The Labor Department rescinded a Trump-era “Independent Contractor” rule that limited the ability of gig and contract workers to argue for minimum wage and overtime protections, The Washington Post reports.
The rule, which limited the ability of workers to argue that they were misclassified as contractors if they qualified for employee status, was finalized in January before Trump left office with the backing of companies like Uber and Lyft.
Uber and Lyft usually classify workers as contractors even if they meet state and federal criteria to qualify as employees.
If the Labor Department finds that many gig workers are misclassified, it could dramatically alter the gig and contract worker landscape.
Biden admin focuses on worker protections:
“By withdrawing the Independent Contractor Rule, we will help preserve essential worker rights and stop the erosion of worker protections that would have occurred had the rule gone into effect,” Labor Secretary Marty Walsh said in a statement.
“Legitimate business owners play an important role in our economy but, too often, workers lose important wage and related protections when employers misclassify them as independent contractors. We remain committed to ensuring that employees are recognized clearly and correctly when they are, in fact, employees so that they receive the protections the Fair Labor Standards Act provides,” he added.
What happens next?
It’s unclear what happens now that the short-lived rule is no longer in effect.
Jessica Looman, a top official in the Labor Department’s Wage and Hour Division told the Post that she did not believe the rule change would have a dramatic change on gig company operations.
“When it comes to digital workers and app-based workers — they’re workers,” she said. “And so we want to make sure we continue to look at their needs, and how they are interacting with their individual employer and whether they have protection.”
The US Chamber of Commerce, a major business group, opposed the move.
“The need for this regulation has never been greater as the use of the independent contractor model has increased substantially, most notably in the online platform context, but also in many other settings,” Marc Freedman, a vice president at the Chamber, told the administration in April. “This regulation sought, and the Chamber believes accomplished, to bring a consistent analytical framework and updated criteria to determining when legitimate independent contractor relationships exist.”