The US Department of Labor has finalized a decision that could make it easier for “gig economy” companies to classify their workers as independent contractors, rather than employees that can claim legal benefits. The Trump administration released its final version of the rule today, and it’s set to take effect on March 8th, although this could change after President-elect Joe Biden takes office in January.
The DOL proposed a new framework last year for classifying employees and contractors. It focuses on two “core factors” for distinguishing the two: the “nature and degree of control over the work” and the “opportunity for profit or loss” based on initiative and investment. It also lists additional “guideposts” that include “the amount of skill required” for the job, the “degree of permanence” of the working relationship, and whether the work is part of an “integrated unit of production.”
As The New York Times noted last year, the rule is interpreting existing regulations rather than establishing new ones, and it only covers federal laws enforced by the DOL. States can still establish their own definitions — like California’s Prop 22, which specifies that Lyft and Uber drivers aren’t employees. However, it could still broadly influence how companies define their workers. The nonprofit labor rights group National Employment Law Project called it a “narrowing” of the standards rather than a meaningful clarification.