The U.S. Department of Labor (DOL) published a final rule in the Federal Register on Wednesday that will make it more difficult to classify workers as independent contractors. If the rule survives court challenges unscathed, it would replace a Trump-era rule that was pro-business but had the opposite effect. It is scheduled to take effect on March 11.
The new rule, first proposed in 2022, could have far-reaching consequences for companies like Uber and DoorDash that rely heavily on gig workers. It would provide that workers who are “economically dependent” on a company are considered employees.
The rule restores pre-Trump precedent of using six factors to determine worker classification. These include the opportunity for profit or loss, the nature of the financial interests and resources the worker invests in the job, the durability of the working relationship, the employer’s degree of control over the person’s work, the importance of the person’s work to the employer’s business, and the worker’s skills and initiative.
In its decision to issue the new guidance, the Labor Department cited “longstanding precedent” in the courts that preceded the Trump administration’s rightward shift. “A century of labor protections for working people have been premised on the employer-employee relationship,” Acting Labor Secretary Julie Su said at a press conference with the Department of Labor. Bloomberg.
“Misclassifying employees as independent contractors is a serious problem that deprives workers of basic rights and protections,” Su wrote in the announcement. “This rule will help protect workers, especially those at greatest risk of exploitation, by ensuring they are correctly classified and receive the wages they deserve.”
Employer costs are expected to increase if the rule takes effect. Not surprisingly, the U.S. Chamber of Commerce, a non-governmental lobby group for business interests, opposed it. “This could threaten individuals’ flexibility to work when and how they want and could have a significant negative impact on our economy,” Marc Freedman, vice president of the U.S. Chamber of Commerce, said in a statement. ” Reuters.
DoorDash sounded optimistic that the rule wouldn’t apply to its employees. “We believe Dashers are properly classified as independent contractors under the Fair Labor Standards Act, and we do not expect this rule to result in changes to our business,” the company wrote in a statement. “We will Continue to work with the Department of Labor, Congress and other stakeholders to find solutions that ensure Dashers maintain flexibility while receiving new benefits and protections.”
Groups with similar views are expected to file legal challenges to the rule before it takes effect. The Biden administration’s previous attempts to repeal the Trump-era rule met this fate, with a federal judge blocking the Labor Department’s reversal.
While the rule’s most prominent theoretical applications are gig economy apps like DoorDash, Lyft, and Uber, it could also extend to areas like health care, trucking, and construction. “The department is seeing misclassifications in places it has never seen before,” said Wage and Hour Division Administrator Jessica Looma. Bloomberg on Monday. “Health care, construction, janitors, and even restaurant workers who often live paycheck to paycheck are some of the most vulnerable workers.”
This article was originally published on Engadget: https://www.engadget.com/new-department-of-labor-rule-could-reclassify-countless-gig-workers-as-employees-130836919.html?src=rss
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