Biden Reversing Trump Labor Rule To Prevent Misuse Of 'Independent Contractor' Status

The Biden administration is releasing a new labor regulation that would make it harder for employers to skirt minimum wage and overtime obligations by labeling workers as “independent contractors.”

The final rule, announced Tuesday and slated to go into effect March 11, seeks to crack down on employee misclassification . Administration officials say that, though many workers may be legitimately independent, others are merely categorized that way as a cost-cutting maneuver by their employers.

It is likely the new rule will be challenged in court by business groups. But Julie Su, the acting labor secretary, argued that it was a commonsense regulation meant to prevent the most vulnerable workers from being taken advantage of.

“I have traveled and talked to workers across the country who are working full time year-round and still struggle to make ends meet because of misclassification,” Su said on a call with reporters. “They sometimes work side by side with individuals who are properly classified doing the same work. But misclassified employees don’t get paid for all of their hours.”

She called misclassification “one of the key ways wage theft and exploitation happen.”

The independent contractor issue is a major flash point in the gig economy, with app-based platforms like Uber and Lyft built on the notion that drivers are in business for themselves rather than for the tech giants. But the new rule would affect all kinds of industries in which workers’ independent status could be questioned, including transportation, construction, health care and technology.

Jessica Looman, administrator of the Labor Department’s wage and hour division, said the rule rolled out Tuesday would apply only to the Fair Labor Standards Act,