Uber told investors not to panic over gig-work reclassification. It’s only partly right.
Hello and welcome to Protocol Policy! Today we look at the Labor Department’s new employment status test that could have huge consequences for Uber, Lyft, and DoorDash. Also, PayPal backtracked on its misinformation policy that “went out in error.” And Elon Musk claims he did in fact speak to Ye but denies speaking to Putin — so make of that what you will.
Testing, testing, 1-2-3
Tuesday was not a good day to be a gig company. Shares of Uber, Lyft, and DoorDash sank after news broke that the Labor Department wants to change the classification system for independent contractors: The proposed rule narrows the definition such that some current gig workers would be reclassified as full-time employees, entitling them to benefits such as federal minimum wage and overtime pay. The Labor Department plans to solicit public feedback for 45 days before publishing the final rule, which will likely come out in 2023. The current draft is due for publication Thursday.
The new classification system would replace the business-friendly standard from the Trump era. In the final days of the Trump administration, the Labor Department reconfigured the gig-work test such that Uber and Lyft drivers were firmly on the side of independent contractors.
- The Trump-era test focuses on two “core factors”: whether a worker has control over their work, and the extent to which their profits are determined by their own initiative and/or investment.
- The new test, similar to the one used before that change in the last days of the Trump administration, will reportedly consider additional factors, including whether the work performed is core to a company’s business. That particular test presents a huge challenge for Uber, Lyft, and DoorDash, though Biden administration officials insist the proposed change isn’t targeting any one industry, according to The New York Times.
Uber and Lyft are telling investors not to hit the panic button.
- Lyft released a statement suggesting the rule change would be no big deal, and that it had expected such a proposal from the beginning of the Biden administration.
- DoorDash struck a similar cool tone in its statement: “While this is just the first step in the process, we do not anticipate this rule causing changes to our business model.”
- And an Uber spokesperson told The Washington Post the proposal takes “a measured approach, essentially returning us to the Obama era, during which our industry grew exponentially.”
- It’s worth noting, though, that industry groups representing gig-work companies ranged from sounding calm (“the new labor standard could impact the current status of gig workers”) to very alarmed (“this move would destroy the thriving, new gig economy”).
The companies may be right not to panic, but they still need to pay attention. The new standard doesn’t directly disrupt the status quo. Instead, the impact of the new classification system would mostly be felt through the guidance it provides for courts and state legislatures. And while a similar standard was applied during the Obama era, that came before the ongoing wave of attempts to reclassify gig workers as employees.
The court component could be particularly important. We’ve already seen courts play the primary role in deciding the outcome of attempts to reclassify gig workers in both Massachusetts and California. The Labor Department wants to give judges a new rubric, and that makes the potential indirect consequences of this change significant.
- As if this case weren’t already complicated enough, there’s the question of midterms and the 2024 presidential election. A rightward midterm swing would give Republicans a chance to legislate more favorable employment laws for gig companies. And a Republican president could plaster over the Biden-era rule, just as we saw in 2021 and are seeing now.
A MESSAGE FROM ERICSSON
Standardization is why phones from different companies can still connect, and Ericsson’s inventors have been at the table helping to establish standards for every generation of cellular technology, from 2G to 5G. On World Standards Day, learn how this underappreciated concept keeps innovation churning forward.
In the courts
Twitter had whistleblower Peiter “Mudge” Zatko destroy more than 10 notebooks and 100 electronic documents as part of a severance deal, Elon Musk’s lawyers alleged in court filings in the still-ongoing lawsuit.
The Treasury Department filed a settlement with Bittrex that will see the crypto exchange effectively paying about $29 million, according to Reuters. Different parts of Treasury had gone after the company for allegedly allowing people in sanctioned countries to use the platform, and for claims it didn’t maintain an acceptable program to counter money laundering.
On Protocol
A former SEC official now leading the Coinbase-allied think tank recently had some “cheeky” words for her old colleagues.
The Inflation Reduction Act is actually starting to bring some EV building capacity to the U.S.
Around the world
Elon Musk reportedly communicated with Vladimir Putin before tweeting out a peace negotiation plan earlier this month. Musk denies the conversation ever took place.
Indian outlet The Wire reported that the country’s ruling Hindu nationalist party has what amounts to a veto over certain Instagram content due to no-questions-asked handling of a top political official’s complaints — but the story itself has prompted disputes. Meta spokesperson Andy Stone claimed it appeared to be based on fake documents. The Wire, in turn, published a screengrab that seemed to show Stone ranting about the document getting leaked. Facebook said that too was fake. Some former Facebook employees and even a reporter have said they’re skeptical and don’t think the documents match their experience, while others insist that some of the doubts about the stories’ veracity were unwarranted.
In the media, culture and metaverse
PayPal has backed away from a $2,500 fine it had said it could levy on users who spread misinformation. After furious backlash, the company said the proposal didn’t reflect its plans. As pressure rises over controversial content online, the battles have spread beyond social media to digital infrastructure companies providing services like cloud-hosting, cybersecurity, and payments.
Musk, who is now once again trying to finalize his proposed purchase of Twitter, said he talked to Kanye West about his anti-Semitic tweets, which were removed from the site. “I think he took [it] to heart,” Musk said. Some wags pointed out this isn’t exactly a scalable content moderation strategy.
In data
60%: That’s how much Meta’s stock has fallen over the past year of trading. The company held its annual developers conference yesterday, focusing on the metaverse. Investors aren’t as enthused about the idea, and Meta executives reportedly told managers they would be held accountable for ensuring their employees enter the metaverse at least once a week.
A MESSAGE FROM ERICSSON
Standardization is why phones from different companies can still connect, and Ericsson’s inventors have been at the table helping to establish standards for every generation of cellular technology, from 2G to 5G. On World Standards Day, learn how this underappreciated concept keeps innovation churning forward.
Milkshake duck — er, bear
Fat Bear Week, which was one of the last uncomplicatedly charming things on the internet, has now been marred by what park officials said was ballot-box stuffing in the form of spam votes. The annual social media bracket has people weigh in on uber-sized ursines who have gorged on salmon ahead of hibernation. The contest continued after officials removed the fake votes, and 747, aka Bear Force One, ultimately prevailed as the winner.
Thanks for reading — see you Friday!