Biden administration proposes rule that could reclassify gig workers
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Biden administration proposes rule that could reclassify gig workers
Shares of Uber, Lyft and DoorDash rebounded somewhat Wednesday after a pretty ugly day Tuesday. The stock of all three “gig” companies plummeted following the Biden administration’s announcement of a proposed rule that could lead to millions of Americans, including drivers for ride-hailing and delivery services, being classified as workers and not as independent contractors.
While still just a proposal, it would be a big shift if enacted.
Washington should be involved in setting standards for how gig workers are classified, said Patricia Campos-Medina, executive director of the Worker Institute at Cornell. Up until now, she said, the federal government has “failed to keep up with the regulations that are needed to meet the changes in the economy.”
Campos-Medina said the rules for gig companies have been largely set by cities and states.
Take California, which has resorted to a patchwork of legislation, court rulings, even a referendum to regulate how the industry classifies workers.
Campos-Medina said having the federal government take initiative matters.
“It raises the standards for everybody,” she said, “for every worker” in a way that many labor activists say is long overdue on other issues like raising the federal minimum wage, which Congress hasn’t done in more than a decade.
Flex, a group that represents eight companies in the ride-hailing and delivery industry, is currently reviewing the government’s approach to refining the status of workers, according to its CEO, Kristin Sharp.
“We’re cautiously optimistic that the proposed rule, if enacted as is, which may or may not be the case, wouldn’t result in significant impact to our member companies’ operations,” she said.
Companies like Uber and Lyft have said reclassifying drivers as workers would require them to change their business models because of rising costs from new benefits and protections for workers.
Any change wouldn’t just affect workers at gig companies, according to Veena Dubal, a professor at the University of California Hastings College of the Law. It could also impact those “in low-wage sectors that are primarily occupied by immigrants and racial minorities,” including construction, farm, domestic and janitorial work.
Dubal said the Biden administration’s proposal is a start, but doesn’t go far enough.
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