October 28, 2020

Uber and Lyft Could Gain From U.S. Rule Defining Employment

In a call with reporters, senior department officials said the proposal would be published in the Federal Register this week or early next week, at which point the public would have 30 days to comment. The department has allowed longer comment periods for ambitious proposals in the past. One official said the department hoped to finalize the proposal before the end of the year.

Mr. Weil warned, however, that because the rule departed from the underlying law that defines who is an employee, it was vulnerable to being struck down by courts. A federal court recently struck down most of a similar Labor Department rule specifying when a worker can be considered an employee of two companies simultaneously, such as a fast-food franchise and its parent company.

While the proposed rule could affect workers in across a variety of industries, from construction to home care, the impact may be most evident in the gig economy, where a vigorous debate over workers’ employment status is playing out.

Prominent gig companies are backing a measure on the November ballot that would exempt their workers from California’s new employment law, known as Assembly Bill 5. Uber and Lyft told prospective investors in filings that treating drivers as employees would force them to rethink their business model.

Some industry officials have estimated that classifying workers as employees — and therefore covering their expenses, paying them a minimum wage and overtime, and contributing to workers’ compensation and unemployment insurance — could raise labor costs 20 to 30 percent.

In the call with reporters on Tuesday, a senior Labor Department official said that the proposed federal rule “sharpens” the analysis laid out in the earlier opinion letter. The proposal echoes the letter’s pronouncement that the test for classifying workers should encourage certain “innovative work arrangements” pioneered by the gig economy.

Among them is “multi-apping,” in which a worker logs into two or more gig apps at the same time and picks the most lucrative job.

Article source: https://www.nytimes.com/2020/09/22/business/economy/labor-gig-workers.html

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