The U.S. Department of Labor is publishing a new proposal on how workers should be classified saying that thousands of people have been incorrectly labeled as contractors rather than employees, potentially curtailing access to benefits and protections they rightfully deserve.
In one key change, employers are required to consider whether the work provided is an integral part of their business. That could affect app-based companies that rely almost entirely on freelance workers to provide their services. The Trump-era rule had narrowed that criteria to whether the work in part of an integrated unit of production, and gave more weight to other considerations such as the worker's opportunity to make a profit or loss.
The rule could bolster labor advocates seeking to challenge worker classification in courts, or state lawmakers seeking to pass stricter laws for designating workers as contractors, said Patricia Campos-Medina, executive director of the Worker Institute at Cornell University's School of Industrial and Labor Relations.
"I don't think it will stop the debate," Campos-Medina said. "The only thing the federal rule does is it creates a basic standard for evaluation." Wedbush analyst Dan Ives said the proposal would constitute a major change for workers and employers from previous years. "Importantly this rule: Does not reclassify Lyft drivers as employees. Does not force Lyft to change our business model," the company said.
In 2020, California voters overwhelmingly approved a proposition to exempt drivers for app-based companies from a state law requiring them to be designated as employees. Uber, Lyft and other companies had spent $200 million campaigning in favor of the proposition. However, a judge struck down the ballot measure as unconstitutional last year, setting up a legal fight that could end up in the California Supreme Court.
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Labor proposal could upend rules for gig workers, companiesThe Biden administration published a new proposal Tuesday regarding how workers should be classified, saying that thousands of people have been incorrectly labeled as contractors rather than employees, potentially curtailing access to benefits and protections they rightfully deserve.
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Labor proposal could upend rules for gig workers, companiesThe Biden administration published a new proposal Tuesday regarding how workers should be classified, saying that thousands of people have been incorrectly labeled as contractors rather than employees, potentially curtailing access to benefits and protections they rightfully deserve. The new U.S. Department of Labor regulations would replace a Trump-era rule that lowered the bar for classifying employees as contractors, workers who are not covered by federal minimum wage laws and are not entitled to benefits including health insurance and paid sick days. The reaction in markets for major gig companies was immediate.
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Labor proposal could upend rules for gig workers, companiesMisclassifying workers as independent contractors denies those workers protections under federal labor standards, promotes wage theft, allows certain employers to gain an unfair advantage over businesses, and hurts the economy, the Labor Dept. says.
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Labor proposal could upend rules for gig workers, companiesThe Biden administration published a new proposal Tuesday regarding how workers should be classified, saying that thousands of people have been incorrectly labeled as contractors rather than employees, potentially curtailing access to benefits and protections they rightfully deserve.
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Biden Labor Rule Aims to Help End Gig Company 'Exploitation' of Workers\u0022All work has value, all workers deserve fair compensation and legal protections from exploitation on the job,\u0022 said one labor union in response to the rule.
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Explainer-How a U.S. rule on independent contracting will affect workers, businessesThe U.S. Department of Labor on Tuesday unveiled a proposal that would make it harder for companies to treat workers as independent contractors, potentially upending the gig economy and other industries that rely heavily on contract labor. The line between when a worker is considered a company's employee, who is entitled to various legal protections, or an independent contractor has shifted over the last decade, as businesses have faced an increasing number of lawsuits by workers who claim they were misclassified. Most federal and state labor laws, such as those requiring a minimum wage and overtime pay, prohibiting discrimination or protecting the right to unionize, only apply to a company's employees.
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