Biden scraps gig-worker rule from Trump era
NEW YORK — The Biden administration nullified a Trumpera rule Wednesday that would have made it easier to classify workers as independent contractors, blocking a change supported by delivery and ride-hailing services.
The Labor Department’s decision came just two days before the Trump-era rule was supposed to take effect. The move means the Labor Department will continue to abide by the 1938 Fair Labor Standards Act to determine whether a worker should be classified as an independent contractor.
Under the existing system, app-based companies such as Uber, Lyft, Doordash and Instacart already were able to classify their gig workforce as independent contractors. But those companies applauded the Trump administration rule, arguing that the Depression-era law was outdated and didn’t provide the flexibility demanded by the digital era.
The scrapped rule would have identified two “core factors“to determine whether a worker is an employee or independent contractor: the degree of control over the work and earnings opportunity based on initiative or investment. The Labor Department said the rule “narrowed the facts and considerations,” undermining worker protections under the fair labor law.
Gig and other contractor workers aren’t covered by federal minimum wage laws and generally aren’t entitled to benefits such as health insurance or paid sick days.
App-based services say their business model is popular with people who like the flexibility of gig work, including being able to set their own hours. In November, California voters rejected a ballot measure that would have classified ride-hailing and appbased delivery drivers as employees eligible for minimum wage protection and other benefits.
In a statement, Uber reiterated its stance that current employment regulations are outdated and impose “a binary choice upon workers: to either be an employee with more benefits but less flexibility, or an independent contractor with more flexibility but limited protections.”
With the Biden administration announcing no new rules, Lyft “sees this as an opportunity to refocus the conversation on what drivers need and want, which is independence plus benefits,” company spokeswoman Julie Wood said.