CNN Business
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The Biden management is proposing a brand new exertions rule that might classify hundreds of thousands of gig employees as workers — a transfer that will problem the low cost exertions fashions at the back of Silicon Valley heavyweights corresponding to Uber, Lyft and DoorDash.
The proposed rule introduced via the Labor Department on Tuesday targets to expand the take a look at that determines whether or not employees are entitled to protections corresponding to minimal salary and additional time pay beneath federal regulation.
“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,” stated Secretary of Labor Marty Walsh in a remark Tuesday.
The new rule would impact employees in quite a lot of industries like house care, trucking, supply products and services, and hospitality, in keeping with the Labor Department.
Shares of Uber (UBER
(UBER)) and Lyft (LYFT
(LYFT)), whose drivers are regarded as unbiased contractors, fell just about 10% at the information of the proposed rule.
In a remark, Uber referred to as the proposal a “measured approach” whilst noting that its drivers “consistently and overwhelmingly state that they prefer the flexibility that comes from being an independent contractor”
Lyft stated the rule of thumb would no longer reclassify their drivers as workers and would no longer pressure the corporate to switch their industry fashion.
A forty five-day public remark duration at the proposed rule will get started October 13.
Gig Workers Rising, an advocacy crew, praised the Biden management proposal.
“For years, gig corporations have exploited outdated labor laws to avoid all responsibilities for their workers,” stated Rondu Gantt, an Uber, Lyft, and DoorDash driving force based totally in San Francisco. “This rule can help establish bedrock protections for app-based workers like me and give us an important tool to fight for respect and safety on the job.”
The proposed rule would expand the take a look at the Labor Department makes use of to resolve whether or not a employee is an worker or unbiased contractor.
This comprises a number of elements, together with whether or not the paintings is an integral a part of the employer’s industry, how a lot keep an eye on the corporate has over the employee, and whether or not the employee has keep an eye on over their very own income.
This rule would additional explain whether or not the employee is “economically dependent on the employer for work (and is thus an employee) or is in business for themself (and is thus an independent contractor),” the Labor Department stated Tuesday.
“Misclassification deprives workers of their federal labor protections, including their right to be paid their full, legally earned wages,” stated Walsh.
The new rule would repeal the 2021 Independent Contractor Rule which narrowed the {qualifications} for workers.
The National Retail Federation, a industry crew representing the biggest US shops, opposes the brand new rule and argues the adjustments would best harm companies via riding up prices.
“The changes being proposed by the Labor Department will significantly increase costs for businesses across all industries, and further drive already rampant inflation,” stated David French, Senior Vice President of Government Relations, on the National Retail Federation Tuesday. “This decision will only foster massive confusion, endless litigation, reduced innovation and fewer opportunities for employees and independent contractors alike,” he stated.
– CNN’s Kate Trafecante contributed to this file.
