Portable Benefits in the 21st Century
Shaping a New System of Benefits for Independent Workers
David Rolf, Shelby Clark, and Corrie Watterson Bryant PORTABLE BENEFITS IN THE 21ST CENTURY PAGE 1
- - - - is a nonpartisan effort to identify concrete ways to ways concrete identify to effort nonpartisan a is THE FUTURE OF WORK INITIATIVE INITIATIVE WORK OF FUTURE THE Copyright © 2016 by the Aspen Institute the © 2016 by Copyright The Markle Foundation, The Rockefeller Foundation, Brian Sheth, Sean Parker, Apple, Parker, Foundation, Brian Sheth, Sean Rockefeller Foundation, The Markle The and others. el J. Friedman Philanthropies, The Hitachi Foundation, The Ford Foundation, The Foundation, Ford Foundation, The The Hitachi Friedman Philanthropies, el J. Trusts, Pew Charitable Foundation, The Peterson G. Peter The Foundation, Kresge This paper is made possible through the generous philanthropic support of philanthropic a broad the generous is made possible through paper This including: Emanu partners, of and corporate range individuals, foundations, as.pn/futureofwork. Honorary CoChairs Senator Mark Warner and Purdue University President Mitch and Purdue University Mark Warner CoChairs Senator Honorary visit information more For Reed. Bruce and Bridgeland John CoChairs with Daniels tury capitalism which rewards work, fuels innovation, and promises a brighter fu fuels innovation, work, rewards tury which capitalism by the leadership of is driven The Initiative alike. and workers businesses ture for workforce. The Initiative is focused on two key objectives: first, to advance and pro advance to first, objectives: key two focused on is The Initiative workforce. tect the economic interests of including Americans in the independent workforce, and second, to inspire a 21st-cen on-demand economy; growing those in the rapidly strengthen the social contract in the midst of sweeping changes in the workplace and ofmidst in the contract the social strengthen the workplace in changes sweeping PORTABLE BENEFITS IN THE 21ST CENTURY PAGE 2
The social The that contract security provided and prosperity previous for lifetime or lifetime a year. even generations is generations undone, coming becomes as work increasingly and contingent, do companies less and keep less to a for workers - - - - American society has always taken taken always American society has 2 eliminated child labor, established a national minimum national a established labor, child eliminated 1 We know this to be true: the shared safety net attached to full-time employment, net attached to full-time employment, this to be true: the shared safety know We Many in alternative work arrangements have ridden the rise ofrise the ridden have “on-demand the arrangements work alternative in Many In the 21st century, as traditional work has become increasingly fissured and many and many fissured has become increasingly as traditional work In the 21st century, University, 29 Mar. 2016. Web. Princeton 1995-2015. Rep. The Rise and Nature of Alternative Work Arrangements in the United States, Krueger. The and Alan B. F., Katz, Lawrence DURING TIMES OF PROFOUND ECONOMIC CHANGE, ECONOMIC PROFOUND OF TIMES DURING 1 The Fair Labor Standards Act of 1938, Pub. L. No. 112. U.S.C. 29, § 209-262, Department (2011). of Labor 112. U.S.C. L. No. Act of 1938, Pub. Standards Fair Labor 1 The 2 once so crucial to the establishment and sustenance of sustenance and once so crucial to the establishment is no lon the middle class, to the constant threat In addition to being subjected as it once was. as relevant ger of of it ignores millions in reduction due to economic and political tides, workers insurance to do so. to do so. insurance an unprecedented opportunity to create a new working world, one in which workers workers one in which world, working an unprecedented opportunity to create a new to sacrifice social and do not have work, they and when the ability to choose how have have the potential to become a race to a bottom for workers: one without a shared workers: for the potential to become a race to a bottom have have we the era that preceded the Great Depression. Right now, net, not unlike safety economy” through a growing number of peer-to-peer marketplaces like Uber, Lyft, Lyft, number of through a growing Uber, like economy” peer-to-peer marketplaces but also represent a great economic opportunity, These marketplaces or TaskRabbit. U.S. economy over that time. over economy U.S. Princeton, the number of workers in “alternative work arrangements” (including arrangements” work number ofPrinceton, the in “alternative workers the last million over 9.4 rose by and independent contractors) temporary workers the in employment overall in rise net entire the for accounts increase This decade. and companies do less and less to keep workers for a lifetime– or even a year. Ac a year. or even a lifetime– for workers and companies do less and less to keep of Katz of Krueger B. Alan and Harvard F. Lawrence by study recent a to cording workforce safety net. The social contract that provided security and prosperity for security and prosperity net. The social contract that provided safety workforce contingent, becomes increasingly as work is coming undone, generations previous of last century’s protections have eroded, America must once again re-examine our re-examine must once again America eroded, ofprotections have century’s last wage, required overtime payment for certain industries, and implemented the mod certain industries, for payment required overtime wage, workweek. ern forty-hour ing unemployment insurance, retirement insurance, and welfare programs. The Fair The programs. and welfare insurance, retirement insurance, ing unemployment of Act Standards Labor 1938 middle class. The most striking example in the modern era is the New Deal, which Deal, New era is the example in the modern The most striking middle class. by establish Depression after the Great workers security for strengthened income a step back to evaluate how rapid evolution can provide a new basis for a prosperous a prosperous for basis a new can provide rapid evolution how a step back to evaluate David Rolf, Shelby Clark, and Corrie Watterson Bryant and Corrie Watterson Clark, Shelby Rolf, David Portable Benefits in the 21st Century: BenefitsPortable 21st in the System a New Shaping Workers for of BenefitsIndependent PORTABLE BENEFITS IN THE 21ST CENTURY PAGE 3
We should We that ensure all workers, of regardless them when they sick,are injured, and when it’s retire. time to employment employment classification, affordable have a safety to access protects net that ------they they Democracy Democracy While there are cur 4 to serve as a new form of form as a new to serve modern for support 3 day’s economy, who may derive their income from multiple sources derive may who economy, day’s A or employers. jobs switch regularly may or who simultaneously should be able to select and maintain their benefits from worker and their protections should not depend on the app to year, year open. have currently they PORTABLE company; or particular job to any not tied benefits are workers’ benefits are attached to a spe Traditionally, benefits. their own own This does not match the reality in to for many cific job. work of last summer, “We must acknowledge the radically different needs of different the radically a new must acknowledge “We last summer,
At its core, this Portable Benefits proposal springs from the modern belief modern the from springs proposal Benefits Portable this core, its that At We should ensure that all workers, regardless of employment classification, have ofregardless have classification, employment workers, all that ensure should We 01 June 2015. Web. Democracy Journal. Democracy: A Journal of Ideas, Inc., Rolf, David, and Nick Hanauer. “Shared Security, Shared Growth.”Democracy Journal Summer 2015. 37 (2015): n. pag. Rolf, David, and Nick Hanauer. “Shared Security, Shared Growth.”Democracy Journal Summer 2015. 37 (2015): ”Common Ground for Independent Workers - What’s The Future of Work?” Medium. N.p., 10 Nov. 2015. Web. 08 June Web. 2015. 10 Nov. Future of Work?” Medium. N.p., The ”Common Ground for Independent Workers - What’s 2016. 3 4 envision the system to contain three core tenets: the system envision flexible employment relationships of‘sharing economy.’” employment flexible the regarding the structure of most questions than answers more rently a system, such generation of Americans—many of whom already have more employers in a week in a week of more employers generation ofAmericans—many have already whom designed to fit the (system) adopting a new than their parents had in a lifetime—by omy and stability of traditional employment. As Nick Hanauer and David Rolf and stability ofomy As Nick Hanauer and David orig traditional employment. in Growth” Shared Security, “Shared article, their in postulated inally Journal workers should not need to choose between the flexibility of the flexibility should not need to choose between econ jobs in this new workers workers who are slipping through the gaps in our social safety net. New models, and models, net. New gaps in our social safety are slipping through the who workers net. in our safety gaps to fill these be required will regulations, and enabling laws likely collaboration of made a across the political spectrum and organizations individuals of a system Benefits,” call for “Portable affordable access to a safety net that protects them when they are sick, injured, and they when net that protects them access to a safety affordable of an unlikely 2015 in November this challenge, Accepting it is time to retire. when support is discouraged by current regulations. by is discouraged support (some of contractors and others of independent are legitimately whom may whom of this act paradoxically, to be victims ofbe found the courts), by misclassification current employment laws and regulations, if a company provides benefits to a work if benefits to a and regulations, provides company a laws current employment While an employee. must classified as that the worker that suggests it is one factor er, workers benefits to their a desire to offer stated have platforms on-demand many America, including independent contractors and many part-time employees. Under employees. part-time and many contractors independent including America, PORTABLE BENEFITS IN THE 21ST CENTURY PAGE 4
