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He spent years advocating for construction workers. Now he could shake up the gig economy

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By Sara Ashley O’Brien, CNN Business
Updated 12:17 PM ET, Fri February 5, 2021

(CNN Business) — Marty Walsh may not seem like the person to overhaul the gig economy. He spent years advocating for construction workers and less time on the intricacies of on-demand work at billion-dollar tech companies.

But now Walsh, a former union leader and the outgoing Mayor of Boston, is on the cusp of becoming the next US Labor Secretary at a pivotal moment for the industry and the broader economy. Millions of Americans have lost their jobs as the health crisis created an economic crisis. And many turned to working with companies like Uber, Instacart, and DoorDash as a backstop for their livelihoods. Instacart alone added hundreds of thousands of contract workers last year to meet demand for grocery delivery spurred by the pandemic.
At the same time, these companies are pushing to defend a controversial business model, one in which they treat their workers as independent contractors rather than employees who would be entitled to traditional benefits and protections such as workers’ compensation, unemployment insurance, family leave, sick leave, or the right to unionize.
Last year, these companies funneled more than $200 million into the passage of a ballot measure in California known as Prop 22 to sidestep the state’s labor law created with them in mind and classify their drivers as independent contractors with some benefit concessions. The companies have made it known they plan to pass similar laws in other states, as well as pursue federal legislation to solidify their approach.
    Public pressure is mounting from advocacy groups for Congress to reject a federal Prop 22-style proposal, with 75 groups writing a letter stating it “would threaten our most fundamental understanding of what work ought to provide.” Labor experts say it is important that the Biden administration weigh in on this thorny issue soon, and all eyes are on Walsh to do so.
    “Right now we are at a crossroads,” said Shannon Liss-Riordan, a Boston-based labor attorney who has been challenging Uber and Lyft over worker classification through various lawsuits for seven years. “If he rises to the challenge, Marty Walsh can have one of the biggest impacts on labor in this country since Frances Perkins,” she said, referring to Franklin D. Roosevelt’s Labor Secretary, who was the chief architect behind the New Deal.

