding legal agreements between CIW and the corporations that sell produce to consumers such as McDonald’s and Whole Foods.[6] Beginning as a campaign focused on tomato pickers in Florida, it has since expanded to six other states and new crops.[7] Under these agreements, retailers pay an additional penny per pound of tomatoes which goes directly to the farm workers who pick them and commit to only buying tomatoes from growers that agree to the Fair Food Code of Conduct.[8] The Fair Food Code of Conduct requires that growers directly hire their workers instead of using labor intermediaries[9] as well as provide better working conditions such as access to shade, drinking water, and bathrooms.[10] Compliance with the financial- and production-standards of these agreements is monitored by a third-party, the Fair Food Standards Council.[11] Retailers who sign one of these agreements can demonstrate their commitment to better wages and working conditions by placing the Fair Food Program logo on consumer products.[12] The WDP’s Better Builder Program uses a similar model to the CIW’s Fair Food Program to improve conditions for Texas construction workers. Better Builder agreements require developers to pay construction workers a living wage, provide OSHA-10 training programs, comply with federal, state, and local laws, and allow WDP representatives access to constructions sites to monitor compliance.[13] Although WDP has reached voluntary agreements with some constructions firms, it also convinced the City of Austin to make economic development incentives and, in some cases, approval of construction projects contingent on participation in the Better Builder Program.[14] The UK Living Wage campaign is a collaboration between Citizens UK and the Living Wage Foundation (“LWF”) that seeks to have British employers voluntarily commit to paying their workers a living wage.[15] The employers’ commitment to pay a living wage includes all individuals aged 18 or older and who work at least two hours per day and eight weeks a year on the employers’ premises, whether they are direct employees, contractors, or self-employed.[16] The living wage rate is calculated based on research into the needs of single and dual earning

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households and includes costs of leisure activity and personal development as well as basic needs.[17] Employers who sign up are formally accredited by the LWF and allowed to display a logo indicating their commitment to paying a living wage.[18] The living wage rate increases annually and employers must keep up with these increases to maintain accreditation.[19] B Lab’s B Corporation certification program allows for corporations to voluntarily adopt a commitment to social goals.[20] To qualify for B Corporation certification, the company must amend its articles of incorporation to include commitments to sustainability and good treatment of workers, undergo B Lab’s certification process that examines the company’s social and environmental impact, and pay fee calculated as a percentage of revenue to B Lab.[21] B Lab also advocates for states to adopt a new alternate corporate structure called a “benefit corporation” which allows for corporations to state a “social purpose” in their articles of incorporation that they can pursue in addition to maximization of shareholder profits.[22] Benefit corporation status and certified B Corporation status are not coextensive.[23] As community organizations and non-profits, all of these organizations are primarily funded through grants and donations. For instance, CIW is financed primarily by grants from foundations.[24] Initially, CIW was funded by small grants from foundations that support community organizing, like Abelard Foundation-East and the Public Welfare, but as the Fair Food Program began to take off, other foundations, such as the Ford Foundation, started to give substantially larger grants.[25] The Fair Food Program also received considerable support from CIW-member workers taking unpaid leave as well as volunteer support from student and faith groups.[26] Likewise, B Lab is funded by donations from a variety of sources including foundations, governmental agencies, individuals, and corporations.[27] These organizations also seek donations from individuals.[28] b. Benefits of High-road Practice Certification

One of the primary benefits of high-road practice certification, especially the CIW’s Fair Food Program and others like it, is that it leverages economies of scale and market forces both from an organizing standpoint and from a provision of benefits standpoint. The former can be seen from the genesis of the CIW’s Fair Food Program. Initially, the CIW tried to improve farm work conditions by putting pressure directly on tomato growers which proved wholly ineffective.[29] After recognizing that poor pay and work conditions were partially a result of pressure placed on growers by the corporate retailers purchasing the tomatoes, the CIW turned their organizing efforts towards incentivizing those same retailers to demand tomatoes grown by better paid workers in better work conditions.[30] This transformed the very same market power that had stymied their initial organizing efforts into a powerful tool to exert pressure on the growers to reform their work practices.[31] Additionally, unlike the tomato growers who sold primarily to other businesses, the corporate retailers sold directly to consumers, enabling the CIW to enlist consumer support, primarily student activists, to exert pressure on the corporate retailers to demand better conditions for tomato growers.[32] The Fair Food Program also provides a strong example of the latter. By demanding that large corporate retailers pay more for produce, the Fair Food Program places costs on those who are

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easily able to bear them but which also result in significant gains for the workers who pick the produce. For instance, one commentator noted that if Publix Supermarket signed a Fair Food agreement and paid one penny more per pound of tomatoes, it would double worker wages while decreasing Publix’s two billion in annual profits by a relatively-paltry one million dollars and the additional cost to consumers would be quite small as well—44 cents per year for tomatoes for a family of four.[33] Interestingly, high-road practice certification also provides benefits to the businesses that seek such certifications beyond the simple public relations gain of appearing to be ethical, especially where the high-road practice certification is backed up by an independently-funded auditing entity. Specifically, supply chain disruptions caused by labor unrest have the potential to be incredibly expensive.[34] By seeking a high-road practice certification and only utilizing suppliers with ethical employment practices, business can decrease the likelihood of such disruptions. And, where the certification is independently monitored, businesses can also rely on the information from the monitoring agency rather than having to conduct supply chain audits of its own, potentially saving money. c. Downsides to High-road Practice Certification

