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Labor Secretary Voices Support For Classifying Gig Workers As Employees

 

Late last week, Labor Secretary Marty Walsh voiced his support for classifying gig workers (such as those that work for Uber, Lyft, Grubhub, etc.) as employees rather than independent contractors.

The announcement does not necessarily come as a surprise but rather one step closer to these gig workers being reclassified.  Many might now be wondering what happens next.  Well, in short, just because the Labor Department (and Biden administration) think that gig workers should be classified as employees does not automatically make it happen.  Instead, what would need to occur is for Congress to pass a measure (similar to California’s AB 5) that would reclassify gig workers across the country.  Bear in mind, however, that is no sure thing.  In fact, I would suggest that trying to get that measure through Congress (even with Democrats having majority control of both the House and Senate) is no sure thing.

Another “easier” option would be to have the Labor Department issue new rulings which would set the legal guideline for how employers treat workers.  With the Labor Secretary voicing his support for reclassifying gig workers, this is a more likely option.

For those wondering why gig employers are not keen to the idea of classifying their workers as employees, it in essence comes down to money.  Should these gig workers suddenly be classified as employees, they would be entitled to a minimum wage, overtime pay, paid leave, health insurance, etc.  It goes without saying that these gig employers would be on the hook for the increase in labor costs...which would drastically eat into their bottom line.  (It should come as no surprised that Uber, Lyft, and other related gig employers saw their stock prices tumble after the Labor Secretary’s comments last week.

I will reiterate that while nothing is official and there has been no change to how gig workers are classified in the U.S., this is one situation that is likely to change in the not too distant future.


For additional information:  https://www.reuters.com/world/us/exclusive-us-labor-secretary-says-most-gig-workers-should-be-classified-2021-04-29/

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