Source: AFP
A rule issued Tuesday by the U.S. Department of Labor making it tougher for companies to classify workers as “independent contractors” could hurt the gig economy — and is likely to face challenges.
The Biden administration’s rule repeals requirements under former President Donald Trump that made it easier for workers to be considered contractors rather than employees.
This includes drivers for ride-hailing services like Uber and Lyft, or delivery workers for companies like DoorDash.
But the Labor Department said Tuesday it believes the Trump-era rule is inconsistent with US law and judicial precedent.
Its latest rule “seeks to combat worker misclassification,” which affects workers’ rights and “facilitates wage theft,” the department added.
Workers generally cost companies more, given their right to minimum wage and overtime, among other benefits and protections.
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“The misclassification of workers as independent contractors is a serious issue that deprives workers of basic rights and protections,” said Deputy Labor Secretary Julie Sue.
The new requirement restores a “multifactor analysis” used to determine an employee’s ties to a company.
These take into account six factors such as the potential for profit or loss, the economic share and nature of the resources invested by an employee, and the degree of permanence of the employment relationship.
This is expected to take effect on March 11.
The 2021 rule placed greater emphasis on the control employees had over their work and their opportunities for profit or loss.
Lyft said Tuesday it sees no “immediate or immediate impact” to its operations at this time, while Uber said it “will not affect the classification” of Americans who drive for Uber.
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Industry group Flex, which represents several US concert platforms, said the guidance “could create significant uncertainty”.
“We will seek to ensure that the implementation of this rule does not target workers who overwhelmingly turn to app-based platforms to earn supplemental income on their own terms,” ββFlex added.
Source: AFP