Although there is a dearth of scholarship that is explicitly critical of high-road practice certification, there are a number of theoretical downsides of high-road practice certification as a tool for advancing workplace justice implicit in its structure. The most straightforward is that, although certain forms of high-road practice certification, such as the Fair Food agreements, are legally enforceable once a company has entered into them, companies can choose whether or not to seek high-road practice certification in the first place. Although high-road practice certification organizations and their supporters can place pressure on companies to join up through boycotts or conditioning economic assistance on adoption of better practices, some businesses are prepared to weather the public relations storm and forgo economic incentives to avoid adopting better practices. For instance, despite the vast majority of the fast food industry adopting the Fair Food Program, Wendy’s has remained steadfast in its refusal to do so.[35] The fact that compliance with the standards created by these organizations is, at least in the first instance, voluntary is a potential limitation on their efficacy.[36] There is also the question of how translatable the model used by the Fair Food Program and Better Builders is to other industries. As reviewed above, the Fair Food Program utilized the particular structure of the tomato market in the U.S.—that a small number of large, consumer-facing corporations bought a disproportionate number of tomatoes—to put pressure on growers to adopt better employment practices. Both the size of the tomato-buying corporations and the fact that a consumer boycott would directly hurt their profits played a considerable role in enlisting their support in the Fair Food Program. It is plausible that if either of these features had been different—that is, if there were a greater number of smaller tomato-buyers or the tomato-buyers were less responsive to consumer preference—the Fair Food Program would not have been nearly as successful. Similarly, Better Builders has been using the fact that government approval and government provision of economic benefits are often critical to construction

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projects to pressure developers and contractors to adopt their standards. But other industries do not necessarily have such a direct need for government approval and support, and so may be less easily swayed to adopt better employment practices.

[1] See, e.g., Kishanthi Parella, Outsourcing Corporate Accountability, 89 WASH. L. R. 747, 809–813 (2014) (discussing the origin of the CIW’s Fair Food Program). [2] See Kathleen Wilburn & Ralph Wilburn, The Double Bottom Line: Profit and Social Benefit, 57 BUSINESS HORIZONS 11 (2014) (discussing B Lab’s mission) [3] See infra Section 5. [4] See, e.g., Amol Mehra & Katie Shay, Corporate Responsibility and Accountability for Modern Forms of Slavery, 14 INT'L JOUR. CRIM. J. 453 (2016) (discussing the Fair Food Program’s zero-tolerance policy for forced labor) [5] See, e.g., Janice Fine, Enforcing Labor Standards in Partnership with Civil Society: Can Co-enforcement Succeed Where the State Alone Has Failed, 45 POLITICS & SOC. 359, 370 (2017) (discussing Better Builder’s requirement that partnership employers must comply with OSHA standards). [6] See Parella, Outsourcing Corporate Accountability at 810–811. [7] Richard Martins, Tomato Pickers Win Higher Pay. Can Other Workers Use Their Strategy?, C.S. MONITOR, (Mar. 9, 2017) https://www.csmonitor.com/Business/2017/0309/Tomato-pickers-win-higher-pay.-Can-other-workers-use-their-strategy. [8] See Parella, Outsourcing Corporate Accountability at 811. [9] Amol Mehra & Katie Shay, Corporate Responsibility and Accountability for Modern Forms of Slavery, 14 INT'L J. CRIM. JUST. 453, 502 (2016) [10] Martins, Tomato Pickers Win Higher Pay [11] Deborah M. Figart, Three Short Stories of Progressive Institutional Change, 51 J. ECON. ISSUES 263, 279 (2017). [12] Id. at 279–280. [13] Our Standards, BETTER BUILDER, http://www.betterbuilder.org/better-builder-standards.html (last visited, January 6, 2019); see also Janice Fine, Enforcing Labor Standards in Partnership with Civil Society: Can Co-enforcement Succeed Where the State Alone Has Failed, 45 POL. & SOC’Y 359, 370 (2017) (discussing details of WDP’s agreement with Apple). [14] Fine, Enforcing Labor Standards in Partnership with Civil Society at 370. [15] Edmund Heery et al., The Living Wage Campaign in the UK, 39 Employee Relations 800, 800–801 (2017) [16] Id. at 801. [17] Id. [18] Id. [19] Id. [20] Kathleen Wilburn & Ralph Wilburn, The Double Bottom Line: Profit and Social Benefit, 57 BUS. HORIZONS 11, 17 (2014) [21] Id. [22] Id. at 14. [23] Id. at 18.

