The Trump administration has made it easier for businesses to classify workers as independent contractors, a win for gig-economy businesses like food delivery and ride-sharing services, and a conflict with a California law that did the opposite.
In a final rule announced Wednesday, the Labor Department would make it harder for an acting worker, such as a driver of Uber or DoorDash, to be counted as an employee under federal law. This means that the workers are not covered by the federal minimum wage and overtime laws, and that they would be responsible for paying the employer a portion of the social security tax.
The rule only takes effect on March 8 after President-elect Joe Biden was inaugurated on January 20. The government of Biden may try to delay the implementation of the rule, provide new guidance or write a new version of the rule. . The Biden administration may also decide not to defend the regulation if it is contested in court. A spokesman for Mr. Biden declined to comment.
Flexible jobs are overwhelmingly preferred by those who prefer to earn on gig economy platforms like Uber, Danielle Burr, Uber Technologies Inc.’s
head of federal affairs, said Wednesday.
“Forcing a binary choice on employees – being an employee with more benefits but with less flexibility, or an independent contractor with limited protection – is outdated,” she said, noting that Uber added benefits to drivers area. “We appreciate the efforts to modernize the country’s laws.”
The Department of Labor’s action follows a 2019 law in California that requires businesses to reclassify many contract and workers as employees, giving employees access to minimum state and overtime laws, workers’ compensation coverage and paid sick days. . In November, California voters approved a vote to release Uber, Lyft Inc.,
DoorDash Inc. and similar companies from the law, which would reform their business model.
DoorDash said the food delivery company is committed to ensuring that its employees can maintain flexible earning opportunities. The vast majority work less than 10 hours per week, or on average four hours per week or less. “We are eager to continue to work with lawmakers across the political spectrum at both the state and federal levels,” a DoorDash spokesman said.
The rule “respects the old American tradition of being your own boss,” said Patrick Pizzella, deputy labor minister. He said California law had distorted the definition of an independent contractor, and that the new federal government would increase the opportunity for action workers and give them greater control over their lives.
A separate Labor Department official said states do not have to follow federal rule, but the department hopes the rule could be a model for states.
“Attempts will be made in several countries to enact laws for which the Department of Labor will be the basis,” said Michael J. Lotito, co-chair of law firm Littler Mendelson PC’s Workplace Policy Institute and an attorney representing businesses. Other states have modeled aspects of California law.
For an increasing number of Americans, patchwork gig performances are the norm, while others have become so-called independent workers because they take second jobs through digital platforms like Uber or Etsy. But almost everyone faces the challenges of inconsistent income and access to benefits. (Originally published on March 22, 2018)
Trade unions, taxi drivers and workers’ advocates were among those who wrote letters to protest the plan, saying employees often have access to benefits, including health insurance and retirement plans, which independent contractors do not have.
“The rule gives employers licenses to call most of their workers independent contractors,” said Catherine Ruckelshaus, chief executive of the National Employment Law Project, which advocates for low-wage workers. “It will dramatically limit the protection of workers … in the work for which it is particularly needed, including construction, agricultural, domestic and delivery work.”
Me. Ruckelshaus said NELP was ready to challenge the ruling in court, but added that it might not be necessary, depending on the actions of the Biden government.
Business groups, including the Chamber of Commerce, Associated Builders and Contractors and the National Federation of Independent Affairs, also supported the rule, which they say gives greater clarity to a labor law passed in the 1930s.
—Sarah E. Needleman contributed to this article.
Write to Eric Morath by [email protected]
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