NASHVILLE - The Tennessee Senate approved legislation Monday that declares workers promoted by companies such as TaskRabbit, which run online "marketplace platforms" connecting customers with handymen and other service providers, independent contractors and not employees, thus legally exempting the firms from a number of legal requirements.
Senators voted 25-3 for the legislation, which was sponsored by Sen. Bo Watson, R-Hixson.
"Tennessee has continued to be a leader within the business sector," Watson told colleagues. "This bill continues that effort, keeping our laws up to date with the incredible growth of the gigabyte economy."
Watson said current laws "were developed decades ago and they don't meet the reality of how the workforce now operates and is changing." The bill, he added, is intended to bring "clarity."
"We are living in an age that in future generations will be looked back on and seen as transformational" for technology in much the way the industrial age was seen in terms of mechanical advancements, Watson said.
But Senate Minority Leader Lee Harris, D-Memphis, and Senate Democratic Caucus Chairman Jeff Yarbro were skeptical.
Harris said if the workers are deemed independent contractors, then companies running marketplace platforms are not legally liable "for what the independent contractor may do."
He cited examples including a maid service, saying someone "may rob or commit some criminal act in that home," but the marketplace platform could not be sued. Moreover, Harris argued, traditional businesses facing online competition could be prompted to declare their employees as independent contractors.
Watson said the platforms conduct criminal background checks and also examine whether workers are appropriately licensed or certified.
Political newsletter The Tennessee Journal reported Gov. Bill Haslam's administration is opposed to the legislation. Labor and Workforce Development Commissioner Burns Phillips warned the Senate Commerce and Labor Committee it could undo protections for employees, including minimum wage requirements, health insurance, unemployment insurance and compensation for injured workers.
It could also spur traditional companies to migrate online and make their current workers independent contractors in order to compete, The Journal cited Phillips as saying.
Yarbro said Monday the bill has no requirement the companies conduct background checks. He noted that is unlike the law Watson sponsored several years ago that enabled Uber and Lyft ride-hailing services to legally operate statewide.
Watson said he's not sure every plumbing company or contractor today requires background checks on their workers. He likened the marketplace platforms to businesses advertising in newspapers. Newspapers don't check backgrounds of advertisers, he argued.
"We're just really applying a practice that's been common for decades and making it applicable to today's technology," Watson said.
Yarbro disagreed, saying newspapers "never paid the independent contractors themselves."
In presenting the bill, Watson cited several companies were interested in the legislation, including Takl, a Brentwood, Tenn.-based tech startup. Watson said the company was "neutral" on the bill.
Senate Commerce Committee Chairman Jack Johnson, R-Franklin, is an executive of Takl. Johnson, who did not participate in the debate, declared Senate Rule 13, which puts the public on notice that he has an interest in an issue.
According to the legislative website, Johnson is a bill cosponsor.
The House companion bill remains in committee.
Contact Andy Sher at [email protected] or 615-255-0550. Follow him on Twitter @AndySher1.