Labor Laws and the Future of Work
In the future of work, if technology delivers on its promises, we will see greater attention given to labor laws associated with workforce structure and data governance, and less attention given to anti-discrimination and health coverage related laws as these will become non-issues and minimum expectations respectively.
I worked with a hotel that outsourced their housekeepers from a staffing firm and hired two different management companies to manage separately their rooms division from their food and beverage outlets. I advised a start up who had both permanent employees and 1099 workers. A colleague shared with me that she contracted stay at home mothers from the opposite side of the country to remotely perform task specific work for her business.
Many companies already employ contingent workers and alternative organizational structures. While we may not consider them part of our organization — freelancers, contract workers, staffing firms — we already employ tomorrow’s workforce today. To make workforces even more diverse, we have seen reports of older generations remaining in the workforce longer, former workers being brought back on a consulting basis as ‘knowledge experts’ and mentors, and an increase in the use of interns in specific industries. Well, we will only see workforces become even more dynamic with an increase in people who want to be their own bosses and better and better technologies that allow these individuals to offer their expertise remotely. This future is what many refer to as the ‘gig economy’ and the ‘future of work’. As employers, our arrangements with these workers have always been transactional, not strategic. This means there is opportunity for disruption and for creating competitive advantage. Companies that develop a differentiated strategy for managing this workforce will distinguish themselves from their competition.
Labor laws that affect this area of business are around how employees are categorized, the definition of co-employment, right to work, and contractual agreements. I believe these laws will be amended and expanded to fit the needs of this dynamic workforce. To navigate and compete in this future of work, companies will need strategic frameworks like ‘minimum viable policies’, decision making agreements and team charters, coupled with smart contracts where applicable. Yes, it is possible to retain workers who want the autonomy that comes with being their own boss. Many large companies created innovation labs within their organizations to compete with the disruption caused by startups. Portfolio companies have been known to spin off brands in order for the brand to realize growth. In most cases, these companies still have some control over the direction of their teams, and they reap the benefits. This is not a new concept, yet companies have not realized how to use this model to compete in the future of work. Leaders can create teams with similar mandates, challenges, autonomy and resources. In a world where innovation is no longer an initiative, but a core business strategy, not only can leaders build environments that allow for individuals to create and innovate, but they must if they are to stay relevant.
Today, large companies collect immense amounts of data from finance to customers to human resources, while small companies may only collect finance data or basic employee data. Slowly, however, more and more companies, large and small, are realizing the benefits of data. Insights gained from data empower leaders to create more value for all stakeholders: customers, employees, and shareholders.
Even still, so much more is possible with HR and people data that we have yet to realize. We currently only collect employee data — EEO demographics, skill assessments, credit checks, background checks, medical checks, survey data — to ensure we create safe and healthy work environments, do not discriminate in our workplace practices and better understand employee needs. Except these are now minimum expectations of all employers. In addition, they only address the bottom half of Maslow’s Hierarchy. People Analytics allows us to address the top half of the hierarchy. Yet, not enough companies today are performing People Analytics. We are not doing enough with our HR and people data. For one, we could do much more with personality data than simply administering assessments. Today, most companies are afraid to use personality data for business purposes for fear it will result in discriminatory practices and lawsuits. In time, however, with technology enabled controls to process and secure data, we will be able to realize the benefits of personality data for not only business purposes but also the individual’s personal and professional development.
Labor laws that affect this area of business are around privacy and right to know, information collection and retention, and whistle blower and anti-retaliation protections. We may even see the creation of whole new labor laws that will affect data governance. To stay ahead of the curve, be sure your technology, practices and policies ensure high data quality, strict security protocols, and individual-owned privacy controls. Put workforce data and insights back in to the hands of your workforce. Show them what they can do with their data and let them decide how it is used with opt in/out capabilities. In addition, reinforce your whistle blower and anti-retaliation protections. Provide a hotline for individuals who feel their data has been used for unprofessional or unethical purposes. In the event of a claim, hire an unbiased third party to investigate reports of the misuse of data. These practices will build trust with your workforce resulting in greater buy-in to use their data for business purposes.
This is not to say other labor laws are not important or that they will become irrelevant. Only that I believe we will not see much movement in the changing of these laws. Two examples where one might think they can expect changes are around anti-discrimination laws and health coverage related laws. Except, with respect to business, I don’t think this is the case.
While there is a lot of talk right now around the impact of technology on bias and discrimination, I do not believe we will see a lot of movement in anti-discrimination laws. This is because technology and data will realize ever more decreases in bias and discrimination in recruitment and management practices and increases in workforce diversity. In addition, leaders that understand the importance of a dynamic workforce have likely already accepted the importance of a diverse workforce.
Health coverage related laws will also be a non-issue, for one of two reasons. One, as more and more workers leave companies and turn to freelance, these companies will have a more difficult time attracting new talent internally. To compete for new internal talent, health insurance and other benefits will become minimum requirements for individuals to join organizations, and therefore it becomes a non-issue. Two, under COBRA, the law already exists for workers that decide to leave their company to continue their coverage uninterrupted. Interestingly though, most workers don’t continue coverage under COBRA because of its high cost. This means that as people leave organizations, they also leave their company health insurance plans. This decrease in company insurance plan membership is a financial loss to insurance companies. To make money on these individuals, then, insurance companies will need to offer more approachable single and family payer insurance plans for freelancers. Health coverage related labor laws — to tell businesses how to behave — will not change.
What to do
In this future, we will see the usual departments fall away and new structures take hold. If the current conversations around people, technology and data are any indication, then it’s not unlikely the future C-Suite will consist of a Chief Human Resources Officer and Chief Technology Officer reporting in to a Chief Information Officer. Finance and Marketing will sit under the CIO as they will be data and information driven, and the entire workforce, including contingent workers, will report in to Human Resources.
To be ready for tomorrow, hire an HR consultant today. Make sure they have the expertise to guide your organization through the complexities of labor law that will shape this future of work. Then work with them to redesign your organizational structure to compete in this future.
Finally, lobby your representatives in government. You can wait for changes in labor law to affect you, or you can affect changes in labor law.