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Biden Labor Department to Nix Trump Rule Defining Gig Workers as Contractors
Posted
March 11, 2021
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0:57Now PlayingThe U.S. Labor Department proposed eliminating a signature Trump administration rule that would have made it easier for businesses to classify workers as independent contractors instead of employees under federal wage law.
In a step that would hurt gig-economy companies such as Uber Techologies Inc. and Instacart, the agency announced Thursday that it plans to collect public input on its proposal to withdraw the regulation, which was finalized two weeks before President Donald Trump left office but has yet to take effect.
New Biden-appointed Labor Department leadership cited concerns that the prior rulemaking was inconsistent with U.S. Supreme Court precedent and the purpose of the Fair Labor Standards Act, while questioning whether it took into account the economic harm independent contracting has on workers.
While the reasons cited in the withdrawal offer strong signals that the Biden administration will restore the Obama-era’s stricter approach to worker misclassification, the agency punted on replacing the rule with an affirmative policy of its own on how to interpret worker status for purposes of the FLSA. That move gives DOL options on whether to devise a new regulation or take a faster route of publishing guidance that doesn’t require public input.
Trump’s rule, which drew heavy backing from corporations and congressional Republicans, would’ve adopted a new test to simplify companies’ legal justification for categorizing workers as independent contractors, rather than employees who are entitled to minimum wage and overtime pay. It would’ve been a boon for gig-economy companies by giving them a tool to defeat or avoid expensive class actions accusing them of misclassifying drivers and other task-performing service workers as independent contractors.
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