The Trump administration made it easier for companies to classify workers as independent contractors, a victory for gig-economy companies like food delivery and ride-sharing services, and a fight against a California law to do the opposite.
The Department of Labor in a final line released Wednesday would make it more difficult for a gig employee, such as an Uber or DoorDash driver, to be counted as an employee under federal law. That means those employees would not be covered by federal minimum wage and overtime laws, and they could be responsible for paying the employer’s share of Social Security taxes.
The rule won’t go into effect until March 8, after President-elect Joe Biden was inaugurated on January 20. The Biden administration could try to delay implementation of the rule, issue new enforcement guidelines, or write a new version of the rule. . Biden’s administration could also choose not to defend the ordinance if it is challenged in court. A spokeswoman for Mr. Biden declined to comment.
Flexible work is overwhelmingly preferred by those who choose to make money on gig economy platforms such as Uber, Danielle Burr, Uber Technologies Inc.’s
head of federal affairs, said Wednesday.
“Forcing employees to choose a binary choice – either being an employee with more benefits but less flexibility, or an independent contractor with limited protection – is outdated,” she said, noting that Uber has provided drivers with additional benefits. efforts made to modernize the laws of our country. “
The Labor Department’s action follows a 2019 California law that required companies to reclassify many contract and handyman workers as employees, giving those workers access to the state’s minimum wage and overtime laws, workers’ compensation coverage, and paid sick days. In November, California voters approved a ballot bill that exempted Uber, Lyft Inc.,
ByDash Inc. and similar companies from the law, which are said to have reformed their business model.
DoorDash said the food delivery company is committed to ensuring that its employees can maintain flexible income. The vast majority work less than 10 hours a week, or an average of four hours a week or less. “We are eager to continue to work with lawmakers across the political spectrum, both at the state and federal levels,” said a DoorDash spokesperson.
The rule “respects the long-standing American tradition of being your own boss,” said Deputy Secretary of Labor Patrick Pizzella. He said California law had skewed the definition of an independent contractor, adding that the new federal rule would increase opportunities for gig employees and give them more control over their lives.
A separate Labor Department official said states are not required to follow the federal rule, but the department hopes the rule can serve as a model for states.
“Efforts will be made in several states to pass laws that will be governed by the Labor Department rule,” said Michael J. Lotito, co-chair of the Workplace Policy Institute at Littler Mendelson PC and a corporate attorney. Other states have modeled aspects of California’s laws.
For an increasing number of Americans, patchwork of odd jobs is the norm, while others have become so-called self-employed workers as they take a second job through digital platforms like Uber or Etsy to make ends meet. But almost all of them face the challenges of inconsistent income and access to benefits. (Originally published March 22, 2018)
Unions, taxi drivers and workers’ lawyers were among those who wrote letters protesting the plan, saying workers often have access to benefits, including health insurance and retirement plans, that independent contractors do not have.
“The rule permits employers to name most of their employees independent contractors,” said Catherine Ruckelshaus, general counsel at the National Employment Law Project, which advocates for low-wage workers. “That would drastically limit worker protection … in the jobs they especially need, including jobs in construction, agriculture, cleaning and delivery services.”
Ms Ruckelshaus said NELP is ready to challenge the rule in court, but added that this may not be necessary depending on the actions of the Biden government.
Business groups, including the Chamber of Commerce, Associated Builders and Contractors, and National Federation of Independent Business, also supported the rule, which they say provides more clarity to a labor law passed in the 1930s.
—Sarah E. Needleman contributed to this article.
Write to Eric Morath at [email protected]
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