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Top Policy Trends 2020: Workforce

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Shifts in 2020

Emerging policies are beginning to recognize that the American employee experience is changing. Recent measures, for example California’s AB5, show how some policy is moving towards a more expansive definition of what a worker is, as well as the benefits and rights associated with that status. Consider also how, for the first time, a US trade agreement addresses the impact of freer trade on American workers. The US-Mexico-Canada (USMCA) trade agreement contains a minimum wage provisions for all three nations. Separately, diversity and inclusion measures—gaining traction in the private sector—are garnering attention on Capitol Hill as well.

53% of CEO respondents rank workforce policy among top 3 policies most impactful to their business.

Source: PwC Election 2020 Poll, November 2019

The four influencers

California and New Jersey

Businesses are introducing greater flexibility over where employees work, and new companies are emerging as platforms that create work, but not workforces. The introduction of Assembly Bill 5 (AB 5), signed by Governor Gavin Newsom, attempts to clarify what defines an employee. Newsom has championed worker rights and has previously proposed the idea of portable benefits. This becomes of particular importance as more companies move toward using a larger number of independent workers, and as a greater number of people supplement their income with gig work.

California has ushered in important policy discussions and alternative proposals. A number of states have enacted similar, but less expansive, laws, that presume a classification of employee unless the employer can show that the worker satisfies an “ABC” test. The test looks at whether a business has control over the worker and performance of the work, if the work falls into a company’s usual course of business and whether the worker is an independent business.

Most recently, New Jersey’s Department of Labor and Workforce Development assessed against a large ride-sharing company with approximately $650 million in back taxes and interest for workers misclassified as independent contractors. A bill similar to California’s AB5 was also recently introduced in the New Jersey Senate.

In contrast to California, a number of other states have enacted laws that result in an independent contractor classification when the worker is engaged through a “marketplace platform,” amongst other criteria. 

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Trade agreements

Trade pacts like the USMCA are now including provisions about how much work must be done locally on certain products, as well as regulation on how much those workers get paid. Under the USMCA, at least 30% of workers on automobiles would need to make $16 per hour by 2020, with that rate increasing to 40% of workers by 2023. The agreement also includes provisions on unions. Expect to see more provisions like these in regional pacts as countries fight to keep jobs at home and protect workers from the consequences of free trade.

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Congresswoman Joyce Beatty

The Chair of the House Financial Services subcommittee on Diversity and Inclusion, Congresswoman Joyce Beatty (D-OH), introduced the “Ensuring Diverse Leadership Act” in 2019, garnering passage through the House. The legislation guarantees that at least one gender-diverse and ethnically-diverse candidate is interviewed when there is a vacancy among the Federal Reserve Regional Bank presidents. Beatty has said that she will seek to pass similar legislation that applies to investment advisers and asset managers.

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California freelance writers

California’s freelance writers have used social media to challenge the creator of AB 5, Assemblywoman Lorena Gonzalez, about parameters of the bill that limit the number of pieces a freelancer can write for a particular outlet in a year. Freelancers have called for meetings with the regulator and are likely to champion court challenges to have parts of the law changed or removed.


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22% of respondents believe the US Federal Government is the stakeholder that wields the most influence in workforce policy.

Source: PwC Election 2020 Poll, November 2019

How to prepare for the shift

Ensure your company has in place a centralized classification program for how to deal with independent talent. If some departments are handling talent different than others and—whether willful or not—misclassification of employees can lead to enforcement action. Make sure there are systems in place that collate extensive data on your workforce—everything from defining personal characteristics, to location, to number of hours, to rate of pay, to total cost of each employee. In M&A due diligence, it’s a good idea to scrutinize worker classification.

As trade agreements shift, monitor the changes to keep workforce and products in compliance. Models for worker mobility continue to evolve, fundamentally transforming how we work.

Diversity and inclusion (D&I) success cannot be measured without a clear picture of where you are now—and where you want to go. Capture the status of D&I programs and policies via metrics on D&I-related employee recruitment, hiring, retention and promotions, as well as employee exits. Measuring diversity (how different employee cohorts are represented) may not be new, but it is also essential now to measure inclusion (the degree to which an employee feels valued, respected, welcome and understood).

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Mike Boro

Partner, Tax, PwC US

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