The Labor Department is rescinding a rule that made it harder for gig and contract workers to argue they were entitled to minimum wage and overtime protections, part of a push to undo Trump-era decisions that favored businesses and employers, the Washington Post reported. The withdrawal of the “Independent Contractor” rule, which limited the ability of workers to argue that they were misclassified as contractors when they should have been employees, will be published in the Federal Register yesterday and become effective today. Companies have increased the use of contractors in recent decades in part to lower labor costs. Employees are entitled to a range of benefits not afforded to contractors, including a minimum wage and overtime pay. Labor advocates say that many of these workers are misclassified, and should be counted as employees. The Labor Department has the power to investigate these cases and rectify violations when they are found. “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,” Labor Secretary Marty Walsh said in a statement. “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.” The rule change is likely to add to speculation about how the Biden administration plans to deal with the question of gig work — one of the most closely watched questions about labor policy in the new administration. Companies such as Uber and Lyft typically classify the workforce their apps rely on as contractors, while aggressively pushing back against state officials, courts and Democratic lawmakers who say that their workers are misclassified.
