Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Biden administration blocks Trump-era rule affecting gig workers

Published 05/05/2021, 09:04 AM
Updated 05/06/2021, 12:56 AM
© Reuters. FILE PHOTO: U.S. President Joe Biden speaks about the status of coronavirus disease (COVID-19) vaccinations and his administration's ongoing pandemic response?in the State Dining Room at the White House in Washington, U.S., May 4, 2021. REUTERS/Jonathan E

© Reuters. FILE PHOTO: U.S. President Joe Biden speaks about the status of coronavirus disease (COVID-19) vaccinations and his administration's ongoing pandemic response?in the State Dining Room at the White House in Washington, U.S., May 4, 2021. REUTERS/Jonathan E

By Nandita Bose

WASHINGTON (Reuters) -The Biden administration on Wednesday blocked a Trump-era rule that would have made it easier to classify gig workers who work for companies like Uber (NYSE:UBER) and Lyft (NASDAQ:LYFT) as independent contractors instead of employees, signaling a potential policy shift toward greater worker protections.

Shares of companies that employ gig labor such as Uber, Lyft and DoorDash immediately pared gains. At 2.15 p.m. ET (1815 GMT) Uber shares traded down 3.2%, Lyft was down 5.8% and DoorDash fell 5%.

"By withdrawing the independent contractor rule, we will help preserve essential worker rights and stop the erosion of worker protections that would have occurred had the rule gone into effect," Labor Secretary Marty Walsh said in a statement.

"Too often, workers lose important wage and related protections when employers misclassify them as independent contractors," he said.

Walsh told Reuters in an interview last week that a lot of U.S. gig workers should be classified as "employees" who deserve work benefits. His comments hurt stocks of companies that employ gig labor.

Walsh said in the interview that his department would have conversations in coming months with companies that employ gig labor to make sure workers have access to consistent wages, sick time, healthcare and "all of the things that an average employee in America can access."

An Uber spokesman acknowledged on Wednesday the current employment system is outdated.

"It forces 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."

He said the company believes it can offer the best of both worlds.

A DoorDash spokeswoman said "dashers work fewer than four hours per week on average and they overwhelmingly tell us how important the flexibility to earn on their own schedule is to them."

Lyft did not immediately comment.

The U.S. Chamber of Commerce said it hopes the administration does not pursue new regulations that would limit earning opportunities for independent workers. "We are disappointed to see the administration withdraw a balanced rule that was well-grounded in the law and provided certainty to workers and businesses about worker classification."

Others praised the move. The AFL-CIO, one of the country's largest unions, applauded the DOL for getting rid of the rule, "which would have made it easier to misclassify workers."

Gig workers are independent contractors who perform on-demand services, including as drivers, delivering groceries or providing childcare - and are one-third more likely to be Black or Latino, according to an Edison Research poll.

The rule by former President Donald Trump's administration, finalized in early January before he left office on Jan. 20, would have hampered workers' ability to earn a minimum wage and overtime compensation - protections offered under the Fair Labor Standards Act (FLSA).

It was supposed to take effect in March, but did not because it was being reviewed by the Labor Department under President Joe Biden, a Democrat who succeeded the Republican Trump. The withdrawal will be effective on Thursday.

© Reuters. FILE PHOTO: Secretary of Labor Marty Walsh speaks during a news conference at the White House in Washington, U.S. April 2, 2021. REUTERS/Erin Scott

The FLSA includes provisions that require covered employers to pay employees at least the federal minimum wage for every hour they work and overtime compensation at not less than 1-1/2 times their regular rate of pay for every hour they work over 40 in a workweek. FLSA protections do not apply to independent contractors.

"The independent contractor rule was in tension with the FLSA's text and purpose," the Labor Department said.

Latest comments

I'm from the Government and I'm here to help you.
leave these gig guys alone. unions trying to muscle their way back in
As soneone who worked as a driver for both uber and lyft, it’s a huge mistake to take Union and taxi service campaign contributions and try to make bad policy. Both are dead and ultimately gig economy is what people want. Biden is paradoxically standing in the way of progress
Fake news
You are making baseless claims of information fraud without any evidence, Mad Money. No one with a brain takes you seriously
they just threw a wrench in the gears for workers who wanted to stay indepent
the government is here to help.RUN
"Misclassification" as gig workers. Fairly certain that gig work was the entire point. "Majority" want it to remain gig work, so who is Biden "protecting" exactly? Never met an uber or lyft driver that didn't love the flexibility and casual nature of the job, and I've taken many many rides since 2014. Next thing will be unions, and we know how that ruined taxi service. Everything the government touches turns into trash, and Biden is Oscar the Grouch.
Biden is protecting tax, unions. Contractors can use all kind of expenses(include food,housing) to write of tax.
truth
Everyone working two jobs, even temporarily, can blame actions like these. You can’t work more at one employer because goverment rules discourage it. Plus this will limit opportunities for part time temporary employment. Unfair to the ambitious.
Destroying America one day at a time
How so? Are Americans not to be protected from misconduct by companies?
Your protection is your freedom to quit and find another job.
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.