The U.S. Labor Department has rescinded a Trump-era policy that would have made it easier to classify workers as independent contractors.
This decision means the department will revert to existing rules under the 1938 Fair Labor Standards Act to determine worker classification. The rescinded rule had simplified the determination process by reducing key factors to just two: employer control and worker opportunity for profit or loss.
Labor Secretary Marty Walsh stated that withdrawing the rule will help preserve essential worker rights and prevent the erosion of protections, particularly for gig workers who may be misclassified. Gig companies, such as Uber, Lyft, and DoorDash, have historically pushed for independent contractor status for their workforces.
While these companies can still classify drivers as independent contractors under current federal law, labor advocates argue the Trump rule would have facilitated easier misclassification by other employers. The Chamber of Commerce expressed disappointment, hoping the administration won't pursue regulations that limit earning opportunities for independent workers and small businesses.
Employment lawyers anticipate the Biden administration will more aggressively pursue companies that misclassify workers.
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