Biden halts easing of contractor rules
Trump administration rules that would make it easier to classify workers as independent contractors, rather than employees entitled to minimum wages and overtime, have been blocked by President Biden’s Labor Department.
The rules were published Jan. 7 in the Federal Register but were not scheduled to take effect until this week. They said individuals generally should be considered contractors, not employees, if they exercise control over their work — assignments, hours, lack of direct supervision, and a right to affiliate with multiple companies — and can increase their earnings by managing their time and assets. Skills needed for the job could also be a factor.
By contrast, the law in California — a 2018 state Supreme Court ruling and legislation, AB5, that took effect last year — treats workers as employees if they work in the same business as the company that pays them. That law was likely to have classified drivers for Uber and Lyft as employees, but the companies, after a $205 million campaign, won passage in November of Proposition 22, which allowed them to treat the drivers as contractors.
The Labor Department did not formally discard the Trump administration’s proposed rules, but said on Monday that they would be put on hold until May 7 and reconsidered under the policy of federal labor law “to broadly cover workers as employees.” The review will examine the previous administration’s “assertion that workers as a whole will benefit” from the tilt toward contractor status, the department said.
In public comments about the proposed rule, the department said, civil rights groups and labor unions “noted that the (changes) will have a $3.3 billion cost to workers each year, and will cause the most harm to workers of color in lowpaying jobs in industries, such as janitorial services, home care, and agriculture, in which independent contractor misclassification is common.”
For now, the government’s action leaves the California laws in place, applying Prop. 22 to drivers for ridehailing and fooddelivery companies and AB5 to other workers. But the Labor Department could go further and declare nationwide standards — likely to be challenged in court — that would classify the drivers as employees. Similar legislation sponsored by Democrats is pending in Congress.
“This represents a first step away from the blinkered Trump (Labor Department) focus upon flexibility and entrepreneurship,” said William Gould, a Stanford labor law professor and former chairman of the National Labor Relations Board. Though Biden’s Labor Department has not yet announced its position, Gould said, this week’s action “spells bad news for 22.”
Rep. Mark DeSaulnier, D-Concord, a member of the House Education and Labor Committee, said President Biden “is restoring power to workers and sending the signal that he will be joining the fight I have been leading in the House with my colleagues to protect workers from predatory practices masquerading as ‘innovation’ and ‘flexibility.’ ”
Uber said in a statement that it “looks forward to working with the Biden administration and the Department of Labor on this rulemaking to ensure independent workers have access to new benefits and protections they deserve.”