The Trump administration has made it easier for businesses to classify workers as independent contractors, a victory for companies with gigantic economies, such as food delivery and travel sharing services, and countering a California law that did the opposite.
The Department of Labor, in a final rule released Wednesday, would make it more difficult to include an employee in concerts, such as an Uber or DoorDash driver, as an employee under federal law. This means that these workers would not be covered by federal minimum wage and overtime laws and could be responsible for paying the employer part of the social security taxes.
The rule will not take effect until March 8, after President-elect Joe Biden will be inaugurated on January 20. The Biden administration could try to delay the implementation of the rule, provide new application guidance or try to write a new version of the rule. . The Biden administration could also choose not to defend the regulation if it challenged it in court. A spokeswoman for Mr Biden declined to comment.
Flexible work is overwhelmingly preferred by those who choose to win on giant economy platforms such as Uber, Danielle Burr, Uber Technologies Inc.
the head of federal affairs said on Wednesday.
“Forcing a binary choice on workers – either an employee with more benefits but less flexibility, or an independent contractor with limited protections – is outdated,” she said, noting that Uber offered additional benefits to drivers. “We appreciate the efforts made to modernize the laws of our nation.”
The Department of Labor action follows a 2019 California law that required companies to reclassify many contract workers and laid off employees as employees, giving workers access to state minimum wage and overtime laws, workers’ compensation coverage and paid sick days. In November, California voters approved a vote proposal that exempted Uber, Lyft Inc.,
DoorDash Inc. and similar companies in the law, which would have reshaped their business model.
DoorDash said the food delivery company is committed to ensuring that its workers can maintain flexible earning opportunities. The vast majority work less than 10 hours a week or, on average, four hours a week or less. “We are eager to continue working with parliamentarians across the political spectrum at both the state and federal levels,” a DoorDash spokesman said.
The rule “respects the American tradition of being your own boss,” said Deputy Secretary of Labor Patrick Pizzella. He said California law distorted the definition of an independent contractor and added that the new federal rule will increase the opportunity for concert workers and give them more control over their lives.
A separate Labor Department official said states are not required to abide by the federal rule, but the department hopes the rule can be a model for states.
“There will be efforts in several states to pass laws that will be the basis of the Department of Labor rule,” said Michael J. Lotito, co-chair of the law firm Littler Mendelson PC’s Workplace Policy Institute and a business lawyer. Other states have used California law as a model.
For a growing number of Americans, a patchwork of concerts is the norm, while others have become so-called self-employed as they take their second job through digital platforms like Uber or Etsy to and touches the heads. But almost everyone faces the challenges of inconsistent income and access to benefits. (Originally published March 22, 2018)
Trade unions, taxi drivers and workers’ supporters were among those who wrote letters of protest against the plan, saying employees often have access to benefits, including health insurance and retirement plans, which independent contractors do not have.
“The rule licenses employers to appoint the majority of their self-employed workers,” said Catherine Ruckelshaus, general counsel at the National Draft Law on Employment, which advocates for low-wage workers. “This would dramatically restrict the protection of workers … in jobs that need them in particular, including construction, agriculture, care and delivery services.”
Ms Ruckelshaus said NELP was ready to challenge the rule in court, but added that it might not be necessary, depending on the actions of the Biden administration.
Business groups, including the Chamber of Commerce, the Associated Builders and Contractors and the National Federation of Independent Affairs, also supported the rule, which they say provides greater clarity to labor law passed in the 1930s.
—Sarah E. Needleman contributed to this article.
Write to Eric Morath at [email protected]
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