Biden administration rescinds Trump-era independent contractor rule

The US Department of Labor (DOL) announced Wednesday that it would be ending a Trump-era rule that would allow businesses to classify certain workers as independent contractors rather than employees.

The end of the independent contractor rule is expected to permit so-called “gig workers” to be entitled to minimum wage and overtime compensation benefits under the Fair Labor Standards Act (FLSA). The protections outlined by the FLSA do not apply to independent contractors but do apply to employees. The decision is expected to have major ramifications for businesses such as Uber, Lyft, and DoorDash, which rely heavily on gig workers.

Labor Secretary Marty Walsh said that withdrawing the independent contractor rule “will help preserve essential worker rights and stop the erosion of worker protections.” He added that workers lose FLSA protection when employers misclassify them as independent contractors and that this move by the Department would ensure that employees are rightfully recognized as employees and receive the full protection the Act entitles them to.

Jessica Looman, principal deputy administrator for the DOL’s Wage and Hour Division wrote that, while some argue that classification as an independent contractor gives workers more flexibility, the truth is that “low wages, unpredictable schedules and a lack of job security is not flexibility.” She concluded that “federal labor law protections for employees are essential to a healthy economy.”