compensation insurance. All workers All access must have the critical to benefits they it Today, need. can be difficult if not impossible an for independent to worker a critical access such as protection disability or workers ------People are earning income are earning People compensation insurance. Other benefits of Other such as compensation insurance. employment, for exist don’t paid time off simply insurance, and unemployment econ for the new system viable benefits Any independent workers. outside of working individuals a traditional em must cover omy relationship. ployment benefits cover independent workers, not just traditional employees. not just traditional workers, independent cover benefits the critical benefits they access to universal must have All workers it can be difficult for an independent if not impossible need. Today, as disability or workers to access a critical protection such worker toward that worker’s benefits on a per hour basis, such as $1 for each such as $1 benefits on a per hour basis, that worker’s toward hour worked. UNIVERSAL lars earned, jobs done, or time worked, covering new ways of ways mi new covering or time worked, lars earned, jobs done, example, For or platforms. employers across different cro-working a and an hour for platform if a delivery an hour for a person works contribute an equal amount both would house cleaning platform, PRO-RATED depend rate a fixed benefits at a worker’s to contributes each company earns. or works, she or he much how on ing of model offrom a variety so any should Benefits sources, Portable dol by companies that can be pro-rated contributions from support As we define what a system of Portable Benefits could look like, we should begin by we should begin ofsystem what a look like, Portable Benefits could define As we
institutions relevant to Portable Benefits, and yielded the following insights: following and yielded the Benefits, to Portable institutions relevant institutions should we draw inspiration? How can these models be updated to leverage leverage to models be updated these can How inspiration? draw we institutions should five we profiled these questions, To begin to answer context? technology or fit today’s looking to relevant and historical models and asking what we can learn. From which can learn. From which we and historical models and asking what looking to relevant could also form the basis of an effective and resourced worker voice organization in worker the basis ofcould also form and resourced an effective inaccessible to most bargaining is increasingly collective traditional an era where sector workers. private ance (such as vision, dental, life, etc), paid time off, education and training, and etc), as vision, dental, life, ance (such It insurance. income-smoothing tools or wage products like novel even potentially of workers compensation (or something similar, such as disability insurance), health as disability insurance), such of compensation (or something similar, workers types of optional to cover but could be expanded insur and retirement, insurance, with workers who do not have access to affordable benefits, namely independent namely benefits, affordable to access have not do who workers with core a least at provide likely should system The workers. part-time and contractors A Portable Benefits system could apply to any type of worker, though it is designed is it though of type any to worker, apply could system Benefits Portable A PORTABLE BENEFITS IN THE 21ST CENTURY PAGE 5 - PAGE 19 PAGE /
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SECURECHOICE RETIREMENT PLANS SECURECHOICE GROUP INSURANCE GROUP GHENT SYSTEM GHENT MULTIEMPLOYER PLANS MULTIEMPLOYER FUND CAR BLACK
5 4 3 1 2 Emerging state-based retirement plans which provide new retirement op retirement new provide which Emerging state-based retirement plans Group insurance can be provided for individual independent contractors, independent contractors, individual for can be provided Group insurance Offering insurance through voluntary worker organizations can serve as an as an organizations can serve worker voluntary through insurance Offering Benefits can be delivered to independent contractors when mandated by mandated when to independent contractors Benefits can be delivered tions accessible to independent contractors tions accessible to independent contractors much as the AARP offers inexpensive group life insurance to its members. to its insurance group life inexpensive AARP offers much as the effective mechanism to build economic power for workers. for power mechanism to build economic effective law, and can be funded by an industry-wide fee paid by customers. paid by fee an industry-wide and can be funded by law, Responsibility for providing benefits can be shared among multiple employers. can be shared benefits providing for Responsibility
PORTABLE BENEFITS IN THE 21ST CENTURY PAGE 6
obligations under collective bargaining agreements. Multiemployer make sense Plans of industries that a employ don’t longterm, fulltime workforce they can prorate their contributions while still ensuring that they meet their insurance, and retirement, other benefit , ------6
The benefits provided to provided benefits The 5
There are a few major types of major few There are a Multi 7
is an employee benefit plan shared by two or more employ or more two by benefit plan shared is an employee
http://www.cwa-union.org/for-members/cwa-pensions-and-trusts Multiemployer Plans Multiemployer Employers are typically responsible for making Multiemployer Plan contribu Multiemployer making responsible for are typically Employers About 20 million people get their health insurance through Multiemployer Plans through Multiemployer their health insurance About 20 million people get Many participants in multiemployer plans are employed by small companies in small by plans are employed participants in multiemployer Many 1 http://www.politico.com/story/2013/09/questions-about-unions-obamacare-096738 Norman, Brett. “Unions and Obamacare: 5 Questions.” Politico. Politico LLC, 12 Sept. 2013. Web. Norman, Brett. “Unions and Obamacare: 5 Questions.” Politico. https://www.ebri.org/pdf/publications/books/fundamentals/fund14.pdf Communications Workers of America. AFL-CIO, 28 Jan. 2010. Web. CWA Pensions and Trusts.” http://www.cwa-union.org/for-members/cwa-pensions-and-trusts General references: United States of America. Pension Benefit Guarantee Corporation.Introduction to Multiemployer Plans. PBGC, n.d. United States of America. Pension Benefit Guarantee Corporation.Introduction http://www.pbgc.gov/prac/multiemployer/introduction-to-multiemployer-plans.html Web. A MULTIEMPLOYER PLANMULTIEMPLOYER A 7 6 contributions. The collective bargaining agreement between the companies and the bargaining agreement between The collective contributions. 5 tions, though employees are sometimes required or permitted to make additional required or permitted to make are sometimes though employees tions, and educational scholarships). Multiemployer Plans receive preferential tax treatment preferential Plans receive Multiemployer scholarships). and educational Code (IRC). Revenue and the Internal ERISA meet rules established by so long as they plans, which are heavily regulated under the Employee Retirement Income Security Income Security Retirement regulated under the Employee are heavily which plans, of and education funds (including apprenticeshipsAct and 3) Training (ERISA); 1974 employer Plans: 1) Welfare benefit plans, which may include group life, disability, un disability, include group life, which may benefit plans, Plans: 1) Welfare employer Pension 2) prepaid legal services; and health insurance; and vacation; employment, for instance, and 10 million people have a retirement account through one ofone through account retirement a have people million 10 and 1,400 instance, for defined benefit pension plans. multiemployer ipating employers. A painter, roofer, or construction laborer can go from job to job or construction laborer can go roofer, painter, A ipating employers. interruption in coverage. without any meet the needs of workers in short-term or seasonal work because their benefits because meet the needs of in short-term or seasonal work workers partic among job to job from insurance their take often can workers — portable are contributions while still ensuring that they meet their insurance, retirement, and retirement, their insurance, meet that they still ensuring contributions while The plans also bargaining agreements. other benefit obligations under collective the building and construction industries. Multiemployer Plans make sense for in sense for Plans make Multiemployer the building and construction industries. can pro-rate their – they a long-term, full-time workforce employ dustries that don’t workforces. As set forth in the Taft-Hartley Act, these plans are governed by a board comprised by a board governed plans are Act, these in the Taft-Hartley As set forth applicable to unionized and are only of and union representatives, equally employer nism to share the costs of benefits when a worker has multiple employers or regular ofnism to share the costs has multiple employers worker when a benefits The terms of the plan or construction workers. as actors such employers, switches ly of and a union, or group the employers unions. between bargained are collectively workers are based on a negotiated hourly contribution made to the Multiemployer to the Multiemployer made contribution hourly on a negotiated are based workers a useful mecha This provides Plan on behalf his or her employer. of by an employee ers, who are often in the same geographic area or industry. area geographic same in the often are who ers, PORTABLE BENEFITS IN THE 21ST CENTURY PAGE 7
shortterm multiple projects, and employers, seasonal working conditions. One additional some of component Multiemployer which provides continuous for of coverage fluctuating hours… arrangement This is particularly in relevant industries with Plans is the concept is the concept Plans “hour bank,” of an despite benefits, ------
