By Eric Morath
The Biden administration is blocking a Trump-era regulation that
would have made it easier to classify gig workers and others as
independent contractors, a policy that had been sought by companies
such as food-delivery and ride-sharing services.
The Labor Department said Wednesday it is nullifying a rule it
completed in early January that sought to make it more difficult
for a gig worker, such as an Uber or DoorDash driver, to be counted
as an employee under federal law. Having status as an employee,
rather than a contractor, means those workers are covered by
federal minimum-wage and overtime laws.
Employees are also better positioned than contractors to
organize into labor unions. The Biden administration has made
creating union jobs a priority.
The Labor Department acted this week to block the rule before it
was implemented Friday, following a common practice of presidents
of different parties undoing the prior president's pending rules
early in a new administration.
Nullifying the Trump rule maintains the decadeslong status quo,
which has largely allowed app-based services to not count drivers
and other providers as employees. But Wednesday's action removes an
extra layer of assurance gig-economy companies had sought as a way,
they said, to modernize labor laws.
The Labor Department isn't planning to offer new regulations for
independent contractors in the near future, said Jessica Looman,
principal deputy administrator for the department's Wage and Hour
Division.
"We are going back to the decade's old analysis, and we really
feel that this is the space where we can best protect workers," she
said on a call with reporters. "When it comes to digital
workers...we want to make sure that we continue to look at their
needs, how they are interacting with their individual employers and
whether or not they have the protections of the Fair Labor
Standards Act."
Uber Technologies Inc. spokesman Noah Edwardsen on Wednesday
said the company views the current employment system as outdated.
Workers must choose to be an employee with more benefits and less
flexibility, or an independent contractor with more flexibility and
limited protections, the spokesman said.
"Uber believes that we can combine the best of both worlds by
offering independent work opportunities to the hundreds of
thousands of workers that use the Uber platform while also
providing these workers with meaningful benefits," he said.
Uber applauded the Trump rule when it was announced, saying it
recognized the flexibility gig workers sought. Trump administration
officials said their rule made it easier for Americans to be
self-employed and set their own hours.
Elizabeth Jarvis-Shean, vice president for communications and
policy at DoorDash Inc., said its drivers on average work fewer
than four hours a week and value flexible schedules.
"We look forward to continuing to work with the Biden
administration and lawmakers across the political spectrum to help
develop a new portable, proportional, and flexible benefits
framework," she said in a statement.
Lyft Inc. spokeswoman Julie Wood said the company sees the
regulatory action as an "opportunity to refocus the conversation on
what drivers need and want, which is independence plus
benefits."
By blocking the Trump rule, the Labor Department will continue
to use its previous regulation to enforce the Fair Labor Standards
Act, which was enacted in 1938. While Wednesday's action doesn't
immediately change how gig workers are classified, it leaves
ambiguity about how a Depression-era law will be applied to a
smartphone economy. Ms. Looman said the department will look for
opportunities to enforce existing laws, especially as they apply to
lower-wage workers.
She said Wednesday's announcement shouldn't dramatically change
how the department regulates app-based services but said the
department is engaging with those companies and others about
labor-law enforcement.
"The fact that we are moving and are embracing a pro-worker
position doesn't mean that we're anti-employer," Ms. Looman
said.
The Trump rule, announced on Jan. 6, was to be implemented on
March 8, but the Labor Department delayed it from going into effect
until Friday, as part of President Biden's broader freeze on
pending regulations.
Labor Secretary Marty Walsh, in an April interview with The Wall
Street Journal, said that legitimate independent contractors are an
important part of our economy, but the Trump-era rule made it too
easy to deny workers employee status.
"We've seen employers are increasingly misclassifying their
workers as independent contractors in order to reduce labor costs
and take a lot of protections away from workers, including minimum
wage and overtime," Mr. Walsh said.
The back-and-forth contractor regulations are in part a response
to California rules applied to gig companies.
In November, voters in California exempted Uber, Lyft, DoorDash
and others from a state law that would have forced them to
reclassify their drivers as employees, eligible for broad
employment benefits. While the exemption allowed the companies to
preserve their business models in the most populous U.S. state,
they did concede some new benefits such as health insurance for
drivers who worked 15 hours or more a week, occupational-accident
insurance coverage and 30 cents for every mile driven.
At the time, the companies said they would lobby to make this
model -- flexibility for drivers with limited benefits -- the
national standard.
Preetika Rana and Amara Omeokwe contributed to this article.
Write to Eric Morath at eric.morath@wsj.com
(END) Dow Jones Newswires
May 05, 2021 12:15 ET (16:15 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.
DoorDash (NYSE:DASH)
Historical Stock Chart
From Mar 2024 to Apr 2024
DoorDash (NYSE:DASH)
Historical Stock Chart
From Apr 2023 to Apr 2024