Man is born free, but everywhere we’ll put him in chains
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Biden, Democrats and labor unions have teamed up to force “gig workers” — truck drivers, musicians, work from homes, real estate agents, writers — back into the embracing arms of employers, where their hours and pay can be controlled, and unions can reach them.
Smashing gig workers started in California, naturally, with its infamous AB5 law, and like all bad ideas from that state, has metastasized and spread east: New York, New Jersey, and a number of other states all have similar laws proposed and lurking in their Democratic chambers, waiting for the opportunity to impose them on independent contractors. I’ve warned about this movement for several years, but now it’s going national.
The proposal, released Tuesday, would affect millions of workers across a range of industries, including healthcare, restaurants, construction and ride-share transportation, the Labor Department said.
Most prominently, it could lead to a push to classify drivers for ride-share or food delivery companies such as Uber Technologies Inc. and Lyft Inc. or DoorDash Inc. as employees rather than gig workers. The companies have opposed similar efforts in the past.
Shares of Uber closed down 10%, Lyft dropped 12% and DoorDash declined nearly 6% on Tuesday.
The rule would put in place a more stringent test to determine when companies can count workers as contractors rather than employees. Under labor law, employees are eligible for protections such as the minimum wage, medical leave or overtime pay that don’t apply to independent contractors.
The rule would put in place a “multifactor reality test” to determine whether workers are truly in business for themselves and control aspects of their employment such as whether they perform managerial duties, how they are supervised or whether they are able to set prices.
It would replace a Trump-era rule—completed just days before the Biden administration took office—and return to an approach favored by the Obama administration. The Trump administration rule made it more difficult for a gig worker to be counted as an employee under federal law.
The Journal’s editorial board has also weighed in:
The Labor Department on Tuesday proposed a rule that aims to reclassify millions of independent contractors as employees. About 20 million Americans work as independent contractors, which have more autonomy than employees and can set their own hours and work for multiple companies at the same time.
But progressives view these flexible arrangements as a burden, not a benefit. Independent contractors can’t unionize and aren’t covered by Labor’s wage and overtime mandates. Unions want to force businesses to reclassify contractors as employees, which is essentially what the proposed rule would do.
[G]ig workers would probably have to be reclassified as payroll employees. This would reduce worker flexibility and disrupt business models, which explains Tuesday’s selloff in Uber (-10.4%) and Lyft (-12%) shares. The proposed rule has the potential to sweep broadly and could cover most corners of the economy.
Newspaper columnists, truck drivers, real estate agents, barbers, consultants and many other freelancers could be ensnared. The Administration is proving it’s an equal-opportunity jobs killer.