8 An example of a Multiemployer Plan with an hour bank is the Family Medical Medical Plan with an hour bank is the Family ofAn example a Multiemployer One additional component of some Multiemployer Plans is the concept ofconcept the is Plans ofcomponent additional One an Multiemployer some One of the best-known examples of a multiemployer plan is the Screen Actors One ofActors of examples is the Screen plan the best-known a multiemployer https://www.eisb.org/html/hspd0150.htm EISB. “Health and Welfare Summary Plan Description.” Electrical IndustryEISB. Service n.d. Web. Bureau, Inc., 8 hour threshold. The worker is able to earn hours for his or her hour bank by working by for his or her hour bank is able to earn hours worker hour threshold. The hour bank. In addition, for this particular fund, the worker is able to make self-pay is able to make this particular fund, the worker hour bank. In addition, for gaps necessary additional to reach the 140 up to six months to fill in any ments for gaining agreement, workers earn approximately $6 per hour in health benefits and earn approximately gaining agreement, workers month, the em benefits in a given $3 per hour in pension. In order to be eligible for of the balance a minimum of must work or have hours in his or her 140 hours, ployee Care Plan administered jointly by National Electrical Contractors Association and Association Contractors Electrical National by jointly Plan administered Care bar in the collective As negotiated International Brotherhood of Electrical Workers. the construction industry, as the hour bank can fill gaps in employment. as the hour bank can fill gaps in the construction industry, to maintain eligibility. This arrangement is particularly relevant in industries with in industries relevant is particularly This arrangement eligibility. maintain to as such conditions, and seasonal working multiple employers, short-term projects, plan. If a worker’s number of number the threshold in future months, plan. If hours drops below a worker’s hours will be deducted from the bank or other factors, due to a job ending, weather, worked beyond that threshold are “banked” for future months. Further, an employ Further, future months. for that threshold are “banked” beyond worked are members of that employers ee can bank hours earned from multiple the same fined in the bargaining agreement. A worker must meet a certain threshold ofworker A fined in the bargaining agreement. hours hours and month) per 140 hours example (for benefits receive to become eligible to “hour bank,” which provides for continuous coverage of despite fluctuating benefits, continuous coverage for provides which “hour bank,” contribution de the hourly “banks” each hour of the worker For employment, hours. deposited into a trust fund that provides benefits for all participants who meet plan’s who meet plan’s for all participants benefits deposited into a trust fund that provides eligibility requirements. by the contributions made by television and movie producers, while the health plan while producers, and movie television the contributions made by by are Contributions both producers and participants. contributions from is funded by the leadership of then-SAG president Ronald Reagan.) More than 40,000 actors and than 40,000 More Reagan.) the leadership of president Ronald then-SAG solely The pension plan is funded plans. benefit from SAG’s their dependents now workers by establishing a multiemployer plan in 1961, through collective bargaining through collective plan in 1961, establishing a multiemployer by workers through created was the plan side note, (In an interesting historical with the studios. – are often working simultaneously on multiple projects for multiple employers. employers. for multiple on multiple projects working simultaneously – are often the problem offor these non-traditional traditional benefits solved providing SAG ments, and the types of investments available vary by plan size. size. plan by vary the types of and available ments, investments workers contingent – like Actors and health plan. pension Guild-Producers (SAG) cents per hour, dollars per day, or percentage ofpercentage or These contributions basis. earnings day, per dollars hour, per cents invest enhanced through and often benefits, for pays in a fund that are then pooled union sets forth the employers’ contribution rates, which may be negotiated on a on be negotiated may which rates, contribution employers’ the sets forth union PORTABLE BENEFITS IN THE 21ST CENTURY PAGE 8
The primaryThe with limitation Multiemployer cover be used to Plans related to related Plans BenefitsPortable cannot they is that independent without workers to an amendment the TaftHartley which governs Act, Multiemployer Plans. 9 - - - - -
“Hour Bank.” Family Medical Care Plan. National Electrical Contractors Association, n.d. Web. https://www.nebf.com/fmcp/planhighlights/hourbank/ Stewart, “Interview 2016. Matthew. with Matthew Stewart, Personal interview. 24 Feb. NEFB Employee.” ADVANTAGES AND LIMITATIONS OF MULTIEMPLOYER PLANS MULTIEMPLOYER OF LIMITATIONS AND ADVANTAGES HOW CAN THIS MODEL BE APPLIED TO PORTABLE BENEFITS? PORTABLE TO APPLIED BE MODEL THIS CAN HOW Multiemployer Plans are a model for Portable Benefits because they allow for pro-ra allow Benefits because they Portable Plans are a model for Multiemployer 9 to accommodate non-unionized workers. to accommodate non-unionized workers. current law, multiemployer plans cannot be applied to independent workers. In or plans cannot be applied to independent workers. multiemployer current law, changed be to need would model the benefits, to access universal more provide to der No. While multiemployer plans can facilitate greater access to benefits, this is only this is only greater access to benefits, plans can facilitate While multiemployer No. plan. Under a multiemployer by covered in unionized industries employees true for Does this model provide more universal access to benefits? to access universal more model provide this Does nates the need to track earnings. workers covered by Multiemployer Plans is typically narrow, so fixed contributions contributions so fixed narrow, Plans is typically Multiemployer by covered workers those plans and elimi the most sense for makes hours worked based on employee ployee hour worked to the plan; employees then receive those benefits proportionate then receive to the plan; employees hour worked ployee of The range for earnings. earnings to the number of overall or their hours worked Are contributions in this model pro-rated? model pro-rated? in this contributions Are or a earnings, based on hours, prorated and benefits are typically Contributions Yes. contribute one dollar per em may combination of an employer example, both. For and between plans and carry their benefits with them. and between cannot be transferred from one Multiemployer Plan to another unless reciprocity is from one Multiemployer cannot be transferred among move if may is established, a worker that reciprocity However, negotiated. accumulated benefits even if a former employer has gone out of has if con This even business. accumulated benefits employer former a credits typically Pension gaps. during employment can also exist tinuity of coverage construction trade). Employees may carry pension and benefits with them between carry between pension and benefits with them may Employees construction trade). on can rely They plans. between agreements exist, reciprocity companies and, when Somewhat. Multiemployer Plans are portable if a worker stays within the within the within ifportable are Plans stays worker a Multiemployer Somewhat. local such as a often span a local industry, (which participant employers the fund’s Is this model portable? Is this for any employer (or multiple employers simultaneously) that is covered by the plan. by is covered that simultaneously) employers (or multiple employer any for PORTABLE BENEFITS IN THE 21ST CENTURY PAGE 9 ------Hour banks are an aspect of Multiemployer Plans that are particularly to helpful to Plans that are particularly of are an aspect banks Hour Multiemployer However, the primary limitation with Multiemployer Plans related to Porta related Plans primary the Multiemployer with limitation However, In addition, there is no maximum limit on the number ofIn addition, there is and employ companies mon for many contingent workers. However, as with Multiemployer Plans, the model Plans, as with Multiemployer However, workers. contingent many mon for independent contractors. need to be adapted for would to ensure consistent benefits for people with fluctuating work hours, which is com work hours, for people with fluctuating consistent benefits to ensure the coverage ofto independent contractors (NLRA) Act Relations Labor the National the coverage difficult to achieve. be very would which level, need to occur at the federal would dent contractors to collectively organize could open up Multiemployer Plans beyond Plans beyond organize could open up Multiemployer dent contractors to collectively extend act or to to the Taft-Hartley changes Unfortunately, base. their current user amendment to the Taft-Hartley Act, which governs Multiemployer Plans. Further, Further, Plans. Multiemployer governs which Act, amendment to the Taft-Hartley organize under current labor collectively independent contractors cannot generally indepen allowing Policy changes is a requirement of which plan. a Taft-Hartley law, ble Benefits is that they cannot be used to cover independent workers without an workers independent cannot be used to cover ble Benefits is that they employer Plan is particularly valuable in industries in which companies are often too often are companies which in industries in valuable particularly is Plan employer plans. individual small to justify or afford tionally only available to those with larger employee bases. These economies of bases. scale employee to those with larger available only tionally of Pooling reduce costs. participation and participants through a Multi encourage an individual trade, others can include entire industries (e.g., CWA, Amalgamated CWA, (e.g., industries entire include can others trade, individual an that are tradi can also pool resources in ways Small employers Clothing Workers). ees that can be enrolled in these plans. While some Multiemployer Plans only cover cover only Plans some Multiemployer While in these plans. ees that can be enrolled also are a useful touchstone because they commonly serve non-traditional industries non-traditional serve commonly because they useful touchstone also are a would employees because of few in which, or seasonal work, irregular employment construction). otherwise benefits (e.g., be eligible for Multiemployer Plan employer participants. Further they provide access for employ access for provide they Further participants. Plan employer Multiemployer are They sizes. importantly, most and ofees industries, types, business different all ta contributions from multiple employers, and they provide for portability within portability for provide and they employers, multiple from ta contributions PORTABLE BENEFITS IN THE 21ST CENTURY PAGE 10
