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Independent contractors, gig workers could be reclassified under new ruling

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A new Department of Labor rule that would reclassify millions of independent contractors is getting some pushback.

The move is set to have a major impact on the “gig worker” community, which includes everything from ride-sharing services to delivery drivers.


What You Need To Know

  • A Department of Labor ruling would make it harder for companies to classify their workers as independent contractors
  • At least five lawsuits have been filed against the DOL so far
  • Major groups opposing the ruling include  the U.S. Chamber of Commerce, the National Retail Foundation and the Coalition for Workforce Innovation

From construction workers to drivers of ride-hailing services like Uber or Lyft, independent contractors make up a big chunk of the nation’s workforce. And while millions of people make a living this way, the protections and bennefits of the gig working industry has always varied from working for an employer.

“They are, self-employed. They do jobs for various different clients. And they’re not employed by any one client. They’re not getting a paycheck. They’re just getting, you know, payment for the various different jobs that they do,” said Jared Cook, an employment attorney with Tully Rinckey PLCC.

But a new Biden administration law that was set to go into effect this week could be changing things.

A Department of Labor ruling would make it harder for companies to classify their workers as independent contractors. Instead, they’d simply be employees, opening them up to the same pay scales and benefits of those under contract.

“It is true that if you’re an employee, the requirements are greater. You have to receive more in benefits than somebody who’s just an independent contractor,” said Cook.

And while this ruling is meant to protect workers, it’s actually facing quite a bit of pushback. At least five lawsuits have been filed against the DOL so far.

The fear among labor unions is that employers may no longer offer these jobs if they’re forced to change their classification, impacting millions of independent contractors nationwide.

“It creates more burdens on employers. And there will be some employers that may say … the burdens are just too great. We can’t afford to be in business,” said Cook.

But many are still on board with the move.

“The counterargument to that, people would say, ‘well, if you can’t afford to pay your workers minimum wage and to comply with the laws that apply to every other employee, then you maybe you shouldn’t be in this business anyway,’ ” said Cook.

Cook says that if companies aren’t sure what to do in this middle period, it’s better to be safe than sorry.

“My advice to them is probably going to be, well, the safest way to operate is to treat them as employees, make sure you’re complying with all the laws, and then you won’t have to face a costly lawsuit. Yes, it may be a little bit more burdensome, but in the end, it it may actually save you a lot of money,” said Cook.

While the ruling is still in limbo, its impact could be a big one for the future of the economy and workforce.

Major groups have already signed on to fight against this ruling, including the U.S. Chamber of Commerce, the National Retail Foundation abd the Coalition for Workforce Innovation.

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