Labor Department Seeks to Expand Gig Worker Status Rules (2)

Gig companies would have an easier time classifying workers as independent contractors under a new US Department of Labor proposal that seeks to expand a business-friendly standard from the first Trump era.

The proposed rule, released Thursday, addresses the oft-litigated issue of when workers qualify as contractors who aren’t entitled to federal minimum wage or overtime pay rights under the Fair Labor Standards Act.

It also aims to extend the agency’s independent contractor standard to the Family and Medical Leave Act and Migrant and Seasonal Agricultural Worker Protection Act.

Regulatory attempts across administrations have drawn multiple lawsuits to block changes to a measure that would affect DOL investigations of industries such as construction and trucking, as well as app-based gig giants like Uber Technologies Inc. and Lyft Inc.

“Clearer application of longstanding judicial standards means businesses can classify workers more confidently and avoid mistakes that are costly, both to workers and businesses alike,” the DOL’s Wage and Hour Administrator Andrew Rogers said in a press conference Thursday.

The department estimates that the number of independent contractors could rise by as much as 750,000, but would come through new workers, not reclassified ones.

Contractor Factors

In addition to minimum wage and overtime, the FLSA guarantees child labor protections for employees. The FMLA provides 12 weeks of unpaid, job-protected medical and family leave, while the MSPA establishes employer requirements for wage, housing, and transportation arrangements for migrant and seasonal farm workers.

Thursday’s proposal said it would streamline the worker classification tests used under the laws into “a single uniform standard.”

It also would reverse a policy developed under President Joe Biden that made it harder to treat workers as contractors. That rule was heavily litigated before President Donald Trump took office.

The DOL under Trump stopped enforcing the Biden-era contractor rule last year, halting lawsuits against it until the department finalized a new regulation.

The standard from the first Trump administration considered five factors to determine whether a worker is economically dependent on an employer, but prioritized the nature and degree of the worker’s control over the work, and the worker’s opportunity for profit or loss based on personal initiative or investment.

In the new proposed rule, the agency opened the possibility of reducing the analysis down to just the degree of control. If that factor indicates employment, the analysis could stop.

If it is neutral or indicates contractor status, then the analysis could continue to the other factors, the proposal said, adding that this would provide “even greater clarity and focus.”

Labor Secretary Lori Chavez-DeRemer said in a statement that independent contractors were driving the “Golden Age of the American economy,” adding that the proposed regulation is designed to protect them.

Rep. Bobby Scott (D-Va.), ranking member on the House Education and Workforce Committee, opposed the rule, saying it would make it more difficult for misclassified employees to obtain rights under federal law.

“By codifying the pervasive trend of employers misclassifying their employees as independent contractors, the proposed rule will strip workers of their basic wage and hour protections and leave law-abiding businesses at a competitive disadvantage,” he said in a statement.

Lobbying Efforts

The proposed rule comes after the DOL and the White House’s Office of Information and Regulatory Affairs met with at least eight business groups in the last three weeks, including the US Chamber of Commerce, the Independent Work Coalition, and the Flex Association.

Flex Association CEO Kristin Sharp said in a statement Thursday that the organization is eager to work with DOL in the future. It represents app-based ride-share and delivery platforms, including Uber and Grubhub Inc.

“The millions of Americans who earn through app-based platforms do so because they value the flexibility to choose when, where, and how to work,” she said.

Associated Builders and Contractors Vice President of Government Affairs Kristen Swearingen said the Biden-era rule resulted in “more confusion and expensive, time-consuming, unnecessary and often frivolous litigation.” ABC’s Southeast Texas chapter, the Coalition for Workforce Innovation, sued the Biden administration over the 2024 rule.

Others urged Congress to step in with legislation to offer portable benefits to independent contractors.

“Independent work should not be a political football with rules changing back and forth,” DoorDash Vice President of Global Public Policy Max Rettig said in a statement. “We encourage lawmakers to protect the freedom to work independently and expand access to the benefits workers deserve.”