Findings

Congress finds the following: (1) Millions of workers in the United States report to work by logging on to digital labor platforms: software applications (commonly known as apps) that allocate and manage work. (2) Businesses are using digital labor platforms in a wide and growing range of industries and occupations in the United States. While the most well-known businesses using digital labor platforms provide ride-hail and last-mile delivery services, businesses in a variety of sectors, including large- and low-paid sectors like retail, hospitality, warehousing, and food services, increasingly manage labor via digital labor platforms. (3) Platformed, or app-based, workers of all ages and every race, ethnicity, gender, and immigration status can be found in every State. According to the Bureau of Labor Statistics, app-based workers are disproportionately people of color, comprising approximately 42 percent of the app-based workforce, compared to 29 percent of the overall workforce. A 2021 Pew Research poll of United States workers found that women (17 percent) were more likely than men (15 percent) to report that they had ever done app-based work. The growing workforces of businesses that use digital labor platforms to manage delivery workers are majority women. Platform work is growing in industries like retail, hospitality, warehousing, and food services, in which people of color are overrepresented. (4) Government and academic research has found that app-based workers often receive poverty wages and few to no benefits and are subject to wage theft and wage and employment discrimination. A 2024 University of California at Berkeley study of app-based ride-hail drivers in 5 metropolitan areas found that a majority of drivers earn net pay that is significantly less than the applicable minimum wage. Job quality issues may be related to the frequent misclassification of app-based workers as independent contractors who lack employment-based rights and protections. Indeed, both courts and regulatory agencies have found businesses that use digital labor platforms to have misclassified employees as independent contractors, stolen wages, and withheld benefits. (5) Research also shows that some businesses that use digital labor platforms may be engaging in discriminatory pricing practices, charging variable rates for the same services based on particular characteristics of a consumer, and setting personalized wages for the same work based on characteristics of a worker. (6) Businesses use digital labor platforms to determine access by an app-based worker to work assignments, the pay for the assignments, and the prices charged to customers. Such platforms often use electronic monitoring tools and automated decision-making systems or algorithms, fed by a variety of inputs, including data derived from workers and consumers. (7) The use of electronic monitoring tools and automated decision-making systems is not exclusive to businesses that use digital labor platforms. Other kinds of businesses do use them but the heavy reliance by such businesses on these systems to interface with workers and consumers is unique. (8) But while the electronic monitoring tools and automated decision-making systems of businesses that use digital labor platforms dictate the experience of workers and consumers on digital labor platforms, their presence, purpose, and mechanics are, too often, wholly opaque to workers, consumers, voters, and policymakers. This opacity creates profound information asymmetries between these groups and the corporations that own or operate digital labor platforms. (9) The lack of information about the electronic monitoring tools and automated decision-making systems used by businesses that use digital labor platforms prevents workers, consumers, and policymakers from understanding whether and to what extent these systems are generating harms and facilitating the violation of existing laws and regulations. (10) Unaccountable pay algorithms can enable various forms of wage theft, such as minimum wage violations, tip-stealing, routine undercounting of worktime, and illegal fees and deductions, as well as discrimination based on protected class. Forms of employer control obscured by algorithmic management can enable independent contractor misclassification and create insurmountable roadblocks to app-based workers’ ability to access minimum wage and overtime pay for all time worked, paid sick leave, unemployment insurance benefits, workers’ compensation, protections from discrimination, and more. (11) Reliance on electronic monitoring tools and automated decision-making systems that hide control and enable misclassification of employees as independent contractors also has profound implications for social welfare programs and competing businesses. Businesses that misclassify employees as independent contractors neglect to pay their share of employer contributions for programs such as unemployment insurance and social security. In total, a misclassifying business can save up to 30 percent of its payroll costs by mislabeling a worker as an independent contractor, which disadvantages responsible employers. (12) The lack of transparency around pricing algorithms allows businesses that use digital labor platforms to raise prices on consumers under the guise of increasing labor and regulatory costs. Businesses that use digital labor platforms may use opaque pricing algorithms to determine the amount they charge to customers for a service, as well as the share of that fee that those businesses keep for themselves compared to the share that goes to the app-based workers who provide the service. The variable and opaque share of the consumer charge that certain digital labor platform providers keep, versus the share they pay an app-based workers (the take rate) is concerning. (13) The issue of fluctuating, opaque, and predatory take rates is especially pronounced in the ride-hail industry, a pioneer in the use of digital labor platforms. Initially, ride-hail companies paid app-based workers 90 percent of the consumer charge, decreasing it to 80 percent as they attracted more workers. Early take rates of 10 to 20 percent were styled as service fees that drivers paid to access work through the digital labor platform. Like commissions, if the ride-hail companies increased their prices, workers likewise received a raise. (14) Ride-hail companies later abandoned their commission-based service fee, and now set consumer prices independently of app-based worker pay. Both prices and pay are largely influenced by unaccountable hidden algorithms and automated decision systems. They are also influenced by individualized consumer and worker characteristics that offend notions of equal pay for equal work and fair dealing. (15) App-based workers now report ride-hail companies taking as much as 60 percent of the fare. A PowerSwitch Action analysis of Uber fares in New York City and Chicago between 2019 and 2023 found that driver pay declined even as fares charged to consumers increased because Uber’s take rate also increased. (16) Rising, unpredictable take rates and lower pay have made ride-hail work an increasingly losing proposition. Workers who provide what has become a growing and crucial transportation service are entitled to transparent, consistent, and fair pay for their work. A 25 percent cap on take rates in the ride-hail industry will limit the most exploitative algorithmic practices and help ensure the health and well-being of more than a million U.S. workers. Since expenses and the cost of living vary from market to market, the take rate cap in this Act establishes a floor, not a ceiling, and does not preempt any state or local efforts to establish take rate standards that exceed that set forth herein. (17) Although the ride-hail industry has been an early adopter of digital labor platform technologies, the public needs to understand how all businesses that use digital labor platforms utilize electronic monitoring tools and automated decision-making systems so they may understand how this unaccountable technology affects their lives. Without transparency requirements around their use of electronic monitoring tools and automated decision-making systems, businesses that use digital labor platforms can exploit information asymmetries to make false and unverifiable claims about the potential impacts of proposed and existing public policies. (18) Policymakers outside the United States have taken steps to ensure that platforms operate with more transparency and accountability. Multinational corporations like Amazon, Uber, and DoorDash will soon be subject to various transparency and reporting requirements in the European Union as countries come into compliance with the European Union Platform Work Directive. The United States must not be a global laggard when it comes to platform regulation; workers, consumers, and the public will suffer for it. (19) To ensure that app-based work is not an engine of poverty and racial inequality that places downward pressure on job quality across the economy, workers, consumers, policymakers, and regulators must not be left in the dark about the surveillance and labor management technologies that businesses that use digital labor platforms are using. (20) All workers, businesses, and consumers in the United States, stand to benefit from the establishment of clear rules requiring transparency and accountability around the use of electronic monitoring and automated decision-making systems by businesses that use digital labor platforms to manage work.