New Biden labor rule would make some contractors employees (updated)

Upwork

11/10/2022 14:11

(Adds background, statement from Marty Walsh)
    By Daniel Wiessner, Nandita Bose and David Shepardson
       WASHINGTON, Oct 11 (Reuters) - The U.S. Department of
Labor proposed a rule on Tuesday that would make it more
difficult for companies to treat workers as independent
contractors, a change that is expected to shake up the business
models of the ridesharing, delivery and other industries that
rely on gig workers.
    Shares in Uber and Lyft traded sharply down Tuesday morning.
    The proposal would require that workers be considered a
company's employees, who are entitled to more benefits and legal
protections than contractors, when they are "economically
dependent" on the company.
    The Labor Department said it will consider workers'
opportunity for profit or loss, the permanency of their jobs,
and the degree of control a company exercises over a worker,
among other factors.
    Most federal and state labor laws, such as those requiring a
minimum wage and overtime pay, only apply to a company's
employees. This means employees can cost companies up to 30%
more than independent contractors that many industries have come
to rely on, according to some studies.
        U.S. Labor Secretary Marty Walsh in a statement said
businesses often misclassify vulnerable workers as independent
contractors.
  
        “Misclassification deprives workers of their federal
labor protections, including their right to be paid their full,
legally earned wages," Walsh said. 
  
        The rule, which will take at least several months to
finalize, would replace a Trump administration regulation that
says workers who own their own businesses or have the ability to
work for competing companies, such as a driver who works for
Uber and Lyft, can be treated as contractors.
  
        The new proposal adopts a broader definition of who
counts as an employee, mirroring legal guidance issued by the
Obama administration that was withdrawn by the Labor Department
under former President Donald Trump.
  
        More than one-third of U.S. workers, or nearly 60
million people, performed some sort of freelance work in the
past 12 months, a December 2021 
    survey
     by freelancing marketplace Upwork showed. 
  
        Groups representing businesses including the U.S.
Chamber of Commerce, which is the largest U.S. business lobbying
group, the National Association of Home Builders, the National
Retail Federation and Associated Builders and Contractors had
met with White House officials to lobby for a more
business-friendly standard. 
  
        Those groups have said that any broad rule would hurt
workers who want to remain independent and have flexibility.
  
        But many worker advocacy groups have said that companies
are increasingly misclassifying employees as independent
contractors, depriving workers of fair pay and benefits to pad
their profits. 
  
        The proposal will be formally published on Thursday,
kicking off a 45-day public comment period. 
  
 (Reporting by David Shepardson and Nandita Bose in Washington
and Daniel Wiessner in Albany, New York; Editing by Doina
Chiacu, Chizu Nomiyama and Mark Porter)
 ((doina.chiacu@thomsonreuters.com; 202-898-8322;))