Labor Department Could Grant Gig Workers Employee Status

The U.S. Department of Labor is proposing new rules that could help gig workers be classified as employees instead of independent contractors.

The rules “would provide guidance on classifying workers and seeks to combat employee misclassification,” the department said in a news release Tuesday (Oct. 11).

This is a serious issue denying workers rights and protection under the law, subjecting them to wage theft, and hurting the economy, according to the release.

“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,” said Secretary of Labor Marty Walsh in the release.

The new rule would align the Labor Department’s approach with the courts’ interpretation of the Fair Labor Standards Act (FLSA) and would go back to what the department said is the long-held interpretation of the economic reality factors, the release stated.

“These factors include the investment, control and opportunity for profit or loss factors,” according to the release. “The integral factor, which considers whether the work is integral to the employer’s business, is also included.”

As PYMNTS reported earlier this year, the President Joe Biden administration has explored several ways to reduce the misclassification of workers, especially gig workers.

Read more: US Treasury Weighs in on ‘Gig Worker’ Status Debate

Among these interventions was at the consultation launched by the National Labor Relations Board (NLRB) about whether to change the standard for determining the independent contractor status of workers.

Two companies at the center of the issue include Lyft and Uber. In March, Washington State passed a law establishing minimum pay standards for the companies’ drivers and giving them paid sick time, family medical leave, and workers’ compensation. However, the law stops short of classifying drivers as employees, a sore point between labor groups and gig economy giants.

See more: Washington State Sets Minimum Pay for Uber, Lyft