This solution is designed to protect people working on a piecework basis in services such as Uber.
President Joe Biden’s administration on Wednesday blocked a Trump-era rule that made it easier to classify temporary workers at companies like Uber and Lyft as independent contractors rather than employees, a move that could signal a policy shift toward greater worker protection.
Shares of companies that use the labor force on a piecework basis immediately fell in price: shares of Uber fell 1.8 percent, Lyft – 4.4 percent, and DoorDash – 2.8 percent.
“By repealing the independent contractor classification rule, we will help preserve workers’ basic rights and stop the erosion of their protections that could occur if the rule were to take effect, ” Labor Secretary Marty Walsh said in a statement.
“Too often, workers lose wages and protections when employers mistakenly classify them as independent contractors,” he added.
Walsh said in an interview with Reuters last week that many temporary workers in the US should be classified as “employees” eligible for employment benefits. His comments sent shares of companies that hire temporary workers tumbling.
Walsh also said that in the coming months, his department would negotiate with companies that hire temporary staff to ensure workers have access to stable wages, sick leave, health care, and “everything that the average employee in America can access.”
An Uber spokesperson on Wednesday acknowledged that the current employment system is outdated.
“It presents workers with a binary choice: either to be an employee and have more benefits but less flexibility or to be an independent contractor with more flexibility but limited protection,” he said.
According to him, the company believes that it can offer its employees the best of both options.
A DoorDash spokeswoman said that people working in the service “work less than four hours a week on average and in the vast majority of cases note how important flexibility and the ability to work on their own schedule is for them.”
Lyft has yet to comment.
Temporary workers provide services on a piecework basis, including as drivers, deliverymen, or nannies. According to a survey by Edison Research, African-Americans or Latinos often do this kind of work.
The rule, passed by the administration of former President Donald Trump in early January, would limit the ability of such workers to receive the minimum wage and compensation for overtime work, which is guaranteed by the Fair Labor Standards Act. The rule was supposed to go into effect in March, but it did not happen because under Biden it was sent for review to the Labor Department, which found that it was contrary to the Fair Labor Standards Act.