The ongoing debate over whether gig workers should be classified as independent contractors or full employees has been a contentious issue for companies like Uber, Lyft, DoorDash, and others for years. This classification has significant implications for workers’ rights, benefits, and protections.
In 2019, Keith Sonderling, who has been appointed as President-elect Donald Trump’s deputy labor secretary, issued an opinion letter while serving at the Department of Labor (DOL) that classified workers of an unnamed “virtual marketplace” employer as independent contractors. This decision was welcomed by gig companies’ lawyers as potentially persuasive material that could be used in court, despite not being legally binding.
The misclassification of workers as independent contractors can have detrimental effects, costing workers as much as $18,000 each year in income and job benefits, according to the Economic Policy Institute. These workers often lack basic protections such as overtime pay and unemployment insurance, and they may earn less than the minimum wage.
President Joe Biden’s Labor Department rescinded a Trump-era rule that made it easier for companies to label workers as independent contractors, allowing millions of workers to be considered employees. This decision was met with lawsuits from several trade associations, including the U.S. Chamber of Commerce.
Various states have also weighed in on the classification of gig workers. California upheld a rule classifying gig workers at companies like Uber and Lyft as independent contractors, while Pennsylvania dismissed a case where Uber Black drivers alleged misclassification. States like Alabama, Georgia, and Utah have laws that provide clarity on the status of app-based drivers.
In Massachusetts, voters approved union rights for rideshare drivers, and Uber and Lyft reached a settlement with the state to provide benefits to drivers without the same legal protections as full employees. These developments have implications for the gig economy and the rights of workers in this sector.
The appointment of Keith Sonderling as deputy labor secretary under the incoming Trump administration signals a potential shift in federal rules regarding the classification of gig workers. Employers are advised to prepare for potential changes in regulations while considering state laws that may impact their workforce.
Overall, the classification of gig workers as independent contractors or employees remains a complex and evolving issue with far-reaching implications for workers, companies, and policymakers. The ongoing debate underscores the need for clear guidelines and protections to ensure the fair treatment of all workers in the gig economy.
