President Biden’s Labor Department has blocked Trump administration rules that would make it easier to classify workers as independent contractors.
The rules, which were published January 7 in the Federal Register and set to take effect this week, stated that workers should be considered contractors if they are able to control their own schedules, have a lack of direct supervision, and freedom to work for other companies.
Uber and Lyft drivers, for example, would not be entitled to overtime and minimum wages because they have flexibility. Now, the proposed rules have been put on hold until May 7, when the Labor Department will review them again.
Debate over driver classification
The Labor Department’s action could potentially lead to new challenges to California’s AB5 legislation, which took effect last year. Under AB5, workers must be treated as employees if they work in the same business as the company that pays them.
Uber and Lyft pushed back against the legislation in the form of a $205 million campaign. The ride-hailing firms ultimately passed Proposition 22 and were allowed to continue classifying their drivers as contractors. Although AB5 remains in place, it’s possible that the Labor Department could eventually classify drivers as employees.
In a statement, Uber said it “looks forward to working with the Biden administration and the Department of Labor on this rule-making to ensure independent workers have access to new benefits and protections they deserve.”