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President Joe Biden’s Labor Department this week proposed overturning two regulations that it says weakens worker protections, including one about independent contractors’ status that was finalized right before the previous administration’s term ended.
The U.S. Labor Department’s Wage and Hour Division wants to rescind the rule that establishes a standard for when a worker should be considered an employee vs. an independent contractor. The rule, which was finalized in early January and supposed to take effect this week, adopts a test for determining independent contractor status under the Federal Labor Standards Act, which is more favorable to gig companies like Uber Technologies Inc. UBER, +2.37% and DoorDash Inc. DASH, -2.03%, which want to keep treating their drivers and delivery workers as independent contractors.
The rule would minimize other factors considered by courts traditionally, the Labor Department said in a news release Thursday, “making the economic test less likely to establish that a worker is an employee under the FLSA.”
See: New U.S. rule could boost ‘gig economy’ companies while costing American workers billions
The other rule updated guidance for determining joint employer status when an employee performs work for an employer that also benefits another individual or entity. The rule was established early last year under the Trump administration. In September, a court found the rule to be contrary to the FLSA and “arbitrary and capricious.”
“The Wage and Hour Division’s mission is to protect and respect the rights of workers,” said Jessica Looman, principal deputy administrator for the division, in a statement. “While legitimate independent contractors are an important part of our economy, the misclassification of employees as independent contractors denies workers access to critical benefits and protections the law provides. Additionally, removing a standard for joint employment that may be unduly narrow would protect more workers’ wages and improve their well-being and economic security.”
The department is accepting public comments about both rules until April 12.
