The Biden administration has blocked a Trump-era rule that would have made it easier for companies like Uber, Lyft and Instacart to continue classifying rideshare drivers and delivery workers as independent contractors under federal law.
The rule pertained to the classification of gig workers under the Fair Labor Standards Act, which requires employers to pay non-exempt employees at least the federal minimum wage. The Trump administration published the rule in January 2021, and it was originally set to go into effect on March 8. In February, Biden's labor department delayed implementation until May 7. Now, the Department of Labor has officially withdrawn the rule.
The decision to rescind the rule does not mean gig workers will be considered employees. But it does mean certain gig workers won't face an additional obstacle in their efforts to be classified as employees.
The rule would have implemented a new interpretation of what type of worker is an independent contractor. The DOL, however, determined that it would have "narrowed the scope of facts and considerations" in determining whether someone is an independent contractor or employee.
Uber, a proponent of classifying gig workers as independent contractors, said the current employment model is "outdated," a spokesperson said in a statement to Protocol.
"It forces a binary choice upon workers: to either be an employee with more benefits but less flexibility, or an independent contractor with more flexibility but limited protections," Uber said. "Uber believes that we can combine the best of both worlds by offering independent work opportunities to the hundreds of thousands of workers that use the Uber platform while also providing these workers with meaningful benefits."
Lyft says it sees this as "an opportunity "to refocus the conversation on what drivers need and want, which is independence plus benefits," a spokesperson told Protocol.
The labor department's decision comes at a time when gig workers and progressive legislators are pushing for the passage of the Protecting the Right to Organize Act. The PRO Act would alter the definition of "employee" in order to expand the number of people covered by the National Labor Relations Act, which protects the rights of employees and encourages participation in collective bargaining.