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Labor Department Proposal Could Define Employment for Uber and Lyft

Published on Sep 23, 2020 at 7:37 am in News.

The Labor Department’s latest proposal could deem millions of gig workers as contractors rather than employees. The proposal is an interpretive rule, meaning it’s not a regulation that has the force of the law. If finalized, however, it could make a significant impact in the rideshare driver contractor/employee status battle.

Senior department officials said the proposal will be published in the Federal Register this week or early next week. At that point, the public will have 30 days to comment. In the past, however, the department has allowed longer comment periods for ambitious proposals. The department is hoping to finalize the proposal before the end of the year.

According to the New York Times, the proposal only covers laws that the Labor Department enforces, like the federal minimum wage and overtime rules. State and other federal agencies would still be able to make their own determinations. Employers, however, tend to follow the department’s guidance.

While determining employment status is based on a number of factors, the proposed rule would place emphasis on the extent to which a company controls how a worker performs a job and the opportunity that a worker has to profit in the job on the basis of initiative.

In the event those two factors point in opposite directions, the department has other factors to serve as guideposts, including how much skill the work requires and whether the relationship between the worker and company is temporary or permanent.

According to Labor Secretary Eugene Scalia, “The department’s proposal aims to bring clarity and consistency to the determination of who’s an independent contractor.” Critics of the new proposal, however, argue that it will make it more difficult to deem a worker an employee.

Catherine Ruckelshaus, general counsel of the National Employment Law Project, provided the following statement regarding the matter: “It’s certainly a narrowing of the test. Employers know the rules. Workers know the rules. Employers just don’t like where the lines are between employee and independent contractor. There really isn’t very much confusion.”

Uber also commented on the proposal: “Uber appreciates the department’s focus on independent workers and is reviewing the proposed rule. Unlike A.B. 5, which would eliminate work for hundreds of thousands of people, this rule recognizes that the majority of workers on platforms like Uber want to stay independent.”

For more information on the latest in the rideshare industry, click here to visit the Rideshare Law Group blog.