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[24] The Bridgespan Group, The Fair Food Program, (available at: https://www.bridgespan.org/bridgespan/Images/articles/15-success-stories-of-audacious-philanthropy/audacious-philanthropy-fair-food-program.pdf) [25] Id. [26] Id. [27] Funders & Finances, B LAB, https://bcorporation.net/about-b-lab/funders-and-finances (last visited: January 6, 2019) [28] See, e.g., Donate, FAIR FOOD STANDARDS COUNCIL, http://www.fairfoodstandards.org/donate/ (last visited: January 6, 2019); Donate Now, B LAB, https://donatenow.networkforgood.org/b-lab (last visited: January 6, 2019); Donate, WORKERS DEFENSE PROJECT, http://www.workersdefense.org/donate/ (last visited: January 6, 2019). [29] Parella, Outsourcing Corporate Accountability at 810. [30] Id. at 810–811. [31] See id. at 813 (arguing that the critical lesson of the Fair Food Program is to figure out the point in the supply chain that exerts the most leverage over the other portions and enlist public support to place pressure on them to alter their practices). [32] Figart, Three Stories of Progressive Institutional Change at 279. [33] Deborah M. Figart, Three Short Stories of Progressive Institutional Change, 51 J. ECON. ISSUES 263, 280 (2017). [34] See Christopher E. Johnson, Jr., Business Lawyers Are in a Unique Position to Help their Clients Identify Supply-Chain Risks Involving Labor Trafficking and Child Labor, 70 BUS. LAWYER 1083 (2015) [35] Figart, Three Short Stories of Progressive Institutional Change at 280. [36] It is worth noting that the companies that choose to adopt high-road practices actually do follow through on their commitments. See Kathleen Wilburn & Ralph Wilburn, Evaluating CSR Accomplishments of Founding Certified B Corps, 6 J. GLOBAL RESP. 262 (2015) (reviewing certified B Corporation survey data to find that the companies followed through with their commitment to social good0. V. ORGANIZATIONS THAT ENFORCE LABOR STANDARDS Role of enforcement organizations Organizations that enforce labor standards play an important role in filling enforcement gaps on the local level. Over the last decade, U.S. cities, counties, and states have taken the lead on labor policy, enacting higher minimum wages, paid sick and family leave, domestic worker and wage theft protections, removal of job application questions about prior convictions, and fair scheduling laws. Nevertheless, major obstacles to enforcing local, state, and federal standards remain. In her 2017 article “Enforcing Labor Standards in Partnership with Civil Society: Can Co-enforcement Succeed Where the State Alone Has Failed?,” Janice Fine argued that while increasing labor inspectorate resources and pursuing strategic enforcement are necessary to improving labor standard enforcement overall, they are not sufficient. Organizations that have industry expertise and relationships with the working communities they serve are essential to

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managing the shifting and decentralized structures of modern employment, which have evolved to evade laws and enforcement capabilities designed for a previous century. Co-enforcement partnerships between local organizations and government are especially effective where government is supportive. Models of enforcement organizations Models of membership, financing, and change vary. For example, the Workers Defense Project and the Equal Justice Center are two labor standards enforcement organizations based in Austin, Texas. While the state government devotes few resources to labor standards or enforcement, the city government is amenable to partnerships and policy efforts. WDP is a membership-based organization that pursues a co-enforcement and partnership strategy and largely receives its funding from major philanthropic foundations. In contrast, EJC uses a litigation and legal services model for enforcement and is funded largely by the Texas Access to Justice Foundation’s IOLTA program as well as attorney’s fee awards. Fine found that that co-enforcement models are most successful “when (1) government agencies and worker organizations recognize each other’s unique capacities, rather than attempt to substitute for one another (2); the effort focuses on a specific industry; and (3) the collaboration receives strong political support.” Sustaining co-enforcement models typically requires formalization of partnerships and stabilization of funding streams. San Francisco has a well-developed system of co-enforcement in which the city Office of Labor Standards Enforcement contracts with half a dozen worker centers in the city and county. The worker centers use the co-enforcement responsibility and funding to assist in organizing in the low-wage and immigrant communities and the organization enables better enforcement of sixteen San Francisco minimum labor standards ordinances. Other examples of enforcement organizations include the Fair Work Center in Seattle; the Washington Lawyers’ Committee Workers Rights Clinic in DC, formerly known as the DC Employment Justice Center; and the Wage Justice Center in Los Angeles. Potential challenges for enforcement A major challenge for labor standards enforcement organizations is identifying consistent funding streams. Many organizations rely on funding from foundations or unions and struggle to generate other income. For organizations that litigate on behalf of clients, attorney’s fee awards can be a substantial, if inconsistent, funding source. VI. ORGANIZATIONS THAT FACILITATE LABOR MARKETS There is a rich, robust literature on the history and historical economics of labor market institutions, charting the processes of communication and of matching supply to demand from the colonial and early United States (where enslaved and indentured labor forged development

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and expansion) to the present.119 Formal labor market institutions date to the late nineteenth century, with the rise of industrial capitalism and, via immigration and domestic rural-urban migration, new patterns of labor distribution.

