Joseph Murgida

ATR Op-ed: Antitrust Proposal Would Empower Bureaucrats and Greedy Trial Lawyers

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Posted by Joseph Murgida on Tuesday, June 1st, 2021, 4:23 PM PERMALINK

In an op-ed published in The Hill this week, ATR Federal Affairs Manager Tom Hebert cautioned against passing Senator Klobuchar’s “Competition and Antitrust Law Enforcement Reform Act.” 

This legislation would invert the burden of proof for certain monopolization cases, upending decades of antitrust enforcement precedent and stacking the deck in favor of antitrust enforcers and trial lawyers. Instead of the burden being on the plaintiff to prove that business conduct is anti-competitive, this bill puts the burden of proof on companies above a certain market cap to prove that their conduct would not hurt competition. 

Burden-shifting would throttle mergers and acquisitions and discourage larger companies from acquiring startups, a key driver of economic growth and innovation. Hebert explains that: 

In practice, this would effectively ban certain companies from engaging in mergers and acquisitions, a routine business transaction that drives economic growth and innovation. This prohibition would likely lead to fewer startups, half of which say their most realistic long-term goal is to be acquired by a larger firm. Without the potential for acquisition, entrepreneurs would have a lot less incentive to take on the risk that comes with starting a new company.

This proposal would hinder competition, as companies under the threat of predatory litigation would be more likely to pull punches when competing with rival firms. This would lead to higher prices and less choices for American shoppers. 

Additionally, Hebert points out that the only people that gain from this proposal are government antitrust enforcers and trial lawyers. The bill would give the Biden FTC and DOJ the unfettered ability to declare routine business activity illegal for political reasons. Instead of a neutral application of antitrust law, the left would usher in a new wave of politicized antitrust enforcement.  

Additionally, private trial lawyers would also see even more incentives than they already do to accuse companies of anti-competitive behavior in court. Hebert points out that:

Inverting the burden of proof would also create a cottage industry for greedy trial lawyers looking to profit off of gaming the American legal system. The potential damages from these suits can be enormous, and plaintiffs can accuse companies of anti-competitive behavior in court regardless of innocence or guilt. Even companies who have done nothing wrong would be forced to pay large sums to avoid an adverse ruling in court.

Hebert urges that Republicans maintain a “light-touch antitrust approach” that keeps the current competitive business environment and consumer welfare standard in place. 

Click here to read the full op-ed.

Photo Credit: Gage Skidmore from Surprise, AZ, United States of America, CC BY-SA 2.0 <https://creativecommons.org/licenses/by-sa/2.0>, via Wikimedia Commons


Vox Supports ABC Test Despite Firing 200 Freelancers Before It Became Law

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Posted by Joseph Murgida on Friday, May 21st, 2021, 1:05 PM PERMALINK

Vox Media recently published an article advocating for the ABC test to ensure “fairer conditions” for gig workers that are classified as independent contractors. In its so-called “analysis,” Vox ignores that the ABC test remains broadly unpopular among California’s independent contractors, and that a national ABC test would threaten the jobs of more than 59 million Americans that engage in freelance work.

Freelancers offer vibrancy to the American economy, and the ability to work as an independent contractor provides Americans with the flexibility that does not come with a traditional employment relationship. Think of a single mom earning a living by selling homemade goods on Etsy, or an Uber or Lyft driver using extra cash he earns to start a business of his own. These are real Americans chasing their dreams without the need to have a boss.

The ABC test under AB5 forced Californian companies to reclassify freelancers as employees, effectively eliminating the possibility of a freelancer classification. Under the ABC test, businesses must prove that a contractor is doing duties “outside the usual course of work of the hiring entity” and that “the worker customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed.” This significantly limits the ability of businesses to retain contractors who may operate within the scope of work sometimes performed by employees in similar circumstances. It’s an unnecessary distinction that prohibits most businesses from working with independent contractors.

The ABC test forced the mass reclassification of California’s independent contractors, forcing countless residents to flee the state to pay their bills and chase their dreams. More than 90 percent of California independent contractors opposed the ABC test reclassification before it was signed into law. ATR has complied 655 personal testimonials from independent contractors who details the ways that AB5 has hurt them, which you can view here.

