Personal Injury Firm
In early January, the Trump administration reportedly published a new rule that would make it easier for food delivery app companies like Uber, Instacart, and Grubhub to continue classifying their drivers, shoppers, and couriers as independent contractors at the federal level. This move could save them and other companies over $3 billion annually.
It isn’t, however, certain if it will ever take effect under President Joe Biden, who has expressed plans to classify more of those gig workers as employees. Nevertheless as Department of Labor (DOL) officials said on a press call and noted on The Counter, it could serve as a policy model for state labor agencies, or a guidepost for courts.
Because of the gig economy, the issue of worker classification has become a frequently discussed topic. App-based delivery services — especially food delivery and ride sharing — uphold that workers who sign up and get jobs through their platforms do so of their own volition, which makes them independent contractors. Under this status, companies don’t have to provide contractors with benefits like paying minimum wage or overtime, nor are those workers eligible for unemployment insurance or workers’ compensation.
However, as many workers and their advocates say, the app companies’ influence over the drivers and couriers’ decisions to pick up shifts, and exert control over their work while they’re on the job is why they contend they’re more like employees, and entitled to better pay and labor protections.
Unfortunately, the ballot measure Prop 22 passed in California in last year’s November election. The gig economy companies collectively poured more than $200 million into the campaign in favor, which would mean they’d be exempt from complying with AB5 and keep their workers classified as contractors. Uber and Lyft are now eyeing similar reforms in other states with AB 5-style laws, such as Massachusetts.
When the DOL rule was first proposed in September, Rebecca Dixon of the National Employment Law Project said it was “yet another example of the Trump administration’s relentless push to stack the deck against workers at every turn,” and a way to “cheat workers” and avoid paying minimum wage. The Economic Policy Institute, a left-leaning think tank, calculated it would cost workers at least $3.7 billion every year, in the form of reduced pay and benefits and more paperwork.
However, this rule does not take effect until March, and it is also very likely that it will fall by the wayside. Last month, Biden spokesperson Jen Psaki said the next President would issue a memo on his first day to halt or delay midnight regulations, and named this rule specifically as one to “freeze.”