Examining labor market institutions can provide necessary insight to the nature of the labor market, per se. As Gordon Betcherman explained:

The laws, practices, policies, and conventions that fall under the umbrella of ―labor market institutions determine inter alia what kinds of employment contracts are permissible; set boundaries for wages and benefits, hours, and working conditions; define the rules for collective representation and bargaining; proscribe certain employment practices; and provide for social protection for workers. The rationale for these institutions can be attributed to four factors: imperfect information, uneven market power (between employers and workers), discrimination, and inadequacies of the market to provide insurance for employment-related risks. Societies almost always introduce labor market institutions to protect workers or to redistribute income to them.120

In this vein, economists and other analysis continually assess contemporary labor markets, whether in light of historical trends and dynamics or aside from them.121 Nevertheless, “the real impacts of most labor market institutions have become less—not more—clear.”122 Globally, “[c]ontroversies over the role and impacts of labor market institutions have continued over the past two decades.”123 Substantial, still evolving bodies of literature compare and debate the effects of western European labor market institutions, known for their “rigidity,” with those arising from the “laxity” (or, absence) of U.S. institutions.124

A. Union Hiring Halls

Union hiring halls, common in the construction and maritime industries, are physical or virtual sites for employers seeking workers to match with workers seeking jobs. Union hiring halls have

119 For a concise overview of this literature and the socio-political dynamics that affected labor market institutions, see Joshua Rosenbloom, The History of American Labor Market Institutions and Outcomes, EH.NET / ECONOMIC HISTORY ASSOC., https://eh.net/encyclopedia/the-history-of-american-labor-market-institutions-and-outcomes/. 120 See Betcherman, Review, infra note 3 at 1. 121 See, e.g., Gordon Betcherman, Labor Market Institutions: a Review of the Literature, Background Paper for the World Bank World Development Report 2013 (2012) (reviewing “the findings of over 150 studies on the impacts of four types of labor market institutions” in developing countries). 122 Id. at 2. 123 Id. at 1. 124 See, e.g., Olivier Blanchard, Designing Labor Market Institutions (Remarks at “Beyond Transition” Conference, Warsaw, September 2002), https://economics.mit.edu/files/664.

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been the subject of considerable scholarly attention; most of this attention, however, was furnished in the middle of the twentieth century, in the wake of the Taft-Hartley Act. 125

Enforcement & Structure

“The development of the hiring hall in the casual labor industries was marked by a lengthy history of labor-management strife.”126 Through halls, unions may exclusively manage the hiring process. Exclusivity arises from an agreement between the employers and the unions.127 Although the Taft-Hartley Act generally outlawed the closed shop, Senator Taft did not wish to destroy union’s hiring halls, for he perceived that the “The employer should be able to make a contract with the union as an employment agency. The union frequently is the best employment agency.” 128 “Nonunion men,” however, could not be disadvantaged; as such, “certain practices” in the halls may amount to unlawful behavior under the Act.129

Exclusivity therefore invokes steeper regulations under the NLRA, which prohibits discriminatory referral procedures130 and imposes upon the union a duty of fair representation.131 Unions with exclusivity are obligated to notify workers of the details of the referral system; they must also commit to non-discrimination standards and procedures. While the NLRB permits

125 For mid-century commentary on union hiring halls, see Craig, Hiring Hall Arrangements and Practices, 9 LAB. L.J. 939 (1958); Fenton, Union Hiring Halls Under the Taft-Hartley Act, 9 LAB. L.J. 505 (1958); Kavarsky, Union Security, Hiring Halls, Right-to-Work Laws and the Supreme Court, 15 LAB. L.J. 659 (1964); Rains, Construction Trades Hiring Halls, 10 LAB. L.J. 363 (1959); Rothman, The Development and Current Status of the Law Pertaining to Hiring Hall Arrangements, 40 VA. L. REV. 871 (1962); Note, Unilateral Union Control of Hiring Halls: The Wrong and the Remedy, 70 YALE L.J. 661 (1961). 126 Note, Unilateral Union Control of Hiring Halls: the Wrong and the Remedy, 70 YALE L.J. 661, 661 (1961). See, e.g., Unions Plan Fight for Hiring Halls, NY TIMES 59 (Nov. 18, 1947) (reporting that maritime unions had voted to strike “to protect and maintain hiring halls”). 127 See https://www.americanbar.org/content/dam/aba/events/labor_law/basics_papers/nlra/construction.pdf 128 Sen. Taft, S. Rep. No. 1827, 81st Cong., 2d Sess., pp. 13-14. 129 See id. See also Int’l Brotherhood of Teamsters v. NLRB, 365 U.S. 667 (1961) (recognizing that the Act did not render the halls illegal). 130 Section (8)(a)(3) of the Act prohibits employers from “discrimination in regard to hire or tenure of employment or any term or condition of employment to encourage or discourage membership in any labor organization.” Section 8(b)(2) prohibits unions from causing or attempting to cause an employer to discriminate (for or against) employees on any grounds relating to union membership or activity. 131 Section 8(b)(1)(A) prohibits a labor organization or its agents from any conduct “to restrain or coerce employees in the exercise of the rights guaranteed them in Section 7 of the Act.” Section 7 grants both the right to organize and the right to refrain from union activity.

