Rules face uncertain future with Biden administration
By Daniel J. Munoz
BridgeTower Media Newswires
The Trump administration is finalizing rules that would allow businesses to more easily classify their workers as independent contractors rather than regular employees.
Should the move actually be implemented, it could score a major victory for businesses like ridesharing companies Uber and Lyft, and food delivery service DoorDash, where gig workers make up the backbone of their workforce.
The rules though face an uncertain future with the inauguration in two weeks of Democratic President-elect Joe Biden, and a potentially Democratic-controlled Congress, which could block many last-minute rules from the Trump administration.
Several federal labor officials, at a Wednesday morning press call, declined to address either of those scenarios.
Under the proposed rule, it would be more difficult for gig workers to be counted as employees under federal labor law, exempting them from overtime and minimum wage, and exempting those employers from payroll obligations taxes, like Social Security.
“This rule brings long-needed clarity for American workers and employers,” U.S. Secretary of Labor Eugene Scalia said in a Wednesday morning statement.
“Sharpening the test to determine who is an independent contractor under the Fair Labor Standards Act makes it easier to identify employees covered by the Act while recognizing and respecting the entrepreneurial spirit of workers who choose to pursue the freedom associated with being an independent contractor.”
The proposal works by removing what is known as the “ABC test” at the federal level, which has been used for decades to discern gig workers from regular employees. The ABC test looks at factors such as whether the work falls outside of a company’s “usual course of business,” and whether the worker has to follow company rules.
In its place is an “economic reality test,” which considers the "nature and degree of control over their work,” and whether the worker has the opportunity for “for profit or loss” as a result of their “initiative or investment.”
States would still be free to implement the ABC test for their own wage and labor laws.
The proposed rules come on the heels of efforts in 2019 by California lawmakers requiring businesses like Uber, Lyft and DoorDash to classify many of their gig workers as employees.
That would have made them eligible for the state’s overtime, paid sick days and other worker protections. Voters there approved a 2020 ballot question exempting those companies from the law.
New Jersey lawmakers tried in 2019 and early 2020 to push forward a bill reclassifying many of those same workers as employees, meaning they also would have gotten access to many of the job protections not granted to freelancers. And those businesses would have been on the hook for payroll taxes.
But amid intense lobbying and opposition, the bill was watered down before it ultimately died in the state Legislature.
Danielle Burr, head of federal affairs of Uber, wrote in October that the measure would preserve a worker-status that “is overwhelmingly preferred by app-based drivers and delivery people.”
“We’re eager to continue working with lawmakers across the political spectrum at both the state and federal level to help create a new portable, proportional, and flexible framework that reflects the multiplicity of needs of the 21st-century workforce," added Taylor Bennett, a spokesperson for DoorDash.
The New Jersey proposal was widely panned by business groups, worried that the bill could kill the flexibility granted to freelance workers, ranging from rideshare and truck drivers to wedding photographers, bakers, freelance journalists, nannies, babysitters and musicians.
But proponents contend that the measure was needed to ensure workers using a single employer - like Uber, Lyft or DoorDash - as their main source of income, were not being cheated out of job protections and that these companies were not skimping out on millions of dollars in payroll taxes to the state.
