Rideshare, retailers brace for tough U.S. independent contractor rule

Upwork

27/09/2022 11:00

By Nandita Bose
       WASHINGTON, Sept 27 (Reuters) - After weeks of lobbying
the White House on how gig workers should be treated, the
rideshare, delivery and retail industries are bracing for a new
rule that is likely to make it easier to classify them as
employees, multiple sources say. 
    A proposed rule from the Department of Labor, aimed at
defining whether gig workers for companies including Uber
 UBER.N , Lyft  LYFT.O , DoorDash  DASH.N  and retailers such as
Amazon.com Inc  AMZN.O  are misidentified as independent
contractors, is under review at the White House's Office of
Information and Regulatory Affairs (OIRA) and is expected to be
released in coming weeks.
    While the details of the new rule are not known, the
department could model it on legal guidance that says people
economically dependent on a company are employees, or go even
further to expand the pool of workers who should receive
benefits, legal experts said.  urn:newsml:reuters.com:*:nL1N30Q1OX
    Groups representing employers, including the U.S. Chamber of
Commerce, The National Association of Home Builders, The
National Retail Federation and the Associated Builders and
Contractors have met with officials at the White House's Office
of Management and Budget, according to White House records and
sources.
    Some of the groups have been trying, and failing, to
convince the White House that any broad rule would hurt workers
who want to remain independent and have flexibility, people
familiar with the discussion said. 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.
    Broadly defining independent contractors as employees would
also force companies to pay benefits, such as overtime pay and
health benefits, that would hurt their bottom line. Employers
can save about 30 percent by skipping payroll taxes and
unemployment and benefit costs, workers' groups estimate.
    The meetings at the White House were one-sided, with
officials at OIRA letting groups speak and not participating or
asking follow-up questions, several employer sources said. They
are interpreting that as a sign the Biden administration's mind
is made up.  
    POLITICAL 
    "It's all very political. The administration has been clear
about the stakeholders they care about and how organized labor
is something they care about," said a senior official at one of
the employer groups, who met with the White House to discuss the
proposed rulemaking.
    "We expect it to be more antagonistic toward independent
work," the official, who did not wish to be named said, and to
hurt companies that rely on gig labor.   
    A White House official said that listening without comment
is part of the standard rulemaking process at OIRA.
    Representatives and lobbyists for employers argued against 
"administrator interpretation" and "the economic realities test"
issued in 2015 under the Obama administration, which said most
workers should be considered employees under the Fair Labor
Standards Act. They also presented their opposition to the "ABC
test" which determines employee status.
    "I'm not optimistic that the concerns we raised is going to
change the direction of the rulemaking," said another lobbyist
for an employer group, who spoke to the White House.
    The White House and the Department of Labor declined
comment. Amazon did not respond to a request for comment. A
spokeswomen for the Flex Association, which represents Uber,
Lyft, DoorDash, said any drastic change that will limit workers'
flexibility "could have dire economic consequences as well as
reduce income and limit options for workers."
    WORKERS WARN OF GROWING PAIN 
    Gig Workers Rising, RideShare Workers United, Mobile Workers
Alliance, We Drive Progress also met White House officials to
broaden the definition of employee further, according to records
and sources. 
    A growing number of companies, including in health care, are
misclassifying hundreds of thousands of workers across the
United States, they argued. Workers in industries that rely on
contractors, like food delivery services, say they're left
without social safety nets, accident coverage or paid sick
leave, and squeezed by high gas prices.
    "This is a model in which if we don't draw a line in this
country, every job is at risk ... and so this rulemaking should
be about ensuring people have basic protections," said Nicole
Moore, a part-time Lyft driver and the president of the group
Rideshare Drivers United.
    Moore said the rulemaking would help Democrats if it were to
be released before the November midterm elections that will
determine whether Republicans or Democrats control Congress.
    "The last thing Americans want is to hear promises on what
the party stands for, what it will mean to have folks in the
White House, Senate and House of Representatives and then to
have nothing happen," she said. 
    "Leaving out misclassified workers would be a huge mistake."
    This is President Joe Biden's second stab at re-setting
rules about how employees can be defined, and is expected to be
quickly challenged in court by companies.
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EXPLAINER-How the Biden administration could restrict
independent contracting     urn:newsml:reuters.com:*:nL1N30Q1OX
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 (Reporting by Nandita Bose; Additional reporting by Daniel
Weissner, Lisa Baertlein and Doyinsola Oladipo; Editing by
Heather Timmons and Grant McCool)
 ((nandita.bose@thomsonreuters.com; +12023545868; Reuters
Messaging: nandita.bose.reuters.com@reuters.net))