    New industry, familiar issues

    While Walsh has yet to delve extensively into the issue of app-based gig worker classification, labor experts and friends who’ve known him professionally throughout his career say they are encouraged by his background advocating for workers in the construction field, which has long dealt with the topic of misclassification.
    “In construction, when contractors started reclassifying their workers from employees to independent contractors, it was just a scam to save money,” said Mark Erlich, a fellow at the Harvard Labor and Worklife Program who formerly served as Executive Secretary-Treasurer of the New England Regional Council of Carpenters and who has known Walsh for roughly 20 years. “What’s different now is it’s no longer [viewed as] a ‘scam,’ it’s [positioned by the companies] as beautiful scheme — a new conception of work in which you are your own boss, have flexibility scheduling — it is actually seen as desirable.”
    The companies have long defended their business model, which was popularized by Uber during the last recession, claiming that workers have more flexibility when treated as independent contractors than employees. But there’s nothing preventing companies from offering flexibility to employees. Rather, it is a business decision — and one that critics say exploits workers in an effort to keep costs low for the companies.
    In statements, a Lyft spokesperson said the company looks forward to working with Walsh and the new administration “to strengthen opportunities for app-based workers.” An Uber spokesperson echoed the sentiment, while stating it “supports efforts to ensure worker independence, while providing drivers and delivery people with new benefits and protections.”
    Instacart and DoorDash pointed CNN Business to a spokesperson for the App-Based Work Alliance which is a coalition backed by Uber, Lyft, Instacart, DoorDash and Uber-owned Postmates.
    “Our country’s independent workforce has been essential in helping our communities overcome the many challenges we’ve faced throughout this pandemic. We are looking forward to working with the Biden-Harris Administration, including the Secretary of Labor, to address the rapidly evolving needs of the 21st century workforce,” said Whitney Mitchell Brennan, a spokesperson for the App-Based Work Alliance in a statement to CNN Business. “We encourage Mayor Walsh to commit to promoting federal policies that will support the growing on-demand economy.”
    Erlich said Walsh has “very strong instincts” about working people and working families. Walsh, the son of Irish immigrants, joined a union when he was 21 and later went on to earn his Bachelor’s degree while working as a legislator. For several years while in that role, he served as head of the Boston Metropolitan District Building Trades Council, an umbrella group of local unions, before becoming Boston’s mayor in 2014, a position he held when tapped by the Biden administration.
    As mayor of Boston, Walsh made clear he saw a role for government in regulating gig companies, recently pushing for new fees on Uber and Lyft rides to encourage shared rides and decrease congestion. He’s also been critical of how services like DoorDash and Instacart are at times inaccessible to certain neighborhoods.
    Representatives for Walsh and the White House did not respond to requests for comment. Walsh’s nomination as Labor Secretary is pending Senate approval. At his confirmation hearing Thursday, Walsh spoke of pivotal moments in his life — from having cancer as a child, to following in the footsteps of his father’s union job and recovering from addiction — that have informed how he views the work of the Department of Labor.
    “Workers’ protection, equal access to good jobs, the right to join a union, continuing education and job training, access to mental health and substance use treatment. These are not just policies to me, I lived them,” Walsh said. “Millions of American families right now need them. I’ve spent my entire career at different levels fighting for them.”
    Walsh wasn’t questioned about his stance on gig worker classification, but he did indicate some support for the PRO Act, legislation that was reintroduced by Democrats Thursday and would significantly alter existing labor law and make it easier for workers to unionize. “That is one step towards helping people organize freely. I do believe in the right of organizing. I do believe in the right of people being able to join a union, if they want to join the union. So, I certainly support that,” said Walsh.
    The PRO Act would have implications for the gig economy, as it would implement an “ABC” test — which the gig companies fought against in California — for determining if a worker is an employee or contract worker, if passed.
    Walsh’s Department of Labor can make a significant impact on worker classification not only by interpreting existing laws and using the office as a bully pulpit, but also through directing and coordinating enforcement action against employers who may not be following laws, according to labor experts.
    Joanne Goldstein, who has known Walsh for 15 years through various jobs of hers such as the head of the Massachusetts Attorney General’s Fair Labor Division and as the state’s Secretary of Labor and Workforce Development, said he cares most about workers having access to social and economic safety nets.
    “We had a number of situations where he’d approach me in my capacity to see what we could do in the context of the law to help workers have the wages, benefits, safety and training that workers deserve,” Goldstein told CNN Business.

    Rethinking the Trump administration’s stance on independent contractors

    Given the current economic downturn, the issue of gig worker classification may not be the first priority on Walsh’s list. But as Becki Smith, a director of work structures at the National Employment Law Project, notes, “It is urgent that they be very clear about their interpretation of the law very quickly.”
    “The first order of business is going to be to erase Trump policies that very radically reinterpreted who among us gets access to basic legal protections,” Smith said. Much of that can be done administratively without changes in the federal law, Smith added.
    The stance under former President Donald Trump’s Department of Labor favored employers, as relayed in a 2019 advisory memo and a rule squeezed in during the final days of the Trump administration. The latter clarified the standard of employment under the Fair Labor Standards Act, which establishes baseline standards like minimum wage and overtime for employees, to make it easier for companies to classify their workers as independent contractors.
    Both Biden and Vice President Kamala Harris have signaled some opposition to the gig companies on this issue. They called for “no” votes on Prop 22, and campaigned on a platform that included putting “a stop to employers intentionally misclassifying their employees as independent contractors” and ensuring workers in the gig economy “receive the legal benefits and protections they deserve.”
    Still, the coalition backed by Uber, Lyft, DoorDash and Instacart wasted no time in issuing a statement on Inauguration Day to congratulate Biden and Harris while pushing its agenda for “modern policies” that will give workers “access to benefits, while protecting their flexibility to earn independent income on their schedule.”
      To really make a mark on the issue, Walsh will have to take on “the entrenched folks out of Silicon Valley,” said Erlich. Among that group are former Obama administration officials who are now in key roles at gig companies such as Lyft’s chief policy officer, Anthony Foxx, and Lyft board member Valerie Jarrett. Uber’s chief legal officer, Tony West, served in the Justice Department for the Clinton and Obama administrations and is Harris’ brother-in-law.
      As Liss-Riordan, the Boston-based attorney, put it: “This could be an extremely significant position and there are a lot of people putting very high hopes in Marty that he does what needs to be done.”

