Biden Proposes New Labor Rule Granting Millions of Uber, Lyft & DoorDash Gig Workers Employee Status

Mandatory Credit: Photo by Shutterstock (13429790p)United States President Joe Biden speaks during a press conference after being briefed on the impact of Hurricane Ian and ongoing federal government response efforts at the FEMA Headquarters in Washington, DC on Thursday, September 29, 2022.
Shutterstock / Shutterstock

The Biden-Harris administration has proposed a rule challenging existing worker classifications that could change the nature of the gig economy in the U.S. by redefining guidelines to fit current labor standards.

Here It Is: Our 2022 Small Business Spotlight
Discover: 7 Surprisingly Easy Ways To Reach Your Retirement Goals

The proposal, announced by the Department of Labor (DOL) on Tuesday, is an attempt to rescind the 2021 Independent Contractor Rule and tighten up current definitions and classifications of workers to fit more in line with those found in the Fair Labor Standards Act.

Essentially, if passed into formal regulation, it may be much easier for independent contractors to be considered company employees and, hence, be afforded the benefits that come with “employee” status, like guaranteed minimum hourly wages, overtime pay, worker’s compensation and unemployment insurance.

According to CNN Business, while the Department of Labor anticipates changes to worker classifications throughout the home care, trucking and hospitality industries, the proposal may specifically and negatively impact the wildly popular ride-sharing giants like Uber and Lyft and delivery services like DoorDash and Uber Eats. All those working in construction and as self-employed freelancers will also keep an eye on future developments.

Make Your Money Work Better for You

“While independent contractors have an important role in our economy, we have seen in many cases that employers misclassify their employees as independent contractors, particularly among our nation’s most vulnerable workers,” said Secretary of Labor Marty Walsh in a DOL press statement.

“Misclassification deprives workers of their federal labor protections, including their right to be paid their full, legally earned wages,” Walsh added. “The Department of Labor remains committed to addressing the issue of misclassification.”

The current Independent Contractor Rule, adopted by former president Donald Trump in 2021, favored businesses that keep labor costs down by hiring workers as independent contractors without having to pay the payroll taxes that cover Social Security and unemployment benefits, per CNBC.

Businesses are likely to challenge the rule in court aggressively. Quoted by Reuters, Michael Lotito, a San Francisco-based lawyer who represents employers and business groups, said, “There’s going to be years of litigation over this. This has Supreme Court written all over it.”

According to the Washington Examiner, news of the proposed rule dropped stock prices across all ride-sharing and delivery companies Tuesday morning. Uber and Lyft stocks dropped 14.6% and 13% respectively, while DoorDash fell approximately 10%. Other relevant losses included freelance talent marketplace Upwork, which dipped down about 4%, and handmade and vintage e-commerce company Etsy, which tumbled more than 6%.

Make Your Money Work Better for You

Take Our Poll: Do You Believe in Quiet Quitting?

DOL’s Wage and Hour Division already solicited feedback from stakeholders on the preliminary proposal and is now inviting comments from any interested parties from Oct. 13 to Nov. 28, 2022. Rule responses can be submitted online.

More From GOBankingRates

Share This Article:

facebook sharing button
twitter sharing button
linkedin sharing button
email sharing button
Make Your Money Work Better for You

About the Author

David Nadelle is a freelance editor and writer based in Ottawa, Canada. After working in the energy industry for 18 years, he decided to change careers in 2016 and concentrate full-time on all aspects of writing. He recently completed a technical communication diploma and holds previous university degrees in journalism, sociology and criminology. David has covered a wide variety of financial and lifestyle topics for numerous publications and has experience copywriting for the retail industry.
Learn More

BEFORE YOU GO

See Today's Best
Banking Offers

1pximage