New labour rule in US on classification of independent contractors

Uber says it doesn’t “materially change the law”

On January 9th, the Biden administration enacted a new labor rule which aims to prevent the misclassification of workers as “independent contractors.”

“Misclassifying employees as independent contractors is a serious issue that deprives workers of basic rights and protections,” explained Acting Secretary of Labor Julie Su. “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 new “independent contractor” rule restores the multifactor analysis used by courts for decades, ensuring that all relevant factors are analyzed to determine whether a worker is an employee or an independent contractor. The rule addresses six factors that guide the analysis of a worker’s relationship with an employer, including:

– any opportunity for profit or loss a worker might have;

-the financial stake and nature of any resources a worker has invested in the work;

-the degree of permanence of the work relationship;

-the degree of control an employer has over the person’s work;

-whether the work the person does is essential to the employer’s business; and,

– a factor regarding the worker’s skill and initiative.

Labor advocates support the rule, saying employers have exploited lax rules to misclassify workers and avoid properly compensating them.  Construction workers, truck drivers, cleaners, landscapers, security guards and call center workers are among the most commonly misclassified workers. A report by the Economic Policy Institute estimates that misclassified construction workers lose between $10,177 and $16,729 per year.

Uber posted a statement in response to the U.S. Department of Labor’s (DOL) “Final Rule,” issued to help determine whether a worker should be considered an employee or independent contractor under the Fair Labor Standards Act:

“This rule does not materially change the law under which we operate, and will not impact the classification of the over one million Americans who turn to Uber to earn money flexibly. 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. As this rule is implemented, we look forward to working with the Biden administration and making sure they continue to hear directly from drivers,” Uber says in its statement.