Biden admin to announce independent contractor rule that could upend gig economy

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Source: Reuters

Biden admin to announce independent contractor rule that could upend gig economy

Daniel Wiessner and David Shepardson
Mon, January 8, 2024 at 10:30 AM EST·3 min read

(Reuters) - The administration of U.S. President Joe Biden will release a final rule as soon as this week that will make it more difficult for companies to treat workers as independent contractors rather than employees that typically cost a company more, an administration official said.

The U.S. Department of Labor rule, which was first proposed in 2022 and is likely to face legal challenges, will require that workers be considered employees entitled to more benefits and legal protections than contractors when they are "economically dependent" on a company.

A range of industries will likely be affected by the rule, which will take effect later this year, but its potential impact on app-based services that rely heavily on contract workers has garnered the most attention. Shares of Uber Technologies Inc, Lyft Inc and DoorDash all tumbled at least 10% when the draft rule was proposed in October 2022.

The rule is among the most impactful regulations ever issued by the Labor Department office that enforces U.S. wage laws, according to Marc Freedman, vice president at the U.S. Chamber of Commerce, the largest U.S. business lobby. But he said the draft version of the rule provides little guidance to companies on where to draw the line between employees and contractors.

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