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unions to charge a “reasonable fee” only to nonmembers who use the hall, members cannot otherwise enjoy privileges in the hall or its referral process.132

The details of the referral process vary across halls. Workers may be categorized according to specialty – e.g., maritime halls classified “oilers, firemen, watertenders,” among others.133 Many unions running halls have traditionally celebrated their policies of self-enforcement, as they have wished to promote the extent to which the halls “run on strictly democratic lines.”134

Value Propositions

Unions Value Control over Employer Access to Labor, and Labor Access to Employment

Labor attorney Robert Giolito has celebrated the organizing power of the halls:

The hiring hall is one of the oldest and perhaps least appreciated organizing tools available to the labor movement. When operated honestly and efficiently, it is also one of the most powerful tools available to unions in achieving the bargaining strength necessary to win improvements in employees’ wages, hours, and working conditions. By controlling access to industry jobs, our members can ultimately control the industry itself and their own destiny.135

This control has long been controversial. “For unfettered control gives the union an inordinate degree of power with which to encourage union membership.”136

Central Hiring Fora Efficiently Respond to the Particular Needs of the Construction Industry

As the NLRB once explained, the hiring hall solved the problems of “wasteful, time-consuming and repetitive scouting for jobs by individual workmen and haphazard uneconomical searches by employers.”137 Historically, the “seasonal and fluctuating nature of projects” in construction industries “required each employer to maintain a standing labor surplus. . . In the construction industry, because of the large number and turnover of contractors operating in no fixed locale, the local union proved the natural employment clearing house . . .”138

Employers May Value the Hall’s Power to Gate-Keep and Regulate Worker Competencies

132 See NLRB, Hiring Halls https://www.nlrb.gov/rights-we-protect/whats-law/employees/i-am-represented-union/hiring-halls (defining and explaining briefly hiring halls). 133 See George Horne, Hiring Halls: Democracy in Action for a New Breed of Seamen, NY TIMES at 21 (June 20, 1967) (describing in detail the procedure and ethos of a hiring hall in the era of the Viet Nam War). 134 See id. 135 Robert S. Giolito, A Hiring Hall Primer (2014), http://giolitolaw.com/a-hiring-hall-primer/. 136 Note, Unilateral Union Control, supra note 8 at 661. 137 Mountain Pacific Chapter, 119 N.L.R.B. 883, 896, n. 8 (1958). 138 Note, Unilateral, supra note 8 at 662.

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In 1986, labor law experts Joseph Moreland and Michael Strapp explained that halls, while they may not apply union-related criteria to hiring status or preferences, may still track and manage the histories of job-seekers.

In an industry were employment is often short-term and transient, the employer’s ability to effectively regulate the conduct of craftsmen referred through a hiring hall may be less than in the traditional industrial setting. This may be particularly so when work is good and the loss of a job with one employer results in little more than the inconvenience of reporting to the union hall for dispatch to another job. As a consequence, multi-employer groups have negotiated with some crafts to impose employment related discipline through the offices of the hiring hall.139

Disciplinary efforts may include imposing penalties on individuals who do not comply with hall rules or those who fight with the dispatcher; those who are excessively absent or who have quit an unstaffed job.140

Marginalized Workers May Value Halls’ Transparency and Venue for Representation

In the 1970s, “Black, Hispanic and women’s rights leaders” urged a resurrection of hiring halls, specifically to serve potential workers who were otherwise likely to be overlooked by employers.141 These leaders advocated for the halls, which would “insure that members of minority groups were hired at city construction sites where public funds were involved,” because they found that the city’s affirmative action programs had failed intended beneficiaries.142

B. Online Platforms

Today, one expects that far more U.S. workers visit an online platform than they do a trade hiring hall. One presiding difficulty in assessing how online platforms that facilitate labor market might protect and enhance worker power, however, is that most of the critical attention to these services and innovative technologies focus on those that have created and are perpetuating the “gig economy.” Online platforms are not synonymous with gig work, but literature tends to conflate the two phenomena, in part because the innovative minds in one are shaping the other. Among the best studies that attempts to taxonomize the nature and extent of platform control and mediation over labor are UC-Berkely political science professors Ruth Collier and Christopher Carter, and UC-Hastings law professor Veena Dubal’s Labor Platorms and Gig Work: the Failure to Regulate.

139 Joseph Moreland & Michael Stapp, A Primer on the Hiring Halls in the Construction Industry, 37 LABOR L. J. 817, 828 (1986). 140 See id. 141 See Thomas A. Johnson, Public Hiring Halls for Minorities Urged at Construction Sites, NY TIMES B6 (Aug. 30, 1979). 142 See id.

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While gig jobs seem to be on the downswing,143 and fewer people than previously anticipated are “relying on platforms for their primary source of income,”144 it is undeniable that Silicon Valley has altered how job seekers find work.145 As of August 2018, across the global more than 48 million people had signed up for websites that facilitate the sale of their labor.146

While definitions vary, a platform is essentially “a set of stable components that supports variety and evolvability in a system by constraining the linkages among the other components.”147 In other words, a platform can (and, should, if it is successful) grow; it is an ecosystem that generates value through interdependent services and players. “Labor, or labor-brokerage, platforms are those that cybercoordinate the market of a service worker and a requester of work for a defined task or project.”148

