Labor advocates are describing a new Trump rule announced by the Department of Labor as a potential blow to protection for workers.
The proposal — announced Sept. 22 — would raise the threshold for contract workers, which includes gig workers, to be considered employees, a category that comes with significantly more protections.
Under the proposal, the Department of Labor — which has the power to investigate worker complaints about misclassifications — said it would adopt a few guidelines to test whether workers should be considered employees or contractors.
“Many workers are misclassified and have been for years — construction workers, agricultural workers, janitors, home care workers,” Catherine Ruckelshaus, the legal director of the National Employment Law Project, an advocacy group for workers, said. “They all stand to lose from this rule.”
In California, the state’s AB5 law aimed to force gig companies such as Lyft, Uber and others to treat workers — including freelance writers — like employees, which is currently the subject of a court case and hotly contested
Labor Secretary Eugene Scalia wrote a short opinion piece published in Fox Business in support of the department’s rule, invoking AB5 no less than five times in critical terms.
“Our proposed rule aims to clear away the cobwebs and inconsistencies that have grown up around this analysis since the Supreme Court’s decisions more than a half century ago,” he wrote.
The rule does not invalidate laws in states like California that seek to add more protections for workers.
But for those states that have not weighed in on the debate over contract employees, this Labor Department rule will act as a baseline.
The test would assess whether a worker is truly in business for themselves like a contractor, or whether they are economically dependent on their employer, as an employee. It would also examine the degree of control a worker has over their work, and whether their earnings came from their initiative or investment.
The federal agency will collect comment on the proposed rule over the next 30 days.
The pandemic has revealed the shortcomings of the existing systems, as Congress was compelled to pass an aid package to provide unemployment insurance for self-employed and gig workers, that unlike traditional unemployment, receive no funding from the companies who rely on these workers.