Jan. 9 (UPI) — The Labor Department issued a final rule on Tuesday that tightens the way businesses can classify employees as independent contractors, wiping out a Trump-era rule that loosened those rules for companies.
The department said the changes are meant to protect workers from wage theft, prevent some businesses to using the designation as an advantage over businesses that fully hire workers, and extend federal employee protections.
“Misclassifying employees as independent contractors is a serious issue that deprives workers of basic rights and protections,” Acting Secretary of Labor Julie Su said in a statement.
“This rule will help protect workers, especially those facing the greatest risk of exploitation, by making sure they are classified properly and that they receive the wages they’ve earned.”
The so-called “independent contractor” rule returns the six-factor review that was once in use to determine a worker’s status.
According to the Labor Department, those factors include a worker’s relationship with the employer, the financial stake and nature of any resources a worker has invested in the work, the degree of permanence of the working relationship, the degree of control an employer has over the person’s work, whether the work the person does is essential to the employee’s business, and a factor regarding the worker’s skill and initiative.
The Labor Department said the rule, initially proposed in 2022, rescinds the 2021 rule that it believes did not square with judicial precedent. That rule gave the workers a level of control over their work and the ability to profit from their position with personal investment as the primary factor in determining if they were independent contractors.
Uber said in a statement that the new rule did not change the way it operates and will not impact the current classification of its employees.
“Drivers across the country have made it overwhelmingly clear — in their comments on this rule and in survey after survey — that they do not want to lose the unique independence they enjoy,” Uber said.
Uber’s rival Lyft said they are still reviewing the new rule but it appears to be guidelines similar to that of the Obama administration and did not believe it presented a material change in operations as well.
DoorDash, one of the country’s top online food delivery services, reacted the same way, saying it does not appear the new rule will affect the independence of their drivers.
“We will continue to engage with the Department of Labor, Congress and other stakeholders to find solutions that ensure Dashers maintain their flexibility while gaining access to new benefits and protections,” DoorDash said.