The concept of the platform is not new. As a 2016 Harvard Business Review article stressed, “Platforms have existed for years. Malls link consumers and merchants; newspapers connect subscribers and advertisers. What’s changed in this century is that information technology has profoundly reduced the need to own physical infrastructure and assets.”149 For platform founders and owners, “IT makes building and scaling up platforms vastly simpler and cheaper, allows nearly frictionless participation that strengthens network effects, and enhances the ability to capture, analyze, and exchange huge amounts of data that increase the platform’s value to all.”150 Because these platforms “enable a wider range of human activities,” as Martin Kenney and John Zysman have observed, platforms’ capability “opens the way for radical changes in how we work, socialize, create value in the economy, and compete for the resulting profits.”151

143 See Christopher S. Rugaber, Why Gig Workers are Now Looking for More Traditional Jobs, INC. (Sept. 24, 2018), https://www.inc.com/assicoated-press/why-the-gig-economy-may-not-be-the-workforce-of-the-future.html (“online platforms, despite deploying cutting-edge real-time technology, now look less like the future of work”). 144 See id. (quoting Fiona Grieg, director of consumer research for the JP Morgan Institute). 145 See generally ALEX ROSENBLAT, UBERLAND: HOW ALGORITHMS ARE REWRITING THE RULES OF WORK (exploring via ethnography how the processes and functions of Uber break new ground). 146 http://www.markgraham.space/blog/2017/3/24/introducing-a-fairwork-foundation 147 Carliss Y. Baldwin & C. Jason Woodard, The Architecture of Platforms: a Unified View, HBS WORKING PAPER NO. 09-034, 3 (2008), https://www.hbs.edu/faculty/Publication%20Files/09-034_149607b7-2b95-4316-b4b6-1df66dd34e83.pdf 148 Ruth Berins Collier, V.B. Dubal, & Christopher Carter, Labor Platforms and Gig Work: the Failure to Regulate 2 (IRLE Working Paper No. 106-17, Sept. 2017), http://www.irle.berkeley.edu/files/2017/Labor-Platforms-and-Gig-Work.pdf. 149 Marshall W. Van Alstyne, Geoffrey G. Parker, & Sangeet Paul Choudary, Pipelines, Platforms, and the New Rules of Strategy, HARV. BUS. REV. (April 2016), https://hbr.org/2016/04/pipelines-platforms-and-the-new-rules-of-strategy. 150 Id. 151 Martin Kenney & John Zysman, The Rise of the Platform Economy, 3 ISSUES IN SCIENCE & TECH. (2016), https://issues.org/the-rise-of-the-platform-economy/.

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Structure & Funding

In the popular press, literature focuses much less on the process of online labor facilitation than it does on the results. A study from the international payments platform Payoneer152 indicates that average hourly wages are declining, from $21 an hour globally in 2014 to $19 an hour in 2017.153 Commentators increasingly explore the downsides to online labor platforms. For example, a recent Business Insider article enumerated the distinctions between “expectations” and “reality,” debunking the myth that in freelancing “clients are plentiful as are the benefits.”154 Platforms like TaskRabbit have been enlarging their gains from users’ labor, and cutting further into take-home pay.155 Articles that document such trends in outcomes relate directly to readers’ needs – readers want advice on where to go for work that will pay the bills.156 Further, it may be difficult to examine the significance of platform structure is that platform structure is not readily transparent, and tools are evolving rapidly along with expansions in user habits and demographics.157

However, scholarly literature increasingly explores the nature and architecture of online platforms, including those relating to labor markets. Business and computer science scholars seek to posit a “unified theory” of platform structure.158 Professors Marshall Van Alstyne, Geoffrey Parker, and Sangeet Paul Choudary have demonstrated, “Though they come in many varieties, platforms all have an ecosystem with the same basic structure, comprising four types of players. The owners of platforms control their intellectual property and governance. Providers

152 https://www.payoneer.com/main/ 153 http://snip.ly/yytaf#https://explore.payoneer.com/freelancer-income-survey-2018/ 154 Vlad Dobrynin, Why Online Job Platforms do not Guarantee a Fast and Easy Job Search, BUSINESS INSIDER (June 21, 2018), https://www.business.com/articles/online-job-platform-drawbacks/. 155 Jay Cassano, TaskRabbit Quietly Doubled the Cut it Takes from Many of its Workers, FAST COMPANY (Nov. 29, 2016), https://www.fastcompany.com/3065993/taskrabbit-workers-fee-increase. 156 See, e.g., Steve Strauss, Get your Gig: Here are the 9 Best Sites to Visit for Freelance or Contract Work, USA TODAY (July 12, 2018), https://www.usatoday.com/story/money/columnist/strauss/2018/07/12/strauss-column-gig-economy/773914002/ (listing Freelancer, Upwork, Guru, Toptal, 99designs, and Etsy, among others, as potentially lucrative platforms for freelancers); Jeff Rose, 12 Ways You Can Absolutely Make Money Online, FORBES (Apr. 24, 2018). 157 See Rosenblat, Uberland 158 For one of the first such explorations, see Carliss Y. Baldwin & C. Jason Woodard, The Architecture of Platforms: a Unified View, HBS WORKING PAPER NO. 09-034 (2008), https://www.hbs.edu/faculty/Publication%20Files/09-034_149607b7-2b95-4316-b4b6-1df66dd34e83.pdf.