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      Lyft focuses on seniors with new option to book rides by phone call

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      By Sara O’Brien, CNN Business
      Updated 12:50 PM ET, Wed February 24, 2021

      (CNN Business) — Lyft is adding an option to allow people to order a ride in a more retro way — by phone call — a year after Uber tried doing the same before shutting it down.

      The ride-hail company said Wednesday it launched a special service in dozens of Florida cities to allow people to call a number (631-201-LYFT) with a cell phone to book a car on weekdays from 8 a.m. to 8 p.m. It’s geared towards seniors and those without access to its app. Once a ride is booked, Lyft (LYFT) said it will communicate updates via text message.
      The service, which Lyft said it piloted in late 2020 in Miami before expanding to more Florida cities, is similar to one Uber announced last February. Uber’s service was only available in select markets — Arizona, Florida and New York City — for rides or meal deliveries, but by the end of 2020, the company paused the program.
      An Uber (UBER) spokesperson told CNN Business Wednesday that there was declining use of the service, with only a few hundred people a month using it. Uber’s service also allowed users to order food delivery. (Those who call the Uber hotline now are told they can request rides from the mobile site or app.)
        Sam Bond, regional director for Lyft in the Southeast, said in a statement that the company looks forward to “helping seniors access transportation to essential services and resources that may be currently out of reach without a car.”
        The company didn’t directly address why it believes the program will succeed where Uber’s stalled, only reiterated that it is dedicated to serving vulnerable and underserved communities.
          On an earnings call earlier this month, Lyft president John Zimmer said the pandemic “has amplified transportation and security, especially for seniors and vulnerable communities. We are committed to ensuring that transportation access is not a barrier to beating this virus.”
          At the end of 2020, the company announced a vaccine access program with a goal to provide 60 million rides to and from vaccination sites alongside JPMorgan Chase, Anthem Inc. and United Way.

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          Facebook will restore news in Australia after talks with the government

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          By Michelle Toh and Chandler Thornton, CNN Business
          Updated 11:08 PM ET, Tue February 23, 2021

          Hong Kong (CNN Business) — Facebook will restore news pages in Australia after the government agreed on changes to a planned media code that the company said would allow it to retain greater control over what appears on its platform.

          The announcement caps months of bitter dispute between the American tech firm and Canberra, which had been working on legislation that would force tech platforms to pay publishers for news content.
          The initial version of the legislation would have allowed media outlets to bargain either individually or collectively with Facebook and Google (GOOGL) — and to enter binding arbitration if the parties couldn’t reach an agreement.
          On Tuesday, the Australian government said it would amend the code to include a provision that “must take into account whether a digital platform has made a significant contribution to the sustainability of the Australian news industry through reaching commercial agreements with news media businesses.”
            Arbitration, meanwhile, will now only be used as a “last resort” following a period of “good faith” mediation.
            Facebook’s decision to restore news came as the Australian Senate discussed the latest iteration of the media law.
            “It’s always been our intention to support journalism in Australia and around the world, and we’ll continue to invest in news globally, and resist efforts by media conglomerates to advance regulatory frameworks that do not take account of the true value exchange between publishers and platforms like Facebook,” Brown said.
            Google, meanwhile, had already been trying to get ahead of the new legislation by announcing partnerships with some of the country’s largest media organizations, including Rupert Murdoch’s News Corp (NWS) and Seven West Media. Facebook revealed its own deal with Seven on Tuesday.
              Asked about Google’s partnerships last week, Australian Treasurer Josh Frydenberg alluded to the changes that were ultimately announced Tuesday. He said that “if commercial deals are in place, then it changes the equation.”
              — Kerry Flynn contributed to this report.

