Are you an employee or a gig worker? U.S. issues new rule on criteria

The Biden administration enacted a new labor rule Tuesday that aims to prevent the misclassification of workers as “independent contractors,” a step that could bolster legal protections and compensation for millions in the workforce.

Major app-based platforms including Uber, Lyft and DoorDash expressed confidence that the new rule would not force them to reclassify their gig drivers. But business groups warned that the rule creates ambiguities and uncertainty for employers and that much depends on how the Labor Department decides to enforce it.

The Labor Department rule, which the administration proposed 15 months ago, replaces a Trump-era standard that narrowed the criteria for classifying employees as contractors.

Labor advocates have supported the rule, saying employers have exploited lax rules to misclassify workers. The rule, which will take effect March 11, directs employers to consider six criteria for determining whether a worker is an employee or a contractor, without predetermining whether one outweighs the other. That’s a change from the Trump-era rule, which prioritized two criteria: how much control a company has over its workers and how much “entrepreneurial opportunity” the work provides.

Advocates say the new rule offers a more comprehensive approach to determining whether workers are truly in business for themselves.

Potentially at issue for ride-hailing, delivery and other apps is a requirement to consider whether the jobs performed by workers are an integral part of the company’s business.

But it’s up to employers to decide how to weigh the criteria, which also include how much control the employer has over the worker, whether the work requires special skills, the degree of permanence of the relationship between worker and employer, and the investment a worker makes, such as car payments.

Jessica Looman, administrator of the Department of Labor’s Wage and Hour Division, said the rule isn’t intended to apply specifically to certain industries or types of work. Asked about enforcement, Looman said the department will focus on the “most vulnerable workers,” particularly those unfairly deprived of minimum wages and overtime pay.