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Labor Department Moves to Change Worker Classification Rule

Bloomberg Law: “The Biden administration has issued a highly anticipated proposal on how it will approach independent contractor status under federal wage law, its second attempt to undo a Trump-era standard that it says leaves workers vulnerable to misclassification. The proposal, released Tuesday by the US Labor Department, clarifies when workers should be classified as independent contractors who are in business for themselves, or employees who are afforded the full minimum wage, overtime, and other protections provided under the Fair Labor Standards Act. Gig companies such as Uber Technologies Inc. and Lyft Inc., and construction, trucking, and other industries that use independent contractors to staff their fleets were watching closely for the rule. Shares of Uber and Lyft tumbled Tuesday after the DOL announced the proposal. Businesses say their operating costs would skyrocket if they were broadly required to reclassify their independent contractors as employees, due to the tax liabilities and minimum wage, labor, safety, and other legal requirements that apply to employees. The acting head of the DOL’s Wage and Hour Division said Tuesday the rulemaking wasn’t likely to result in large worker classification changes. “What we anticipate is that this will really help provide guidance to both avoid and prevent misclassification,” Jessica Looman said during a press call. “But this is a framework that has been used and has been well recognized and understood.” The agency’s top attorney, Seema Nanda, also noted during the press call that the proposal is “not intended to target any particular industry or business model.” .“It’s intended to provide an analysis that would apply to all industries, whether it’s newer or older, to different business models,” she said…”

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