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              The worldwide web as we know it may be ending

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              By Rishi Iyengar, CNN Business
              Updated 12:00 PM ET, Tue February 23, 2021

              (CNN Business) — Over the last year, the worldwide web has started to look less worldwide.

              Europe is floating regulation that could impose temporary bans on US tech companies that violate its laws. The United States was on the verge of banning TikTok and WeChat, though the new Biden administration is rethinking that move. India, which did ban those two apps as well of dozens of others, is now at loggerheads with Twitter.
              And this month, Facebook (FB) clashed with the Australian government over a proposed law that would require it to pay publishers. The company briefly decided to prevent users from sharing news links in the country in response to the law, with the potential to drastically change how its platform functions from one country to the next. Then on Tuesday, it reached a deal with the government and agreed to restore news pages. The deal partially relaxed arbitration requirements that Facebook took issue with.
              In its announcement of the deal, however, Facebook hinted at the possibility of similar clashes in the future. “We’ll continue to invest in news globally and resist efforts by media conglomerates to advance regulatory frameworks that do not take account of the true value exchange between publishers and platforms like Facebook,” Campbell Brown, VP of global news partnerships at Facebook, said in a statement Tuesday.
                But if such territorial agreements become more common, the globally-connected internet we know will become more like what some have dubbed the “splinternet,” or a collection of different internets whose limits are determined by national or regional borders.
                The stakes will only get higher if more governments jump on the bandwagon.
                “It’s kind of a game of chicken,” said Sinan Aral, a professor at the MIT Sloan School of Business and author of “The Hype Machine: How Social Media Disrupts Our Elections, Our Economy and Our Health.”
                Aral says companies such as Facebook and Google will encounter a slippery slope if they start to exit every market that asks them to pay for its news, which would “severely limit” the content they can serve their global user base.
                “They have a vested interest in trying to force any one market to not impose such regulations by threatening to pull out,” he said. “The other side is basically saying: ‘If you don’t pay for the content, you’re not going to have access to our market of consumers or the content in this market.'”

                As the internet fractures, global regulators coalesce

                A fight over news in Australia is a relatively small part of the clash between tech and governments, which has largely been focused on issues such as censorship, privacy and competition. But the response to Facebook’s move in Australia has shown that a more international effort to rein in Big Tech may be gathering momentum — and with it, the potential for additional fracturing of how internet services function from one country to the next.
                As his government faced off against Facebook last week, Australian Prime Minister Scott Morrison issued a warning to the social media giant: what you do here may come back to hurt you in other countries.
                “These actions will only confirm the concerns that an increasing number of countries are expressing about the behavior of Big Tech companies who think they are bigger than governments and that the rules should not apply to them,” he said in a Facebook post. “They may be changing the world, but that doesn’t mean they run it.”
                On Tuesday, Morrison said Facebook’s decision to restore news was “welcome,” adding that the government remained committed to proceeding with its legislation to ensure “Australian journalists and news organisations are fairly compensated for the original content they produce.”
                Several other countries, including the United Kingdom and Canada are now considering similar legislation against social media companies — and many of those countries are talking to each other about how best to do that.
                “It would be extremely useful if governments would come together in some kind of transnational process and come up with a treaty or some kind of standard about who gets to reach out and affect content and information outside their national territory,” Keller said, “because that’s what a lot of them are trying to do, but they haven’t, and so as a result you get this very fragmented patchwork.”
                  If that increased fragmentation is allowed to reach its natural conclusion, however, the consequences could be dire.
                  “If the eventual outcome of that is that we have social media platforms in every major country or market that are separate, then what we will have is an information ecosystem that is completely bifurcated or splintered across the globe,” Aral said. “What that portends is a citizenry that has completely different sets of information about local events, about world events, and perhaps a very splintered worldview of reality.”

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                  Former WeWork CEO in talks to get nearly $500 million in SoftBank settlement

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                  By Sara Ashley O’Brien, CNN Business
                  Updated 2:29 PM ET, Tue February 23, 2021

                  (CNN Business) — Adam Neumann, the disgraced former CEO and cofounder of WeWork, may soon have a massive payday as part of a possible settlement with SoftBank, the company’s largest investor, but the amount under discussion is far less than the golden parachute originally offered.

