The Biden administration canceled a signature Trump-era rule that would’ve eased businesses’ ability to legally consider workers as independent contractors, a rollback the U.S. Labor Department said was necessary to broadly extend wage protections while cracking down on employer abuses.
A final rule, issued Wednesday, rescinded the regulation that would’ve helped preserve the workforce model of gig-economy companies such as Uber Technologies Inc. and Instacart. The Biden agency hasn’t replaced it with a new interpretation of when workers can function as independent contractors, but the administration’s top wage regulator made clear the DOL will be targeting companies for failing to treat workers as employees who are afforded minimum wage and overtime protections.
In deciding questions of employee status, the Biden administration will now rely on a longstanding multi-factor test established by judicial precedent, Jessica Looman told reporters in a call arranged by the agency. That often-complicated analysis would have been narrowed by the Trump administration’s regulation, which was published two weeks before former President Donald Trump left office but never took effect.
The withdrawal of the Trump regulation, set for May 6, culminates a process that began when President Joe Biden took office and froze his predecessor’s rulemaking. But Looman went further by articulating how the department will handle enforcement efforts on the issue of classifying workers as independent contractors, which represents an existential question for gig economy companies but has ramifications for multiple other economic sectors.
Uber shares closed down 3.4% today, and Lyft closed down 6.3%.
But what about the shareholders? And the DISRUPTION?