Labor proposal could upend rules for gig workers, companies

FILE - An Uber sign is displayed inside a car in Palatine, Ill., Thursday, Feb. 10, 2022. The department said Tuesday, Oct. 11, that misclassifying workers as independent contractors instead of employees denies employees' protections under federal labor standards, promotes wage theft, allows certain employers to gain an unfair advantage over businesses, and hurts the economy.

Misclassifying workers as independent contractors denies those workers protections under federal labor standards, promotes wage theft, allows certain employers to gain an unfair advantage over businesses, and hurts the economy, the Labor Department. One key change that could affect app-based companies is a requirement that employers consider whether the employee's work is an integral part of their business. The Trump-era rule had narrowed that criteria to whether the work is part of an integrated unit of production, and gave more weight to two other considerations: the degree of control by the employer over the worker and the worker’s opportunity make a profit profit or loss.

But both Uber and Lyft dismissed the potential impact of the new rule, saying that they could thrive in either scenario. “Importantly this rule: Does not reclassify Lyft drivers as employees. Does not force Lyft to change our business model,” the company said. In 2020, California voters overwhelmingly approved a proposition to exempt drivers for app-based companies from a state law requiring them to be designated as employees. Uber, Lyft and other companies had spent $200 million campaigning in favor of the proposition. However, a judge struck down the ballot measure as unconstitutional last year, setting up a legal fight that could end up in the California Supreme Court.

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