Labor Relations Board, that hypothesizes “when thinking about Portable I think Benefits, the Black Car that be could Fund about as useful a model as any. Wilma Liebman, Wilma Chairwomanformer of the National ------
11
was established in the State of New York to provide workers workers to provide of established in the State was York New
Today the fund provides workers’ compensation coverage to more coverage compensation workers’ the fund provides Today
10 Black Car Fund Car Black Similar to the lawsuits currently facing many leading companies in the “on-de facing many currently Similar to the lawsuits The fund derives its income from a 2.5% surcharge on every black car ride, paid by paid black car ride, every on surcharge its income from a 2.5% The fund derives Although the for-hire industry’s drivers are independent contractors, for the pur for contractors, are independent drivers industry’s Although the for-hire “This was a way for the industry to get together and take care of their drivers. If care of and take get together for the industry to their drivers. way was a “This
General references: “History.” The Black Car Fund. The Black Car Fund, n.d. Web. Black Car Fund. The The “History.” http://www.nybcf.org/ Black Car Operators’ Injury Compensation Central Dispatch Facility, New York (State). Executive Law.. New York Department Web. of State. 160oo). 2016. New York 160cc- S. (S. Art.Fund, Inc. 6-F. http://www.dos.ny.gov/licensing/lawbooks/C-DISPTC.pdf 2 THE BLACK CAR FUND BLACKTHE CAR 11 Conigliaro, Jim, Jr., Esq. “Interview Personal interview. 3 Mar. 2016. with Jim Conigliaro Jr., Esq,.” 10 workers comp.” workers the employment classification of drivers. Conigliaro noted, “This seemed to solve a Conigliaro noted, “This seemed to solve classification ofthe employment drivers. oflot a lot was There classification. employment around issues around litigation of mand” economy, prior to the Black Car Fund, there were regular legal battles over over legal battles regular there were Fund, Black Car to the prior economy, mand” ents rates went up a bit, but it was everyone across the board. There is no competitive across the board. There is no competitive everyone up a bit, but it was ents rates went edge.” the passenger and collected by the affiliate’s member base and remitted to the fund. member base and the affiliate’s and collected by the passenger clean across the board. Cli it because it was liked Conigliaro described that “owners Social Security and Medicaid. However, in theory, the statute could have been writ could have the statute in theory, However, and Medicaid. Security Social ten to include a broader collection of benefits. poses of workers compensation. The fund is not required to provide other common poses of compensation. The fund is not required to provide workers contribution to the employer-related such as paying benefits related to employment, are able to be afforded Workers’ Compensation coverage ifBy working. while injured Compensation coverage Workers’ are able to be afforded of the pur employees the fund for the structure of are only the drivers the statute, poses of the state statute, affiliated drivers are the fund’s employees and therefore, therefore, and employees ofposes fund’s the are drivers affiliated statute, state the Jr., Esq., General Counsel to the Machinist Union District 15 and member of Esq., General Counsel to the Machinist Union District 15 and member Jr., the Board of the Black Car Fund. Directors for you’re a driver in NY working for a black car base, you’re covered,“ said Jim Conigliaro covered,“ you’re a black car base, for working in NY a driver you’re contractors and would otherwise not have access to traditional workers’ compensa access to traditional workers’ otherwise not have contractors and would tion insurance. 300 black car companies. with approximately affiliated drivers than 33,000 compensation insurance to “Black Car” (for-hire livery) drivers who are independent who drivers livery) to “Black Car” (for-hire compensation insurance PORTABLE BENEFITS IN THE 21ST CENTURY PAGE 11 - - -
12
Further, the Black Car Fund is a rare model that provides critical protections to in critical protections to provides is a rare model that the Black Car Fund Further, Perhaps most relevant is that the contribution is required by state statute and is that the contribution is required by most relevant Perhaps ADVANTAGES AND LIMITATIONS OF THE BLACK CAR FUND CAR BLACK THE OF LIMITATIONS AND ADVANTAGES HOW CAN THIS MODEL BE APPLIED TO PORTABLE BENEFITS? PORTABLE TO APPLIED BE MODEL THIS CAN HOW 12 Liebman, Wilma. “Interview 2016. Liebman.” Personal interview. with Wilma 29 Feb. the fund acts as the employer for the purposes of providing workers’ compensation, compensation, of the purposes for workers’ providing the fund acts as the employer dependent contractors who fall outside ofdependent contractors who As the reach of traditional benefits. many around providing benefits to workers due to considerations related to employment due to considerations related to employment workers benefits to around providing Fund illustrates that a legal mandate circumvents classification, but the Black Car this problem. is thus not construed as providing benefits to the worker, which is factor in em worker, benefits to the is thus not construed as providing expressed significant concern have classification. On-demand platforms ployment relevance to any conversation on Portable Benefits for a number offor a number Benefits reasons. on Portable key conversation to any relevance esizes that “when thinking about Portable Benefits, I think that the Black Car Fund I think that the Black Car Benefits, thinking about Portable esizes that “when is of Indeed, the Black Car Fund great could be about as useful of a model as any.” Wilma Liebman, former Chairwoman of Chairwoman Liebman, former Board, hypoth Wilma Labor Relations the National working for a base in New York are covered. York a base in New for working Yes. The Black Car Fund provides access to workers compensation to drivers who who drivers to compensation workers to access provides Fund Black Car The Yes. rate due to their status as struggled to secure it at an affordable have otherwise would drivers car black all statute, by provided is this as Further, contractors. independent Does this model provide more universal access to benefits? to access universal more model provide this Does for by the 2.5% surcharge to the customer. There are no minimum requirements for There are no minimum requirements to the customer. surcharge 2.5% the by for with a member base. must be affiliated other than the driver eligibility, Is this model pro-rated? Is this under a member base and is paid ride given every for is provided The coverage Yes. outside of the Black Car sector, this model would be truly portable. portable. be truly outside of model would this the Black Car sector, could only be affiliated with one base, but rules have been recently updated to allow allow updated to been recently have but rules with one base, be affiliated could only coverage for If allow to multiple bases. for were the Black Car Fund to drive drivers Is this model portable? Is this is portable, through the Black Car Fund compensation to workers Access Somewhat. the fund required that drivers Initially industry. driving within the for-hire but only PORTABLE BENEFITS IN THE 21ST CENTURY PAGE 12 - - - The main limitations of the Black Car Fund are that it only applies to workers’ ofThe main limitations workers’ applies to Fund are that it only Car the Black Lastly, it is an interesting funding option to have the customers provide the pay the the customers provide option to have it is an interesting funding Lastly, other models which require new or updated regulations at the federal level. level. regulations at the federal or updated require new other models which that this statute could be replicated in other geographies. Fortunately, this model can Fortunately, other geographies. that this statute could be replicated in than implement to easier far be would it meaning level, local or state the at operate there does not appear to be any limitation that would prevent the fund, or a simi the fund, prevent that would limitation to be any there does not appear seems and it benefits, additional to include mandate the expanding from fund, lar compensation, and it is only available in one industry and in one state. However, However, in one industry state. and in one available it is only compensation, and ment for the benefit. This allows for the provision provision for the impact limited benefit with of the allows This benefit. the for ment the bases. for on the business model employer, the Fund is able to access a broader selections ofto access a broader is able the Fund a compared to benefits employer, ofgroup or association independent contractors. tion below on group insurance, there are limitations to how independent contractors contractors independent to how there are limitations on group insurance, tion below as an By qualifying of the purposes for together can be grouped benefits. providing it provides a functional mechanism to deliver the benefit. As is discussed in the sec the in discussed is As benefit. the deliver to mechanism functional a provides it PORTABLE BENEFITS IN THE 21ST CENTURY PAGE 13
in the world. In in the world. Tying unemployment union to insurance membership has the Nordic driven to countries the highest rates unionization 2013, Denmark 67% unionized, was 69%, and Finland 68%. Sweden ------unemployment insurance system com system insurance unemployment The Ghent System Ghent The The Belgian system also covers a broader set of including career inter also covers situations, system The Belgian Unlike that of other Nordic countries, Belgium’s system is based more on income is based more on income system that of Belgium’s Unlike countries, other Nordic Funds are typically tied to economic sectors or professional groups within a trade, a trade, groups within or professional to economic sectors tied are typically Funds
