The Trump administration made it easier for businesses to classify workers as independent contractors, a victory for gig-economy companies such as food-delivery and ride-sharing services and a counter to a California law that did the opposite.
The Labor Department in a final rule released on Wednesday would make it more difficult for a gig worker, such as an Uber or DoorDash driver, to be counted as an employee under federal law. That means those workers wouldn’t be covered by federal minimum-wage and overtime laws, and they could be responsible for paying the employer portion of Social Security taxes.
The rule won’t go into effect until March 8, after President-elect Joe Biden is inaugurated on Jan. 20. Biden spokeswoman Jen Psaki last week, in a press briefing, pointed to the then-pending independent contractor rule as an example of the type of last-minute regulation Mr. Biden would seek to halt or delay with a memo he intends to sign on inauguration day. She said the rule would make it easier for companies to misclassify employees.
Flexible work is overwhelmingly preferred by those who choose to earn on gig-economy platforms such as Uber, Danielle Burr, Uber Technologies Inc.’s head of federal affairs, said Wednesday.
“Forcing a binary choice upon workers—to either be an employee with more benefits but with less flexibility, or an independent contractor with limited protections—is outdated,” she said, noting Uber has offered additional benefits to drivers. “We appreciate the efforts made to modernize our nation’s laws.”