Biden administration introduces worker classification rules

CN – The Biden administration has announced a new labor rule aimed at limiting the misclassification of workers as independent contractors. The move is expected to expand federal minimum wage, health insurance and paid sick leave protections to millions of U.S. workers.

The rule issued today replaces previous guidance that favored employers’ classification of workers. This change is part of the government’s ongoing efforts to support workers’ rights and provide them with basic benefits that they may not have access to as independent contractors.

The rule, which takes effect March 11, outlines six criteria for determining whether a worker should be classified as an employee under the Fair Labor Standards Act. It is intended to provide guidance to companies rather than directly require employees to be reclassified.

Despite initial concerns when the proposed rules were announced in October 2022, shares of gig economy companies such as Uber and Lyft have since recovered. These companies, which rely heavily on independent contractors, have been at the center of debates over worker classification.

The U.S. Chamber of Commerce and other business groups voiced opposition to the new rule, warning it could negatively impact workers’ flexibility. They are considering legal action to challenge the rule. Meanwhile, gig economy companies including Uber remain confident that their drivers will remain contractors despite the new standards.

The government’s move marks an important step in addressing the complexities of the modern labor market and aims to ensure workers receive the benefits and protections required by law.

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