The Biden administration is proposing a rule that would result in more “gig” workers being considered full-time employees, a potentially major change to the nation’s labor laws that limit ride-sharing, distribution, construction and sales jobs that employ independent contractors. may disrupt other companies.
The draft rule, formally published Thursday, is a test the Labor Department uses when it determines whether employers have broken wage and hour laws. It formally instructs the agency to consider six factors when determining whether a worker is an employee – and therefore minimum wage, overtime and the right to unionize – or an independent contractor, who essentially fends for himself. There is a self-employed person in the business.
“We continue in our enforcement work to identify workers who are not properly classified in construction, health care, even restaurants, where we found that dishwashers were improperly supplied by independent contractors. so that they can’t be paid overtime,” Jessica Luman, principal deputy wage and hourly administrator with the Labor Department, told reporters Tuesday.
Officials said the rules would be open for public input for 45 days after the Labor Department’s proposal is published.
Independent contractors are generally much cheaper to hire because they are responsible for their own payroll taxes and do not qualify for overtime or minimum wage.
Proposed rule a. takes the place ofThis made it easier for companies to legally classify workers as independent contractors. Labor Secretary Marty Walsh says thousands of workers, including gig workers driving cars, delivering food and clean house, are actually employees, because the companies that hire them set their own hours and wages.
The National Employment Law Project, a pro-activist think tank, has estimated that 30% of workers may be incorrectly classified as independent, costing them billions of dollars in tax revenue.
gig stock sank
The news caused the shares of the gig company to plummet. Uber and Lyft fell more than 12% while DoorDash was down nearly 9%.
“The proposal is a clear blow to the gig economy and a near-term concern for the likes of Uber and Lyft,” Dan Ives, an analyst at Wedbush, said in a note.
“As with ride-sharing and other gig economy players, based on the contractor business model, a classification for employees would essentially turn the business model upside down and cause some major structural change if it holds up,” he said. wrote.
Ride-hailing companies that are not consistently profitable have said they can’t afford to pay drivers as employees when they spendof dollars to win the legislative carving out of state worker protection laws.