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Internal Documents Suggest Pattern of Undue Corporate Influence and Secrecy at Texas Workforce Commission

Documents reveal how lobbyists representing the interests of digital platform Handy coordinated with Commissioner Ruth Hughs on rule that would harm Texas workers. Press conference to be held on Tuesday with Rep. Romero and allied organizations to denounce corporate influence and call for rule to be withdrawn.

AUSTIN, TX — Documents obtained by Workers Defense suggest a pattern of undue corporate influence, secrecy and potentially unlawful lobbying at the Texas Workforce Commission surrounding the development of a proposed rule that would harm Texas workers. The documents, released through a public information request in March, reveal extensive coordination over more than a year between TWC Commissioner Ruth Hughs and her staff and lobbyists representing the interests of digital marketplace Handy.

The communications detailed in the documents, which have been made available online, relate to the creation of rule §815.134 that would encourage companies to classify workers hired through digital platforms as independent contractors by stripping the workers of unemployment insurance. Independent contractors, unlike employees, are not legally entitled to minimum wage and overtime pay, workers’ compensation, and unemployment benefits.

Coordination between lobbyists and Commissioner Hughs and her office, beginning in December 2017 and lasting through 2018, took place despite TWC’s claims that the Commission does not use outside sources when developing rules. According to the Texas Observer in an article on Jan. 31, 2019: “Asked about potential industry influence in the promotion or drafting of the rule, Communications Director Lisa Givens said, ‘Neither staff nor the Commissioners use outside sources when drafting proposed rules.’”

Citing the documents, the The New York Times and Texas Observer showed detailed information sharing between lobbyists and Commissioner Hughs and her office about the content, legal basis, and precedents that would inform the proposed rule. The lobbyists provided the TWC with language that would eventually be used to draft the proposed rule.

According to the New York Times’ Noam Scheiber: “Tusk Ventures appears to have been the primary author of the Texas proposal. Large portions of the draft released by the Workforce Commission mirrored a proposal that the lobbyist forwarded to the agency one year earlier.”

Additionally, according to Texas Ethics Commission records, the two lobbyists named in the emails to Commissioner Hughs and her office—Jerry Valdez and Mackenna Weymeyer—had not listed Tusk Strategies or Handy as lobbying clients in 2017 and 2018. The two registered as lobbyists for Tusk Strategies in 2019.

In response, Workers Defense and Texas AFL-CIO have called on the TWC to immediately withdraw the rule. A press conference will be held on Tuesday, March 26 at 1:00 p.m. CT with State Representative Ramón Romero at the Texas Workforce Commission Annex, 1411 Brazos St. in Austin.

“This rule is now under a cloud of corruption and the TWC has a lot of explaining to do,” said José Garza, Executive Director of Workers Defense. “The TWC needs to withdraw the rule, come clean, and be honest with Texans who depend on the agency. At this point, there is no other path forward.”

“This fiasco shows how far a new generation of high-tech corporations employing old-fashioned low-road tactics is willing to go to rig the rules of the digital economy,” Texas AFL-CIO President Rick Levy said. “The Times and Texas Observer stories expose a sneak attack and cover-up that undermines working families and must be stopped.”

“We call on the Commission to abandon this Trojan horse of a proposed rule immediately,” Levy continued. “We also call for an independent investigation of how corporations conspired with the Governor’s administration to deny workers overtime pay, health coverage, Social Security and Medicare contributions, Unemployment Insurance, Workers’ Compensation and many other benefits that afford working people a fair shot at better lives.”

Many questions remain unanswered. In response to Workers Defense’s public information request, the Office of Governor Greg Abbott wrote in a communication to Texas Attorney General’s office that “some of the information submitted to your office by TWC is excepted from required public disclosure under the PIA,” suggesting that there may have been communications between the TWC and the Office of the Governor surrounding the proposed rule.

The rule is part of a larger, national effort by companies like Handy and its lobbyists at Tusk Strategies to misclassify workers who find jobs through digital platforms as independent contractors. According to the National Employment Law Project, carve-out legislation similar to the Texas rule change has been introduced in Alabama, Arizona, Florida, California, Colorado, Georgia, Indiana, Iowa, Kentucky, Missouri, North Carolina, Tennessee, Utah, and West Virginia. Most of the bills were drafted by Handy or lobbyists representing Handy.

This trend is detailed in a report released today by NELP entitled “Rights at Risk: Gig Companies’ Campaign to Upend Employment as We Know It.”

“What’s happening in Texas should be a wake up call for the whole country,” said Maya Pinto, senior researcher and policy analyst with the National Employment Law Project. “State by state, gig platform companies are using their money and influence to rig the rules of employment against the workers who make their business success possible. The changes being pushed by these gig lobbyists are bad for workers. And there’s a real risk that this erosion of labor rights could bleed into other sectors of the economy. If companies can legally get away with paying you less and eliminating your benefits simply by calling you an independent contractor, you can be certain they’re going to take advantage of that.”

About rule §815.134

The TWC first proposed rule §815.134 in a 2-1 vote on December 21, 2018, the Friday before Christmas, with only vague rationale for bringing the rule forward and no explanation of who sought the rule.

The rule drew strong opposition from groups including Workers Defense, Texas AFL-CIO, Equal Justice Center, Central South Carpenters Regional Council, and Texas Building Trades Council, who called on the TWC to reveal how the rule came to be. State Representative Ramón Romero also voiced his opposition to the rule, asking in a press conference why the Commission was “circumventing the deliberative process of the 150 members of the Texas House and the 31 Senators — people who Texans elected to represent them.”

In order to better understand the facts that caused the TWC to put this rule forward, Workers Defense in January 2019 submitted a public information request to the TWC requesting documents and communication by Commissioner Hughs and her staff related to the proposed rule change. The documents were provided to Workers Defense on March 7, 2019.