As reported by The Washington Post this week, the Biden administration “is rescinding a rule that made it harder for gig and contract workers to argue they were entitled to minimum wage and overtime protections.” The rule was a holdover from the Trump era, and, if left in place, it would have “raised the bar for contractors to prove they have been misclassified” as independent contractors rather than regular employees, the Post explains.
So-called independent contractors are not entitled to the same benefits and protections as regular employees, and the Trump era rule, the Post says, would have placed a “particular emphasis” on a determination of the “worker’s opportunity for profit or loss” when deciding whether they count as a full-fledged employee. Making it more difficult for workers to prove that they should be classified as regular employees could easily be a financial boost for big companies at workers’ expense.
The formal rule withdrawal is set to take effect on Thursday. The original Trump era rule was finalized just this past January, before Trump left office. Notably, the Labor Department possesses the authority to step into disputes over the classification of workers, so their approach to determining appropriate worker status could have serious ramifications. Labor Secretary Marty Walsh commented as follows about the change:
‘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. Legitimate business owners play an important role in our economy but, too often, workers lose important wage and related protections when employers misclassify them as independent contractors. We remain committed to ensuring that employees are recognized clearly and correctly when they are, in fact, employees so that they receive the protections the Fair Labor Standards Act provides.’
Jessica Looman, who serves as principal deputy administrator at the Labor Department’s Wage and Hour Division, commented on a similar note to reporters that, regarding “app-based workers,” the department wants “to make sure we continue to look at their needs, and how they are interacting with their individual employer and whether they have protection.” Notably, a slew of companies — including Uber, Lyft, and Postmates — that rely on app-based work by people classified as independent contractors sued the Biden administration earlier this year over the president’s team’s decision to block the implementation of the Trump era rule about employee status, but this lawsuit evidently did not change the government’s thinking.