3 THE GHENT SYSTEM IS A PUBLICLY SUBSIDIZED PUBLICLY A IS SYSTEM GHENT THE failures, severe drops in demand, strikes, and other conditions beyond employer’s’ employer’s’ and other conditions beyond drops in demand, strikes, severe failures, workers can receive a special benefit called “temporary unemployment” that com a special benefit called “temporary unemployment” can receive workers technical due to bad weather, to reduce hours forced they’re pensates them when ruption and working time reduction. For instance, under Belgium’s system, manual system, under Belgium’s instance, time reduction. For ruption and working due to bad weather, technical failures, severe drops in demand, strikes, and other drops in demand, strikes, severe technical failures, due to bad weather, control. employer’s’ conditions beyond and non-manual workers. Manual workers can receive a special benefit called “tem can receive Manual workers and non-manual workers. to reduce hours forced they’re that compensates them when porary unemployment” The Belgian system also covers a broader set of set broader a interrup career including covers also situations, system Belgian The manual between discriminates system Belgium’s time reduction. tion and working system allows for theoretically unlimited-duration income replacement, while other unlimited-duration income replacement, while theoretically for allows system of event income dips in the profound short-term job loss. countries prevent Nordic protection than on past contributions and wages, and in exchange it offers lon it offers and in exchange and wages, protection than on past contributions initial income replace Nordic countries, In other rates. benefits but at lower ger-term of Because time. this tradeoff, the Belgian over ment rates are high but drop steeply a lower fee and, if they become unemployed, received a lower-level basic benefit. a lower-level received and, if fee become unemployed, a lower they high-wage and this insurance replaces up to 90% of a person’s former income de former replaces up to 90% of and this insurance high-wage a person’s participate via a union pay who choose not to composition. Those pending on family employees, employers, and the government (in the form of form (in the contribute tax subsidies) and the government employers, employees, Nordic countries are typically generous. quite to the cost. The benefits are typically although national funds have recently been created to serve workers regardless of workers been created to serve recently although national funds have of portion small a only comprise fees Membership as benefits field. unemployment participation. private gains associated with the price of unemployment insurance weighed against with the price of gains associated private weighed insurance unemployment motivate gains, collective not ofrisk the benefits, Individualized unemployment. Finland, Iceland, and Sweden, where participation is voluntary; Belgium operates voluntary; participation is where Sweden, Finland, Iceland, and Members retirement benefits. that incorporates a compulsory quasi-Ghent system members of to join and remain are likely unions as part ofof cost-benefit analysis monly administered by trade unions in Nordic countries. It operates in Denmark, countries. trade unions in Nordic administered by monly PORTABLE BENEFITS IN THE 21ST CENTURY PAGE 14
Denmark. One of the biggest advantages of the Ghent for system is that employers more it allows flexibility in the in labor force, for exchange receiving workers security. income combination This of policies is called in ‘flexicurity’ ------
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The high union density in Nordic countries has been directly responsible for pre responsible been directly Nordic countries has The high union density in For example, the Swedish Ghent system consisted of Ghent system funds, 42 unemployment the Swedish example, For Tying unemployment insurance to union membership has driven the Nordic the Nordic has driven to union membership insurance Tying unemployment http://library.fes.de/pdf-files/id-moe/11021.pdf tion.” Bibliothek. Library of the Friedrich Ebert 2014. Web. Foundation, Nov. Nergaard, Kristine. “Trade Unions in Norway: Coordinated Wage Bargaining and Workplace Level Co-determin in Norway: Coordinated Wage Bargaining and Workplace Level Unions “Trade Nergaard, Kristine. of Living and Working Conditions. Eurofound, n.d. Web. http://www.eurofound.europa.eu/observatories/eurwork/comparative-information/national-contributions/swe den/sweden-social-partners-involvement-in-unemployment-benefit-regimes “Sweden: Social Partners’ Benefit Regimes.”European Foundation for the Improvement in Unemployment Involvement ESPAnet Conference, Stream 20: Institutional Design and Reform – Consequences for Social Inequality, Oslo and ESPAnet Oslo, 4th – 6th September 2014 (2014): n. pag. University of Bamberg. Web. University of Applied Science, Akerhus https://www.uni-bamberg.de/fileadmin/uni/fakultaeten/sowi_professuren/internationale_politik/Zohlnhoefer/ Mitarbeiter/Bandau_ESPAnet_Paper.pdf Bandau, Frank. “Contested Welfare Institutions - The ConservativeBandau, Frank. “Contested Welfare Institutions - The Attack on the Swedish Ghent System.” 12th Annual “Trade Union Density.” OECD. Organisation for Economic Co-operation and Development, n.d. Web. OECD. Union Density.” “Trade https://stats.oecd.org/Index.aspx?DataSetCode=UN_DEN HOW CAN THIS MODEL BE APPLIED TO PORTABLE BENEFITS? PORTABLE TO APPLIED BE MODEL THIS CAN HOW 15 16 14 Yes. The majority of contributions come from government subsidies and a pay The majority ofgovernment contributions come from Yes. 13 Is this model pro-rated? Is this Yes. Benefits and fees are not tied to a specific job, but rather to the employment sec but rather to the employment fees are not tied to a specific job, Benefits and Yes. jobs. switching continue membership when participant may A tor. Is this model portable? model portable? Is this unnecessarily regarding social policy matters.” unnecessarily ing conditions. As Norwegian labor researcher Kristine Nergaard notes, the Norwe notes, researcher Kristine Nergaard labor As Norwegian ing conditions. the labour unions been cautious not to provoke ways “has in many gian government ment-led reforms. Labor unions have ensured that Norway’s generous sick leave pro sick leave generous that Norway’s ensured Labor unions have ment-led reforms. work commonly organizations been touched, and unions and employer gram hasn’t and work wage improve that will measures to develop with the government together United States has experienced. In Norway, for instance, labor unions fought for and for fought unions labor instance, for Norway, In experienced. has States United pension plans in the face ofworkers’ for govern significant protections recent won venting the level of that the systems welfare the level erosion of benefits and social venting employee Labor Market Fund before being distributed to the 42 individual unemployment unemployment to the 42 individual being distributed before Fund Labor Market funds. generous unemployment insurance that replaced 90% of 90% replaced that insurance is system unemployment The generous income. lost into a centralized which flow contributions, and employer taxes financed through covering nearly 80% of the labor force at its peak in 1990. Members were asked to asked of80% were nearly Members 1990. in peak its at force labor the covering for about $1 to $5 per month, in exchange ranging from membership fees low pay unionized, Finland 69%, Iceland 86%, and Sweden 68% (the United States had an 11% United States had 68% (the 86%, and Sweden Finland 69%, Iceland unionized, one of in the world). the lowest the same year, unionization rate during countries to the highest unionization rates in the world. In 2013, Denmark was 67% 67% was In 2013, Denmark the world. rates in to the highest unionization countries control. PORTABLE BENEFITS IN THE 21ST CENTURY PAGE 15 ------17
However, for this system to be applicable to American workers, adequate contri American workers, to be applicable to this system for However, Independent workers can also sometimes be accommodated under this system ifsystem under this sometimes be accommodated can also workers Independent Further, the Nordic Ghent system is highly applicable when considering how to considering how applicable when is highly Ghent system the Nordic Further,
Dimick, Matthew. “Paths to Power: Labor Law, Union Density, and the Ghent System.” (2010): n. pag. Washington Law, “Paths to Power: Labor Dimick, Matthew. University Law Library. Web. Library. University Law http://law.wustl.edu/centeris/documents/laboremplLaw/DimickPathstoPower1.pdf ADVANTAGES AND LIMITATIONS AND ADVANTAGES 17 governments requiring significantly larger worker contributions to the fund, which fund, contributions to the worker larger significantly requiring governments signups. voluntary time has decreased over bution levels would have to be maintained between the employer and the govern the and employer the between maintained be to have would levels bution years due to conservative in recent has eroded somewhat system ment. The Ghent a fund is set up for them. a fund is set up for workers that strengthen union density. Union membership is extremely high under Union membership is extremely that strengthen union density. workers workers. incomes and job protections for high further drives which this system, come security by combining 1) unemployment contributions from employers and and from employers contributions 1) unemployment combining come security by and 3) membership dues from by unions, 2) benefit administration government, design a portable benefits structure for independent workers in the United States. in the United States. workers for independent design a portable benefits structure of levels high in achieve to workers for possible is it that shows system Ghent The labor market and a flexible workplace.” and a flexible labor market thew Dimick said, “Union-determined and administered unemployment insurance insurance and administered unemployment Dimick said, “Union-determined thew trade-offa form a positive-sum establishes and efficient is between in the of security One of the biggest advantages of the Ghent system for employers is that it allows is that it allows One of of employers for advantages the biggest the Ghent system income security. receiving workers for exchange in force, in the labor more flexibility This combination of expert Mat As Ghent in Denmark. policies is called ‘flexicurity’ dates participation. In some countries, such as Denmark, there are funds for self-em for funds are there Denmark, as such countries, some In participation. dates workers. ployed workers who meet the employment qualifications (for example, having worked at worked having example, (for qualifications meet the employment who workers country that man though Belgium is the only month in Sweden), least 80 hours per Does this model provide more universal access to benefits? to access universal more model provide this Does all for insurance access to unemployment universal provides Ghent systems Yes. ployment sectors (e.g., finance). Generally fees for workers to join the plan are low plan are low to join the workers for fees Generally finance). sectors (e.g., ployment and tax-deductible. income and the sector to which they belong. Plans require higher contributions for for higher contributions Plans require belong. they the sector to which income and in low-unem than those musicians) sectors (e.g., in high-unemployment workers roll-based employer tax. The cost per participant is based on a combination of on a combination is based per participant The cost tax. employer roll-based their PORTABLE BENEFITS IN THE 21ST CENTURY PAGE 16
