The Labor Department issued a final rule clarifying the difference between employees and independent contractors under the Fair Labor Standards Act.
The rule, which goes into effect in March, makes it more difficult for gig workers to be classified as employees.
Major win for companies like DoorDash and Uber
It means they won’t be forced to offer employee benefits such as minimum wage, healthcare, and paid sick leave. It’s also a victory for the drivers because it means they can continue to set their own hours.
The new rule “respects the time-honored American tradition of being your own boss,” explains Deputy Secretary of Labor Patrick Pizzella, and will provide increased employment opportunities for working parents, military spouses, and ex-offenders seeking to reenter the workforce.
The Labor Department’s decision comes less than three months after California residents voted overwhelmingly in favor of a ballot measure that exempts companies like Lyft and Uber from reclassifying their workers as employees.
Uber, Lyft, DoorDash, Postmates, and Instacart dumped $200 million into the effort, making it the most expensive ballot measure in the history of California.
“We’re eager to continue working with lawmakers across the political spectrum at both the state and federal level,” said a spokesperson for DoorDash.
It is unclear if the incoming administration will choose to fight the Labor Department’s decision.