(AP) – The Biden administration proposed new standards Tuesday that could make it more difficult to classify millions of workers as independent contractors and deny them minimum wage and benefits.
The U.S. Department of Labor rule, which could take months to take effect, would replace a scrapped Trump-era standard that had lowered the bar for classifying employees as contractors, workers who are not covered by federal minimum wage laws and are not entitled to benefits including health insurance and paid sick days.
The reaction in markets for major gig companies was immediate. Shares of the ride-hailing company Lyft fell 12% while rival Uber tumbled about 10%, although both companies dismissed the significance of the new proposal and its potential to affect their business.
In one key change, employers are required to consider whether the work provided is an integral part of their business. That could affect app-based companies that rely almost entirely on freelance workers to provide their services. The Trump-era rule had narrowed that criteria to whether the work in part of an integrated unit of production, and gave more weight to other considerations such as the worker’s opportunity to make a profit or loss.
The new rule directs employers to consider six criteria for determining whether a worker is an employee or a contractor, without predetermining whether one outweighs the other. The criteria also include the degree of control by the employer, whether the work requires...
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