                  Neumann, who stepped down in late 2019 after a disastrous attempt to take WeWork public, could be eligible to sell nearly $500 million worth of his shares to SoftBank as part of a $1.5 billion stock buyback program for early WeWork employees and investors, according to a source familiar with the matter. The deal is not yet finalized.
                  The deal is part of a settlement under discussion to resolve a long-simmering legal dispute between Neumann, WeWork and SoftBank after the Japanese conglomerate walked away from a $3 billion WeWork share purchase agreement.
                  The terms of a possible settlement were first reported by the Wall Street Journal. A second source familiar with the matter told CNN Business that the deal is close to being finalized but could still fall through.
                    WeWork, SoftBank, and a representative for Neumann declined to comment.
                    The settlement is half of what was previously on the table when SoftBank agreed to bail out the co-working company after a period of turmoil. As part of the deal in fall of 2019, Neumann departed and had the chance to sell back nearly $1 billion of his shares — an opportunity that infuriated some workers.
                    Under Neumann’s leadership, WeWork raised billions of dollars, scaled its coworking operations to hundreds of cities around the world, and was valued at an eye-popping $47 billion during one investment round. But the company also failed spectacularly in its attempt to go public in large part because IPO paperwork revealed his unchecked power and numerous potential conflicts of interest, as well as WeWork’s staggering losses.
                      In April 2020, SoftBank abandoned plans to buy $3 billion in WeWork stock from Neumann and others, citing certain conditions of the deal that hadn’t been met, including the existence of pending criminal and civil investigations into the company, global restrictions related to the coronavirus, and the failure to restructure a joint venture in China. In response, Neumann and a special committee of WeWork’s board brought lawsuits.
                      News of a possible deal comes as SoftBank and WeWork attempt to turn the page on the Neumann chapter of the company. As the Journal reported, WeWork is in talks about a potential deal to merge with a special purpose acquisition company, or SPAC, to fulfill its ambitions of becoming a public company at long last.

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                      The hot new thing in tech: speaking into your phone

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                      By Kaya Yurieff and Rishi Iyengar, CNN Business
                      Updated 9:03 AM ET, Wed February 24, 2021

                      (CNN Business) — Before last year, 28-year-old Meredith Giuliani thought voice notes were “kind of weird,” and she mostly stuck to texting. But after the pandemic hit, audio messages became a daily routine for her and many of her friends.

                      “This is my way to debrief and tell everybody what’s going on,” she told CNN Business. “It’s not like it used to be where I would wait until I was going to see my friends over the course of the next week for drinks or for brunch.”
                      For years, Apple and others have offered the option to record short messages and send them via text and chat apps. But the format has gained new appeal for many in the United States during the pandemic as we approach a year of limited opportunities to socialize with friends, family and coworkers.
                      Romina Hyskaj, a 23-year-old recruiter who lives in New York City, uses them mainly to keep in touch with her parents who live six hours away, noting that “it can get your tone, attitude, or joke across.” Nick Hofstadter, a 38-year-old luxury travel adviser in Los Angeles, sends voice notes to a handful of close friends, mostly to tell funny stories with a more “dramatic effect” and to avoid sending long text messages. (He prefers using voice notes on iMessage over Instagram so he can listen to it before sending.)
                        And it’s not just voice messages. Voice is having a moment — and the tech industry is taking notice.
                        Hall said an added part of the appeal — beyond conveying more emotional nuance — is how easy voice notes are to record, store and replay.
                        “Back when we had answering machines, people used to save important messages, particularly from loved ones, sometimes for as long as the machine had space and power to store those messages,” he said. “People don’t use voicemail in the same manner, partly because the phone is not the easiest way to leave a message for another person — that would be a text.”
                          Prior to the pandemic, Giuliani said there were many friends she didn’t talk to daily. Voice notes have changed that.
                          “It’s kept some of my friends and I really close together,” she said. “We send over voice notes and we’re chatting every single day, way more than we ever did before the pandemic.” She added: “I can’t believe that we didn’t before.”

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