The Labor Department under the Biden administration enacted a new labor rule. The rule has been made to ensure workers are not classified as “independent contractors.” Millions of workers might benefit from this step as workers lose thousands of dollars under the classification of independent contractors.
The new rule replaces a Trump-era rule with two criteria for worker classification. In contrast, the new government has six measures by which employers must determine whether a worker is an employee or a contractor. Generally, contractors might not be paid minimum wage or get benefits such as healthcare and paid sick leave.
According to a report in AP, acting Secretary of Labor Julie Su that there have been instances where misclassified workers work side by side with those who are classified and do the same work but “don’t get paid for all their hours.”
Su also said that misclassified workers have “eroded their economic security because of misclassification.”
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The Economic Policy Institute, a left-leaning organization, analyzed 11 commonly misclassified jobs and said that such workers could lose from $9,529 to $16.729 per year in income and job benefits.
Uber said that the new law didn’t change the direction in which they operated, while Lyft said that they would not change their business model. However, the new guidance would increase “complexities and ambiguities for companies and courts.”
Many Democrats and labor unions have welcomed the new guidelines, while some Republicans have spoken against the rule. Business groups say that the government could create uncertainty as employers have to classify workers depending on how the Labor Department enforces the law.
Marc Freedman, the vice president of workplace policy at the U.S. Chamber of Commerce, said they were considering challenging the rule in court.
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