This situation This ties the benefit membership to or in a group so association, the portability the to is related ability to person’s a member remain of the association their if they leave job or industry. ------to members of an employer, association, to members of an employer,
The coverage is not available to the general public and can be obtained and general public and can be obtained to the available is not The coverage 18
Group insurance Group Additionally, individual insurance policies can be cumbersome and expensive to ad policies can be cumbersome and expensive insurance individual Additionally, Compared to issuing individual insurance plans, insurance carriers typically prefer carriers typically insurance plans, insurance individual Compared to issuing In order for an association to offer insurance to its members, it must meet certain to its members, insurance to offer an association In order for NAIC. Group Personal Lines Property and Casualty Insurance Model Act. Publication no. MDL-760. National Associa Lines Property Group Personal MDL-760. Model Act. Publication no. and Casualty Insurance NAIC. http://www.naic.org/store/free/MDL-760.pdf Web. tion of Insurance Commissioners, 1996. General references: 4 GROUP INSURANCE IS COVERAGE PROVIDED COVERAGE IS INSURANCE GROUP 18 a single group policy is issued to the association (with members being issued a certifi to the association (with members being issued a single group policy is issued members. for all one premium carrier is remitted the insurance and cates of coverage) minister. This is because payment must be collected by many individuals. In contrast, individuals. by many must be collected This is because payment minister. insurance carriers to provide. Offering coverage through a group of group a through individuals similar coverage Offering provide. to carriers insurance rates among the group can mitigate this risk. high participation and having verse selection risk.” This is the scenario when high risk individuals are more likely to are more likely individuals when high risk This is the scenario selection risk.” verse foror unprofitable expensive very the insurance make can which purchase insurance, group plans, which can make individual insurance coverage very expensive or com expensive very coverage insurance individual can make which group plans, “ad avoid to is plans group prefer carriers insurance reason One unavailable. pletely combination. policy would result in economies ofeconomies in result would policy ofterms in scale Pre administration. or price or a the association, the member, be paid by may coverage the insurance miums for association’s insurance, and can choose to cancel coverage at any time. While most time. at any and can choose to cancel coverage insurance, association’s such requirement. In some there is no associations are nonprofit organizations, such the group among other things, that, must verify commissioner the insurance cases, nually), must collect dues, and the members must have voting privileges and rep and privileges voting have must members the and dues, collect must nually), to purchase their are not obligated board. Members resentation on the governing in existence for at least two years, and must exist for purposes other than simply simply purposes other than for and must exist years, at least two for in existence (at least an the group must hold regular meetings In addition, obtaining insurance. requirements that vary from state to state. In general, the association must have been the association must have In general, from state to state. requirements that vary life insurance to members, and the Owner-Operators Independent Drivers Associa Independent Drivers and the Owner-Operators to members, insurance life disability plan to its members. a group short-term offers tion (OOIDA) fered through an association, including disability, life, and supplemental insurance, insurance, and supplemental life, disability, through an association, including fered group AARP provides the example, For cannot. generally major medical insurance maintained only because of the covered person’s membership in or connection with connection or in membership of because person’s only maintained covered the of full suite A insur including health or group. the particular organization benefits, types of or union. While many benefits can be of to an employer ance can be offered or union.
PORTABLE BENEFITS IN THE 21ST CENTURY PAGE 17
to certainto benefits, such as disability its reach insurance, it in that is limited cannot include health insurance. Although this Although work model would provide to today independent access contractors - - - -
19
ADVANTAGES AND LIMITATIONS OF GROUP INSURANCE INSURANCE GROUP OF LIMITATIONS AND ADVANTAGES HOW CAN THIS MODEL BE APPLIED TO PORTABLE BENEFITS? PORTABLE TO APPLIED BE MODEL THIS CAN HOW 19 Turvey, Dale. “Interview with Dale Turvey.” Personal interview. 13 Mar. 2016. “Interview Dale. with Dale Turvey.” 19 Turvey, ed States, highlights the advantage of affordability, “for the customer to get the best the get to customer the “for of advantage the highlights affordability, States, ed all the sense in the world.” deal, the association makes founder of the National Administration Company, a national program administrator offounder Company, Administration the National affinity group and association products and that offers throughout the Unit services The main advantages ofThe main advantages and accessibil model are affordability the group insurance Dale Turvey, ity of to access independently. for individuals benefits that are difficult or affordable to members ofor affordable a group. Does this model provide more universal access to benefits? benefits? to access universal more model provide this Does be accessible only that may to access coverage for individuals The model allows Yes. opposed to the source of contribution. the a sometimes-substantial fee to join and there are no contributions from employers from employers to join and there are no contributions fee a sometimes-substantial to the accessibility of This model is more relevant the benefit as or the government. Is this model pro-rated? model pro-rated? Is this the association, the participant must pay by be paid for may Although coverage No. industries without giving up their coverage. industries without giving dustry, without giving up their benefits. However, ifwas more broad, association the However, up their benefits. giving without dustry, between ofassociation an perhaps move could person the contractors, independent the portability is related to the person’s ability to remain a member of member a remain to ability association the person’s the to related is portability the if example, a member of For the person was an their job or industry. if leave they but not their in firms, real estate change association of could likely they realtors, Is this model portable? Is this so to membership in a group or association, This situation ties the benefit Somewhat. the association is domiciled and the approval process is streamlined in many other in many is streamlined process and the approval is domiciled the association states. drive a lower cost. As opposed to needing to file the policy in all 50 states as is re all 50 states as is file the policy in to needing to As opposed cost. a lower drive where in the state group policy is filed a policies, insurance individual quired for Finally, group policies can also provide administrative efficiencies, which help to which efficiencies, administrative can also provide group policies Finally, PORTABLE BENEFITS IN THE 21ST CENTURY PAGE 18
- - - - 20
Joseph M. DiBella, Managing Director of Conner Strong & Buckelew, an insur an ofDirector Managing DiBella, M. Joseph & Buckelew, Strong Conner
20 DiBella, Joseph M. “Interview with Joseph M. DiBella.” Personal interview. 13 Mar. 2016. “Interview with Joseph M. 20 DiBella, Joseph M.
force. Hopefully a byproduct ofbyproduct a Hopefully areas may in other outlets creating insurance force. of driver is the biggest cost.” which be a stimulus to deal with medical coverage plans. The use ofplans. synch with the gig-econo health benefit plan pooling to large to help provide a much needed platform provide and would is long overdue my work new healthcare to the delivered priced and efficiently more reasonably of our economy and economic framework must be modernized to keep pace with must be modernized to keep of and economic framework our economy group health that govern happening, so too should the archaic laws the changes need to modify ERISA (the federal law that governs health and retirement plans) retirement and health governs that law federal (the ERISA modify to need that other aspects old. In the same way that is more than 40 years is a law which ance broker and benefits consultant, suggests that “there is an overwhelming overwhelming that “there is an suggests and benefits consultant, ance broker than individuals can find on the health care exchanges, the reduction in cost would cost the reduction in exchanges, on the health care can find than individuals ifoften be less than subsidy. for a tax a person qualifies the impact ofthe impact insurance access health can workers all since is limited restriction this rates lower offer may while a group plan Further, Act. Care Affordable through the to certain benefits, such as disability insurance (as an alternative to workers com workers to (as an alternative insurance such as disability benefits, to certain However, insurance. it cannot include health is limited in that its reach pensation), Although this model would work today to provide independent contractors access contractors access independent to provide today work this model would Although PORTABLE BENEFITS IN THE 21ST CENTURY PAGE 19
Half of all households don’t a retirement have and account, households near retirement average age have of only savings $14,500.
