The Trump administration made it easier for companies to classify workers as independent contractors, a victory for companies in large economies, such as food delivery and car-sharing services, and a violation of a California law that made the contrary.
The Department of Labor, in a final rule released Wednesday, would make it difficult to account for a concert worker, such as an Uber driver or DoorDash, as an employee under federal law. This means that these workers would not be covered by federal laws on minimum wage and overtime, and could be responsible for paying the share of Social Security taxes to the employer.
The rule will not go into effect until March 8, after President-elect Joe Biden is sworn in on January 20. The Biden administration could try to delay the implementation of the standard, give new application guidelines, or try to write a new version of the standard. The Biden administration could also choose not to defend the regulation in case it is challenged in court. A spokeswoman for Mr Biden declined to comment.
Flexible work is overwhelmingly preferred by those who choose to win on economic platforms like Uber, Danielle Burr, Uber Technologies Inc
head of federal affairs, he said Wednesday.
“Forcing workers to choose a binary option, whether it’s an employee with more benefits but less flexibility, or an independent contractor with limited protections, is obsolete,” he said, noting that Uber has offered additional benefits to drivers.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 hired and contracted workers as employees, allowing them access to the state’s minimum wage and overtime laws. workers’ compensation coverage and paid sick days. In November, California voters approved a voting proposal that exempted Uber, Lyft Inc.,
DoorDash Inc. and similar law firms, which would have reshaped their business model.
DoorDash said the food delivery company is committed to ensuring its workers can maintain flexible profit opportunities. The vast majority work less than 10 hours a week, or an average of four hours a week or less. “We look forward to continuing to work with lawmakers across the political spectrum, both at the state and federal levels,” a DoorDash spokesman said.
The rule “respects the traditional American tradition of being your own boss,” said Deputy Secretary of Labor Patrick Pizzella. He said California law had biased the definition of an independent contractor and added that the new federal rule would increase opportunities for concert workers and give them more control over their lives.
A separate Labor Department official said states are not required to follow 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 Littler Mendelson PC’s Workplace Policy Institute and a lawyer representing companies . Other states have used aspects of California law as a model.
For a growing number of Americans, concert work is the norm, while others have become so-called self-employed because they occupy second jobs through digital platforms like Uber or Etsy. But almost everyone faces the challenges of inconsistent income and access to benefits. (Originally posted on March 22, 2018)
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, that do not have independent contractors.
“The rule gives employers a license to call most of their workers independent contractors,” said Catherine Ruckelshaus, general counsel for the National Labor Law Project, which advocates for low-wage workers. “This would drastically reduce worker protections … in jobs that need them, including construction, agriculture, concierge and delivery jobs.”
Ruckelshaus said the NELP is prepared to challenge the rule in court, but added that it may not be necessary, depending on the actions of the Biden administration.
Business groups, including the Chamber of Commerce, Builders and Associated Contractors and the National Federation of Independent Businesses, also supported the rule, which they say provides greater clarity to a labor law passed in the 1930s.
—Sarah E. Needleman contributed to this article.
Write to Eric Morath to [email protected]
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