Big Changes Ahead for Gig Workers?

The debate over benefits and legal protections for gig workers has escalated as their ranks in the workforce have grown.

Today, more than 10 million Americans consider themselves gig workers, and most lack the benefits and legal protections that traditional workers enjoy.

While the Trump administration sought to keep it that way, the Biden administration has taken a different tack favoring greater benefits and protections for gig workers. On Oct. 11, the Labor Department unveiled a proposed regulation that would see millions of gig workers becoming employees.

Defining Qualifications

The new rule would broaden the test that the Labor Department uses to determine whether a worker is an employee or an independent contractor. The factors would include:

• Whether the worker is an integral part of the employer's business
• The degree of control the company has over the worker
• Whether the worker has control over their own earnings.

It would also further clarify whether the worker is "economically dependent on the employer for work (and is thus an employee) or is in business for themself (and is thus an independent contractor)," the Labor Department said.

The Biden administration launched its effort to broaden gig workers' rights in May 2021, when the Labor Department revoked a rule that went into effect just two weeks before Trump left office five months earlier.

In March of this year, a U.S. district judge in Texas blocked the Biden administration's revocation, ordering the Trump rule to go back into effect. The Labor Department appealed, and in June the department said it would issue a proposed rule.

Legal Challenges Are Likely

The proposal would only apply to laws that DOL enforces, such as the federal minimum wage and overtime pay. But employers and regulators in other jurisdictions may consider DOL's interpretation when making decisions about worker classification, and judges may use it as a guide.

If so, it could have an impact on companies that contend their workers are independent contractors like Uber, Instacart, and DoorDash. These companies argue it will increase their costs by 20 to 30%, and it seems likely that they will mount legal challenges to the rule.

The National Retail Federation issued a statement opposing the proposed rule, calling it "both unwarranted and unnecessary" and will result in "massive confusion" and "endless litigation."

The litigation can't proceed until the rule is finalized, however. DOL is soliciting public comments, and a final rule won't come for several more months.

Related Resources

• California Judge Throws Out Gig Worker Law (FindLaw's Courtside)
• Does Uber App Cheat Drivers? (FindLaw's Courtside)
• Is Law Becoming Part of the Gig Economy? (FindLaw's Greedy Associates)
• How to Form an LLC in North Carolina (State Laws)