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Half of have all households don’t 21 plans have recently been enacted, recently plans have
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Secure Choice Choice Secure Plans Retirement Illinois has addressed an important element ofIllinois has addressed an important element in 2017 the state Starting this gap. The increase in retirement insecurity is driven in part by the fact that today, em today, fact that by the in part is driven insecurity retirement in The increase http://www.forbes.com/sites/laurashin/2015/04/09/the-retirement-crisis-why-68-of-americans-arent-saving-in- an-employer-sponsored-plan/#2749c6e019d8 Dec. 2014. Web. Dec. http://blog.transamerica.com/5-ways-part-time-employees-can-take-advantage-401k-plans Retirement Crisis: Why 68% Of Americans Aren’t Saving In An Employer-Sponsored Plan.” Forbes. “The Shin, Laura. Forbes Magazine, 9 Apr. 2015. Web. Dow, Olga. “5 Ways Part-Time Employees Can Take Advantage of 401(k) Plans.” Transamerica. The Aegon Group, 15 The Advantage of 401(k) Plans.” Transamerica. Dow, Olga. “5 Ways Part-Time Employees Can Take United States of America. Social Security Administration. Office of Retirement and Disability Policy. Social Security United States of America. Social Security Administration. Office of Retirement and Disability Policy. Bulletin. By Andrew G. Biggs and Glenn R. Springstead. 2nd ed. Vol. 68. N.p.: n.p., 2008.Alternate Measures of Re 2008.Alternate n.p., 68. N.p.: Biggs and Glenn R. Springstead. 2nd ed. Vol. Bulletin. By Andrew G. Web. Social Security Administration. placement Rates for Social Security Benefits and Retirement Income. https://www.ssa.gov/policy/docs/ssb/v68n2/v68n2p1.html 5 Type=3 Type=3 Department n.d. Web. of the Treasury, https://myra.gov/get-answers/ That Sponsor Employee Benefits Security Administration. “Interpretive Bulletin Relating to State Savings Programs United States Departmentor Facilitate Plans Covered by the Employee Retirement Income Security Act of 1974.” of 2015. Web. Government Publishing Office, 18 Nov. Labor. http://webapps.dol.gov/FederalRegister/HtmlDisplay.aspx?DocId=28540&AgencyId=8&Document ment. SHRM, 27 Jan. 2016. Web. Plans.aspx#sthash.aEODXHzZ.dpuf https://www.shrm.org/hrdisciplines/benefits/articles/pages/dol-Multiemployer 572&GAID=12&Session http://www.ilga.gov/legislation/BillStatus_pf.asp?DocNum=2758&DocTypeID=SB&LegID=78 ID=85&GA=98 “Retirement Accounts: Frequently Asked Questions.” My Retirement Account. U.S. Department of the Treasury. U.S. Economic Opportunity Institute. The Washington Small Business Retirement Marketplace. Issue brief. Economic Op Washington Small Business Retirement Marketplace. Economic Opportunity The Institute. portunity Institute, n.d. Web. http://www.eoionline.org/wp/wp-content/uploads/Marketplace-basic-brief-Feb15.pdf Manage Miller, Stephen. “DOL Proposes Easing Access to Multiple Employer 401(k)s.” Society for Human Resource General/other references: A NUMBER OF STATE AND FEDERAL RETIREMENT FEDERAL AND STATE OF NUMBER A 23 22 21 than 25 employees must enroll their workers into Secure Choice, unless they already already unless they Choice, into Secure must enroll their workers than 25 employees payroll deduction by that access to a plan that operates a plan. “The data show offer will automatically enroll workers without a retirement account into a portable, state- without a retirement account into a portable, enroll workers will automatically All firms with more Choice Pension. retirement plan called the Secure run individual counts (IRAs), very few do. few very counts (IRAs), employer match, about halfby their employer of these plans are not offered part-time workers retirement ac can contribute to individual and although these workers employers, plans. In contrast to defined-benefit plans, 401(k)-like plans require that workers workers plans require that 401(k)-like In contrast to defined-benefit plans, plans. a modest receive While these plans may the risk ofassume their savings. outliving ployers rarely offer defined benefit pensions – which provide a fixed retirement fixed retirement provide a – which defined benefit pensions offer rarely ployers 401(k)-like offer benefit, instead opting to employment as an benefit in perpetuity— maintain a comfortable standard ofmaintain a comfortable in retirement. living only $14,500. Social Security is not intended to be the sole source ofsource sole the be to intended not is Security Social in retirement $14,500. only pre-retire earner’s about 40 percent of replace only come as payments the average need 70 percent of workers to while earnings their pre-retirement ment income, ment and reduce dependence on Social Security. on Social ment and reduce dependence of savings average have age and households near retirement a retirement account, with many more in development, in an effort to increase private savings for retire savings private to increase an effort in more in development, with many PORTABLE BENEFITS IN THE 21ST CENTURY PAGE 20
the Secure Choice the Secure program. Savings An importantAn aspect plan of this accounts is that workers follow A job. job to from person with two the jobs can give same account a number for deduction payroll each job. at Selfemployed opt may workers in in and enroll ------24
One of the offerings in the marketplaces is the newly launched federal IRA plan,federal IRA launched One of is the newly in the marketplaces the offerings Secure Choice plans of various kinds have been enacted in California, Oregon, and Oregon, been enacted in California, Choice plans ofSecure kinds have various However, due to ERISA restrictions employers cannot contribute to a worker’s plan. a worker’s cannot contribute to restrictions employers due to ERISA However, An important aspect of this plan is that accounts follow workers from job to job. An em from job to job. ofAn important aspect workers that accounts follow this plan is By default, 3% of an Illinois worker’s wages will be deposited into their pension via be deposited into will wages default, 3% ofBy an Illinois worker’s Barro, Josh. “Illinois Introduces Automatic Retirement Savings Program, a First for the Nation.” The New York Times. New York Barro, Josh. “Illinois Introduces Automatic Retirement Savings Program, a First for the Nation.” The gram-a-first-for-the-nation.html?_r=0 The New York Times, 05 Jan. 2015. Web. New York The http://www.nytimes.com/2015/01/06/upshot/illinois-introduces-automatic-retirement-savings-pro HOW CAN THIS MODEL BE APPLIED TO PORTABLE BENEFITS? PORTABLE TO APPLIED BE MODEL THIS CAN HOW 24 Is this model portable pro-rated? model portable Is this role is to deduct con plan, their only companies cannot contribute to a worker’s No, from job to job. from job to job. Is this model portable? model portable? Is this workers portable and follow Choice pension accounts are completely Secure Yes, tions are capped at $15,000. plan is available to any individual of any employment status. But unlike 401(k) or pen But unlike of status. individual employment to any any plan is available contribu and the lifetime myRA, cannot contribute to an individual’s employers sions, myRA, which has no fee or minimum starting balance and is backed by Treasury bonds. bonds. Treasury by backed is and balance starting minimum or fee no has which myRA, ofmyRA will not lose any The their contributions. also guarantees that workers MyRA ably priced plans in these state marketplaces. priced ably chusetts have created marketplaces to voluntarily connect employers with a small set of with employers connect voluntarily to marketplaces created chusetts have vetted, reason can access workers Self-employed for their employees. plans affordable under 50 years old, per IRS regulations. under 50 years and Massa states including Washington Other and proposed in 12 other states. Illinois, They can only deduct and forward an employee’s payroll deductions to the plan. Another deductions to the plan. payroll an employee’s forward deduct and can only They worker for a year per $5,500 exceed cannot significant limitation is that contributions job. Self-employed workers may opt in and enroll in the Secure Choice Savings program. Choice Savings enroll in the Secure opt in and may workers Self-employed job. ployee simply provides a new employer with their plan information to make the change. the change. to make their plan information with employer a new provides simply ployee each deduction at a payroll account number for the same jobs can give two person with A competitive. competitive. level (3% or more), and can opt out if and can opt out and accounts are pooled together All wish. or more), they (3% level is performance and investment low are that fees ensuring managed, professionally payroll deduction. Individuals can choose their investment plan and their contribution plan and can choose their investment Individuals deduction. payroll enormously changes participation from basically zero to over 50 percent,” says Illi says 50 percent,” to over zero basically from participation changes enormously lead sponsor. proposal’s the was who Biss, Daniel Senator nois state PORTABLE BENEFITS IN THE 21ST CENTURY PAGE 21 - - - - - A better option would be a pooled multiemployer plan modeled after be a pooled multiemployer would better option A However, Secure Choice has one major flaw: employers cannot contribute employers Choice has one major flaw: Secure However,