In fact, the ABC test was so unpopular that Californian voters passed Proposition 22 by over a 17-point margin which allowed ride-sharing and delivery drivers to continue working as independent contractors. Recent survey data from Californian drivers indicates their broad support for Proposition 22. 3 out 4 drivers polled said that they believe that people from other states would benefit if Proposition 22 were passed there and 76% of drivers polled said that Proposition 22 personally benefits them. In comparison to the ABC test, 84% of drivers believe that the Proposition 22 was a superior solution to reclassifying independent contractors as employees. Instead of acknowledging this data, Vox made broad-sweeping allegations regarding the worries and concerns of workers regarding Proposition 22 without directly engaging any of the data that poked holes in their assertions.

Vox also ignored the devastating impact of a national ABC test on American small businesses. 73% of small business owners polled feel that working with freelancers was critical to surviving the COVID-19 pandemic. In addition, 45% of small businesses felt that the PRO Act, a federal law that includes nationalizing the “ABC” test, would force them to close their doors forever.

Ironically, the ABC test crushed some former Vox Media workers. About 200 freelancers from Vox Media in California lost their jobs in the month prior to AB5 going into effect. A cruel irony exists when an organization publishes an article that frames the ABC Standard as a “huge victory for workers” despite firing their workers as a direct result of that law.

The ABC test was such a disaster for California that voters chose to exempt rideshare drivers from its onerous requirements. Similarly, a national ABC test would be a disaster for small businesses and freelancers alike. As our economy attempts to recover from the COVID-19 pandemic, the last thing we need is to limit opportunities for American workers to earn a living.

Photo Credit: Nick Youngson CC BY-SA 3.0 Pix4free.org

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Labor Secretary Walsh’s Threat to Independent Contractors Will Harm Working Families and Small Businesses

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Posted by Joseph Murgida on Wednesday, May 12th, 2021, 12:46 PM PERMALINK

The COVID-19 Pandemic has taken a sledgehammer to the American economy. This past Friday, the Bureau of Labor Statistics reported that last month only 266,000 jobs were created, falling over 86% below some estimations of a 2,000,000-plus increase in job growth.

The last thing that the government should do is threaten work opportunities for millions of American working families. But that’s exactly what Biden’s Labor Secretary Marty Walsh is doing with his attempts to force Americans into an employer-employee relationship with a boss. Walsh disingenuously hid his aggressive support of forced worker reclassification during his Senate confirmation hearing. 

Flexible work arrangements are vital for hard working households which must accommodate school schedules and the caretaking of family members. Americans are increasingly finding such opportunities through freelance work. Particularly after the pandemic 58% of individuals who started remote work as freelancers are thinking about continuing that career. Biden’s DOL wants to dictate this choice to Americans by eliminating the freedom to work as a freelancer or independent contractor.

The Biden administration wants to impose nationwide the California “ABC” test designed to force companies to hire freelancers under a W-2 classification. Businesses refused to hire and chose to fire Californian freelancers. Independent contractors realize the threat of this law, as over 60% of independent contractors anticipate losing 76% or more of their business if they had to be hired as employees instead.

Any theory predicting a complete migration of work from freelance to employee status has already proven to be mythical. Instead of a migration, we will see an elimination of work opportunities. We cannot afford to rip the opportunities of the unemployed away when they need a flexible source of income.

As small businesses with only a couple of employees frequently work with independent contractors, limiting this classification will destroy small businesses. To add to any personal financial struggles, 74% of small business owners have taken on debt to stay afloat during the pandemic.

That’s why small businesses fear the prospect of a national ABC test. 45% of small businesses say they will be put out of business without the ability to work with independent contractors. They also recognize the necessity of independent contractors in this moment, as 73% of small business owners believe that freelancers are necessary for surviving the COVID-19 economic crisis.

A tragic number of small businesses have closed during the pandemic. Owners should not have to dismantle their business to meet the whims of the labor-union-controlled DOL chief.

Nationalizing the ABC Standard will be a death blow to a fragile economy.

Photo Credit: U.S. Department of the Interior

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