A new Labor Department rule aims to make it easier for millions of low-wage workers to get employee benefits and other protections,
The rule expands the reach of federal labor laws that require employers to extend certain benefits and protections to workers classified as employees. Those include the right to the minimum wage, overtime pay, unemployment insurance and Social Security benefits — which employers are not required to provide to independent contractors.
“Millions of gig workers, such as janitors, home-care workers, construction workers, and truckers would be considered employees rather than independent contractors under a final rule announced by the Labor Department, which means that those hardworking Americans will no longer be cheated out of benefits and protections,” said New Jersey worker advocate Lisa McCormick, who said that ore resources are needed to enforce the new rule.
She said that many online platform-based companies that have cropped up in recent years that classify their workers as independent contractors “don’t satisfy the basic terms” of the final rule, which is backed up by decades of legal precedent, including a Supreme Court decision.
“Rideshare and delivery drivers are frequently stuck in a bad deal,” said McCormick. “They’re treated like independent contractors, which means they have no say in their pay or benefits, and they miss out on things like minimum wage, healthcare, and protection from unfair working conditions.”
Companies must take responsibility for compliance, knowing that playing by the rules is not just the right thing to do, but also avoids potentially crippling fines.
“Imagine the independent contractor rule like a new traffic light. The government installed it, but catching every red light runner isn’t always possible,” said McCormick. “So, responsible drivers need to follow the rule themselves, understanding the hefty ticket that awaits if they don’t. Corporations are in the driver’s seat here, and compliance is the green light they need to avoid crashing into trouble.”
The rule is to be published Wednesday and would take effect on March 11, officials said.
Backed by labor advocates, the rule is expected to face an onslaught of legal challenges from companies. It has faced extensive criticism from businesses and industry groups, including those representing Uber, Lyft, DoorDash, and other ride-share and delivery platforms. But labor officials say they have carefully considered possible litigation and are confident that the rule would withstand a court challenge.
The new rule rescinds a Trump-era rule from 2021 that made it easier for employers to classify workers as independent contractors, marking one of the most expansive regulatory actions taken by the Biden Labor Department so far.
It revives a test for determining whether a worker is an employee or an independent contractor who is self-employed under the Fair Labor Standards Act of 1938. The review considers six factors, including how much control an employer has over working conditions, a worker’s financial investment in their job and any opportunities a worker has for turning a profit.
“This is absolutely what needs to happen in the jobs where basically an algorithm is our boss,” said Nicole Moore, president of Rideshare Drivers United. “Anytime the company wants to profit more, they cut our pay. A lot of the rides right now pay us less than the cost of operating our vehicles.”
Before labor laws, workers faced harsh conditions. Long hours, low wages, dangerous work environments, and limited bargaining power were common. Labor laws set minimum standards for things like wages, overtime pay, breaks, and safety regulations, helping to prevent employers from taking advantage of their workers.
Labor laws establish minimum wage requirements and overtime pay rules, ensuring workers receive fair compensation for their time and effort. This helps to close the gap between rich and poor, promotes economic stability, and fosters a more just society.
They also mandate safety regulations and standards in various industries, protecting workers from preventable injuries and illnesses. This benefits both individual workers and society as a whole by reducing healthcare costs and lost productivity due to accidents.
Creating a level playing field is the reason for laws that promote equality and competition in the workplace by treating all workers fairly, regardless of their background or bargaining power. This fosters a more transparent and ethical environment for businesses to operate in.
Strong labor laws can contribute to a more stable and peaceful society. When workers feel protected and treated fairly, they are less likely to experience resentment or discontent, leading to a more harmonious social fabric.