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serve as the platforms’ interface with users. Producers create their offerings, and consumers use those offerings.”159

Examples

In addition to ride-hailing platforms, labor market platforms include:

● Freelancer (formerly, “Nubelo”), the largest online labor platform for Spanish-speaking workers and employers;

● TaskRabbit, an Ikea-owned handy-person or odd-job market, which connects local “Taskers” to customers seeking various household services (whether moving or assembling furniture, fixing appliances, etc.) or other temporary, physical work160;

● Postmates, which operates a delivery service, bringing goods of all kind (including take-out food) to folks staying put (and, which is investing heavily in automation technology to design delivery robots)161;

● Upwork, which connects writing, design, and software freelancers to projects and jobs, which can “be a valuable tool” for building a portfolio and starting a career162;

● Fiverr, which similarly connects creatives;163 ● Honor, Hometeam, and other agencies that connect home health and elder care providers

to clients.164

Value Propositions

Many writers argue that labor platforms “compensate” for their promotion of a “shift to alternative or contingent forms of employment, unprotected by employment and labor laws.”165 (Whether they compensate adequately is perhaps a more controversial question.)

According to a variety of commenters, among values added via the platform labor markets, are:

Cheaper Access to a Cheaper Labor Market; Easier Access to a Richer Economy

Many business leaders celebrate that online labor markets will extend “the spatial reach of labor and talent inputs.”166 Online labor platforms can replace traditional offshoring – providing

159 Marshall W. Van AlstyneGeoffrey G. Parker, & Sangeet Paul Choudary, Pipelines, Platforms, and the New Rules of Strategy, H. BUS. REV. (April 2016), https://hbr.org/2016/04/pipelines-platforms-and-the-new-rules-of-strategy. 160 https://www.nerdwallet.com/blog/finance/getting-started-with-taskrabbit/ 161 https://www.wired.com/story/postmates-delivery-robot-serve/ 162 https://www.nerdwallet.com/blog/finance/how-to-make-money-on-upwork/ 163 For a description of how to find work and get paid on Fiverr, see https://www.theatlantic.com/technology/archive/2018/08/fiverr-online-gig-economy/569083/. 164 Moira Weigel, Elder Care On-Demand: Why Tech is Setting its Sights on your Parents, GUARDIAN (July 7, 2016), https://www.theguardian.com/technology/2016/jul/27/health-care-apps-elderly-silicon-valley-startups. 165 Collier, et al, Failure to Regulate, supra note 30.

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“companies in rich Western countries a simple and cheap mechanism to hire knowledge workers in lower income countries, without the burden of setting up offices abroad or contracting with an outsourcing company.”167

Workers in developing nations can now “work directly for Western clients” and thus “earn more” while avoiding “grueling commutes.”168

According to McKinsey & Company’s Global Institute (MGI), these transnational connections can “ease a number of labor-market dysfunctions.”169 MGI claims that by 2025, “online talent platforms could boost global GDP to $2.7 trillion.”170 Countries with persistently high unemployment rates will benefit most. As Ruchika Joshi at the Just Jobs Network discusses (in light of the McKinsey study), “[d]igital labor platforms have the potential to drive employment and wage growth in developing countries, by creating a level playing field and shifting employment from high-wage to low-wage countries.”171 And, young people will be able to prepare better for global markets through increased transparency and communication with the demand-side. “Capturing this potential will require expanded broadband access, updated labor-market regulations, systems for delivering benefits to workers, and clearer data-ownership and privacy rules.”172

Convenient Access to Income to Supplement Insecure, Stagnant, or Lost Wages Elsewhere

“Platform gig work is a form of flexible employment that is available to a worker between, ‘around,’ or in addition to other jobs that have disappeared, are themselves irregular or ‘flexible,’ or are inadequate sources of income.”173 That these income sources compensate for low or lost wages in more traditional full-time jobs also link the success and growth of online platforms to economic downturns. In result, when unemployment is low and the economy growing, the use of online labor platforms seems to decline.174

Sources of Autonomy and Opportunities for Self-Determination

166 John Horton, William Kerr, & Christopher Stanton, Digital Labor Markets and Global Talent Flows, HBS WORKING PAPER NO. 17-096 (2017), https://www.hbs.edu/faculty/Publication%20Files/17-096_813abb74-09c5-4ea6-989f-5ef03b2d7f31.pdf. 167 Oxford News Release, Online Labor Platforms Offer Growing Alternative to Traditional Offshoring (Nov. 8, 2018), https://www.eurekalert.org/pub_releases/2018-11/uoo-olp110818.php. 168 See id. 169 https://www.mckinsey.com/featured-insights/employment-and-growth/connecting-talent-with-opportunity-in-the-digital-age 170 Id. 171 Ruchika Joshi, Online Labor Platforms: Technology for Everyone? (Oct. 13, 2016), https://www.justjobsnetwork.org/blog/online-labor-platforms-technology-everyone/ 172 McKinsey, supra note 51. 173 See Collier, et al, Failure to Regulate, supra note 30 at 4. 174 https://www.nytimes.com/2018/06/07/business/economy/work-gig-economy.html

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For those who cannot abide by the “tyranny of the clock,” which defined industrialization and bureaucratization, gig puts the work day in the free person’s hands, so proponents claim. Flexibility and freedom from rigorous workplace controls are both offered to users as values in themselves, and are means through which companies defend their classification of workers as independent contractors.