ADVANTAGES AND LIMITATIONS OF SECURE CHOICE SECURE OF LIMITATIONS AND ADVANTAGES ployment climate. ployment to employees. While the aforementioned offerings are not perfect, they are they are not perfect, offerings While the aforementioned to employees. and em economic volatile in an increasingly workers for an improvement efit accounts, and have no cap on lifetime contributions. However, there However, contributions. no cap on lifetime and have efit accounts, applicable to the structure as the plans are only need to be changes would Taft-Hartley plans, which allow employers to contribute to workers’ ben workers’ to contribute to employers which allow plans, Taft-Hartley Without those contributions, and combined with the $5,500 cap on contri $5,500 and combined with the those contributions, Without the money will not be able to save workers law, federal butions required by necessary a secure retirement through this program alone. for to a worker’s plan. Successful retirement systems for the middle class have middle class have the for retirement systems plan. Successful to a worker’s both. preferably contribution, or government included an employer always earned money under the plan. earned money a necessary role in a portable benefits system by acting as a fiduciary agent,by acting as a fiduciary system a necessary role in a portable benefits will not lose their hard- workers that by guaranteeing and setting a high bar to enroll. Independent workers are able to access the retirement plans of are able to access the retirement to enroll. Independent workers is also performing government opting in. The Choice by under Secure fered workers to opt-out. This is critical because if workers have to proactively proactively to critical because if to opt-out. This is have workers workers less likely are drastically they hire, opt-in rather than being enrolled upon will have a modest private retirement fund in addition to Social Security. Security. retirement fund in addition to Social private a modest will have for allowance participation, with an it includes a mandate for Importantly, Secure Choice is an excellent example of example an excellent is Choice Secure benefitsportable state-initiated a that millions of access to retirement, ensuring program. It expands people W2 employees. W2 employees. ment savings accounts. Self-employed workers may opt in and enroll in may workers Self-employed accounts. ment savings traditional for opt-out provision to the program’s the program as opposed Yes, Secure Choice is available to all workers, including independent including to all workers, Choice is available Secure Yes, in retire to increase access to and participation and is designed workers, Does this model provide more universal access to benefits? to access universal more model provide this Does they contribute at each job, up to the $5,500 per year cap. The worker can can worker The cap. per year the $5,500 up to at each job, contribute they altogether. also opt out tributions from the employee’s paycheck and forward the funds to the to funds the forward and paycheck employee’s the from tributions the amount choose workers multiple jobs, plan. If have investment they PORTABLE BENEFITS IN THE 21ST CENTURY PAGE 22 - - - Yes Yes No Yes Yes No No Yes Universal Pro-rated Yes Yes Americans made a collective decision to engender an decision to engender made a collective Americans Yes Somewhat (depends on group) Yes Portable Somewhat (within industry) Somewhat (within industry)
The most applicable models arise when considering several of several considering when arise models above applicable most the concepts The Taft-Hartley plans are an interesting mechanism to deliver benefits to workers workers benefits to plans are an interesting mechanism to deliver Taft-Hartley The models reviewed above can serve as a blueprint, and provide a number of and provide as a blueprint, can serve above The models reviewed
AFTER THE GREAT DEPRESSION, DEPRESSION, GREAT THE AFTER could expand the program to provide other benefits. As workers would now be em would now workers As other benefits. program to provide the could expand in combination. As the Black Car Fund makes drivers employees of employees the fund simply drivers makes the Black Car Fund As in combination. Plus” model compensation, a “Black Car Fund the purposes offor workers providing significant contributions to the fund. of employers. The Ghent system is highly relevant to a future U.S. portable benefits U.S. to a future relevant is highly system Ghent The of employers. made the government and/or applied in employers be similarly plan, but it could only Group insurance and Secure Choice are useful models to provide some benefits to Choice are useful models to provide and Secure Group insurance are limited in their scope and the contribution but they independent contractors, who work for multiple employers, but it is only applicable to unionized employees. applicable to unionized employees. but it is only multiple employers, for work who *Not available to American workers to *Not available SecureChoice System* Ghent Insurance Group Fund Black Car Plans Multiemployer deliver a portable, pro-rated, and universal system of American system Benefits to Portable pro-rated, and universal a portable, deliver modify mechanisms, to create new either have we a system, create such To workers. of or combine pieces models, the existing them. tools we can utilize as we define a system of Portable Benefits. However, as summa as However, ofsystem define a Portable Benefits. utilize as we can tools we independently can explored of none have we the models below, rized in the table benefit from 20th century methods today. centurybenefit from 20th methods today. ers. In the 21st century, it is unfortunately no longer enough. We must implement a must We enough. no longer it is unfortunately 21st century, In the ers. the millions ofsupports that system Benefits can no longer who Americans Portable unprecedented shared safety net that would carry us through generations of carry us through generations net that would safety unprecedented shared work Conclusion PORTABLE BENEFITS IN THE 21ST CENTURY PAGE 23 - - - - While each of the po tools to inform interesting sets forth models the foregoing We can also look for ways to provide benefits for independent workers without workers for independent benefits to provide ways look for can also We economy and society. and society. economy frameworks. Although there are no easy answers, evolving our social safety net is an our social safety evolving answers, Although there are no easy frameworks. of the future prosperity ofundertaking worthy as it will help to ensure the effort our tential structure of a Portable Benefits system, a rigorous legal and policy analysis legal and policy analysis tential structure of a rigorous system, Benefits a Portable in workers net can support a shared safety way to determine the best must follow the best of new then must borrow these models and innovate We the 21st century. misclassification concerns related to providing benefits to independent contractors. independent contractors. benefits to concerns related to providing misclassification This could be accomplished by a model similar to Black Car fund, or a new mecha new a or fund, Car Black to similar model by a accomplished be could This ease the employee would which facilitate or require contribution, nism that would ployed or 1099 workers to traditional employee status. However, then we would need would then we However, status. traditional employee to or 1099 workers ployed to contribute to the cost of companies for another mechanism for to provide benefits. requiring them to be traditional W2 employees. The Secure Choice and group insur Choice and group Secure The W2 employees. them to be traditional requiring of conversion non-traditional, self-em require large-scale ance models wouldn’t become applicable, such as Taft Hartley plans or group health insurance plans. plans. insurance or group health plans Hartley as Taft such become applicable, ployees of “Black Car Fund Plus,” more traditional employment-based models could models more traditional employment-based of Plus,” ployees “Black Car Fund PORTABLE BENEFITS IN THE 21ST CENTURY PAGE 24
- - - - - (New Press, Press, (New
SHELBY CLARKSHELBY aims to support sharing economy workers left left workers sharing economy aims to support vulnerable from the lack of a traditional employ Chief Executive Office, Peers Chief Office, Executive has dedicated a social entrepreneur who is Shelby p2p market and empowering his career to building which of the CEO is currently He places. peers.org, DAVID ROLF DAVID David Rolf President ofVice David is an International SEIU the President ofand interna SEIU 775, known and is on labor leader and thinker as an innovative tionally has led some of He the future of and labor. the work since the 1930s in organizing efforts worker largest President, SEIU 775President, Fight for Fifteen: The Right Wage for a Working America Working for a Wage The Right Fifteen: Fight for
Shelby holds an MBA from Harvard Business School, and a BS in Biomedical and a BS in Biomedical Business School, from Harvard holds an MBA Shelby
2016). Rolf lives in Seattle, WA. Rolf in Seattle, lives 2016). campaigns to win a $15 minimum wage in SeaTac and Seattle. Rolf and Seattle. is also the author of in SeaTac campaigns to win a $15 minimum wage book the forthcoming cluding the successful organization of 74,000 home care aides in Los Angeles and the Angeles organization of home care aides in Los cluding the successful 74,000 Engineering from Northwestern University, where he attending on a swimming he attending on a where University, Engineering from Northwestern scholarship. economy. Shelby is intrigued by the power of impact the the power positively to connecting people online intrigued by is Shelby Collabora evolving and growing that the rapidly strongly world, and believes offline in our society and force positive has the potential to be an incredibly Economy tive world’s first peer-to-peer carsharing marketplace, which now operates in over 2,500 2,500 over operates in which now peer-to-peer carsharing marketplace, first world’s Kiva.org. at p2p microfinance lending platform employee an early was He US cities. ment infrastructure. Previously, Shelby was the founder and CEO of RelayRides, the and CEO of the founder was Shelby RelayRides, Previously, ment infrastructure. About About Authors the PORTABLE BENEFITS IN THE 21ST CENTURY PAGE 25 - - - Born and raised in Indiana, Watterson Bry Indiana, Watterson Born and raised in CORRIE WATTERSON BRYANT CORRIE Senior Researcher, SEIU 775 Senior Researcher, writer, analyst, policy a is Bryant Watterson Corrie collab Bryant 775.and researcher at SEIU Watterson Rolf released book, orated with David on the newly Workinga for Wage The Right for Fifteen: The Fight America. nagerie ofnagerie animals in Seattle. ant completed undergraduate studies at the University of studies at the University ant completed undergraduate and earned a Master Chicago and me family with her of ofWashington. She lives from the University Affairs Public PORTABLE BENEFITS IN THE 21ST CENTURY PAGE 26 - City and an international network of partners. For more information, visit more information, ofCity and an international network For partners. www.aspeninstitute.org. issues. The Institute is based in Washington, DC; Aspen, Colorado; and on Aspen, Colorado; DC; Washington, based in The Institute is issues. York New in has offices also It Shore. Eastern Maryland’s on River Wye the based in Washington, DC. Its mission is to foster leadership based on en Its mission is to foster DC. based in Washington, critical dealing with for venue a nonpartisan to provide and values during The Aspen Institute is an educational and policy studies organization Institute is an educational and policy Aspen The