The Department of Labor (DOL), announced Tuesday a proposal for a rule that could allow millions of gig economy workers to be classified employees. This is a major win for labor advocates who have fought for better standards for gig workers for many years.
The new ruleThis will allow millions to be served working for companies like Uber and Lyft — along with those working in construction, janitorial services, home care, and more — to be classified as employees if they are “economically dependent”Their work for the company. While it isn’t a binding law, which would likely have to be issued by Congress, the guidance will likely beEmployers and judges use it to classify workers.
Labor officials reversed a rule that was in place during Donald Trump’s presidency by announcing the rule that expandedThe pool of workers that could be classified as freelancers or contractors; the rule allowed employers to deny these workers benefits that are required under the federal government, such as overtime pay and guaranteed minimum wage.
“While independent contractors have an important role in our economy, we have seen in many cases that employers misclassify their employees as independent contractors, particularly among our nation’s most vulnerable workers,” Secretary of Labor Marty Walsh said in a statement. “Misclassification deprives workers of their federal labor protections, including their right to be paid their full, legally earned wages.”
Labor unionsProgressive economists have long opposed conditions in the gig economy. They claim that gig companies not just exploit workers but also create jobs. threaten to erodeWorkers across the economy have suffered from or have already suffered from deteriorating working conditions.
A 2020 survey of gig workers found thatAbout 1 in 7 of these workers earn an hourly wage less than the federal minimum wage, which is $7.25 an hr. They are also more likely to be victim to wage theft. More than 60% of respondents reported losing wages due to inability clock in or out, while only 20% of service sector workers reported this.
“This is a long-awaited determination that will empower essential workers to assert their basic wage and hour, health and safety, and compensation rights,” Patricia Campos-Medina, who directs the Worker Institute at Cornell University’s School of Industrial and Labor Relations, told The Washington Post. “All workers are entitled to these rights, but employers easily avoid them by making arbitrary decisions on independent contractor rules.”
Companies in the gig economy have saddled their business modelsCompanies such as These are focused on paying their employees as little as possible. AmazonDoorDash moving as far as possible as to steal workers’ tips. These corporations want to preserve the status quo in gig workers’ lives; California is no exception. Spending gig companiesThey raised over $200 million to pass Prop 22 in 2020. This ruling allowed them to deny workers access to employee benefits.
This new rule is a significant blow to such companies. Officials at some of these corporations have estimated the reclassification could increase their labor cost by 20-30%. Uber, Lyft and DoorDashThe announcement has caused a drop in their share prices.