Risks & Downsides

There is no scarcity of literature lamenting the likely long-term effects of the gig economy on worker rights and power. Nicole Torres, in last summer’s issue of the Harvard Business Review, offers a concise summary of some of the debates on the way the gig economy is reshaping work.175

Individual workers may find themselves working long, unpredictable hours, with varying (and, sometimes, diminishing pay), unprotected by benefits and legal rights accorded employees, and removed from the comradery or information flow of fellow workers. Cultural Studies Professor Trebor Scholz echoes a common refrain: ““The shift away from employment to freelancing, independent contract work and other emerging forms of labor is an affront to one hundred years of labor struggles for the 8-hour workday, employer-covered health insurance, minimum wage, workplace harassment and many other protections that were established under the New Deal to foster social harmony and keep class warfare at bay.”176 Further, globalizing labor markets may only foster a race to the bottom: as Alana Semuels explored in the Atlantic, “while freelance websites may have raised wages and broadened the number of potential employers for some people, they’ve forced every new worker who signs up into entering a global marketplace with endless competition, low wages, and little stability.”177

A growing body of literature also documents the persistent discriminatory effects of algorithms that sort and evaluate individuals, including workers.

Alternative Models

In contrast to the platforms most often discussed, some services link state-funded clients and providers. For example, Carina, which was established via a collective bargaining agreement between SIEU 775 and Washington State, “helps connect Medicaid and state-funded home care clients in Washington state with Individual Provider (IP) home care aides.”178

175 See Nicole Torres, Are There Good Jobs in the Gig Economy?, H. BUS. REV. (2018), https://hbr.org/2018/07/are-there-good-jobs-in-the-gig-economy. 176 https://www.digitalethics.org/essays/online-talent-platforms-boon-workers-or-digital-sweatshop (quoting Scholz). 177 Semuels, The Online Gig Economy’s ‘Race to the Bottom’, ATLANTIC (Aug. 31, 2018), https://www.theatlantic.com/technology/archive/2018/08/fiverr-online-gig-economy/569083/. 178 https://info.carinacare.com/faq

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Other labor platforms have shifted the status of their workforce. For example, cleaning and maintenance startup Managed by Q nearly failed before managers turned to Zeynep Ton’s “Good Jobs Strategy” for a way forward: hire hundreds of W-2 workers.179 The workers have opportunities for advancement, health insurance and a 401(k), and an Employee Stock Ownership Plan. According to the founders, the company is growing because it “sets its employees up for success.” Managed by Q also maintains an online platform service to connect other cleaning service providers to customers. Similarly, Honor eldercare provider classifies all of their “CarePros” as employees, and they receive $17.50 an hour starting wages, equity, and advancement opportunities.180

Further avenues for research might include organizations that facilitate communication, especially among unorganized workers and provide an audience for concerns expressed by workers. Among such organizations or platforms are co-worker.org and Work Smart Project.181

Comments about the Literature Review Memo made after Submission to LWP

Cesar Rosado, 01/18/19 I also think that the document could be further developed by showing how co-determination can help build autonomous worker power (e.g., "labor unions) separate and apart from the corporate governance organizations involved (works councils and worker representation in boards). This is the key issue, I think, and is certainly the issue German labor unionists are always discussing when it comes to co-determination. There is evidence that global works councils have also helped to organize transnational worker networks, if not power, at least within global firms and even industries and supply chains. We can't afford to lose out on the importance on such organizing resources and opportunities. Also, the document could also focus on the way that worker-controlled benefits programs aid in organizing workers. Matt Dimick's work on "Ghent Systems" and the vast industrial relations

179 See Cleaning up Bad Jobs, H. BUS. REV. (Dec. 8, 2017), https://hbr.org/2017/12/cleaning-up-bad-jobs. 180 https://www.theguardian.com/technology/2016/jul/27/health-care-apps-elderly-silicon-valley-startups 181 Other sources that examine hiring halls and the expansion of the hiring hall model or variants outside the union context include:

i) Rebecca J. Livengood, Organizing for Structural Change: The Potential and Promise of Worker Centers, 48 Harv. Civ. Rts.-Civ. Lib. L. Rev. 325 (2013) (http://harvardcrcl.org/wp-content/uploads/2013/04/Livengood_325-356.pdf).

ii) Mark D. Meredith, Note, From Dancing Halls to Hiring Halls: Actors’ Equity and the Closed Shop Dilemma, 96 COLUM. L. REV. 178 (1996).

iii) Eileen Silverstein & Peter Goselin, Intentionally Impermanent Employment and the Paradox of Productivity, 26 Stetson L. Rev. 1 (1996).

iv) Barbara J. Fick, Political Abuse of Hiring Halls: Comparative Treatment under the NLRA and LMRDA, 9 Indus. Rel. L.J. 339 (1987)

v) Emily C. Chi, Star Quality and Job Security: The Role of the Performers’ Unions in Controlling Access to the Acting Profession, 18 CARDOZO ARTS & ENT. L.J. 1, 17 (2000).

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and political science literature on this topic should also be highlighted. Worker control of benefit systems is a powerful institutional tool for autonomous worker organizing, and we should keep our sights set on that goal as well.