New Biden Administration Rule Puts ‘Gig Economy’ In Jeopardy

The so-called “gig economy,” in which independent contractors provide at-will services for companies, has sparked an ongoing debate in recent years.

Proponents say the arrangement offers workers a sense of freedom whereas critics complain that there are no government regulations regarding issues such as minimum wage and healthcare benefits. President Joe Biden, who has repeatedly referred to himself as the most “pro-union” president in U.S. history, unsurprisingly falls in the latter category.

As such, the White House recently unveiled a new rule that will limit how the term “independent contractor” can be defined for regulatory purposes. Although the change is ostensibly being made to prevent gig workers from being exploited, it is already creating confusion and could negatively impact the roughly 10% of U.S. workers who rely on such jobs as their sole source of income.

U.S. Chamber of Commerce Vice President of Workplace Policy Marc Freedman highlighted the uncertainty these changes could cause for companies seeking to provide opportunities for independent contractors.

“A company trying to classify someone as an independent contractor is going to be left wondering which factors the Department of Labor actually cares about,” he said. “There are an awful lot of people operating as sole proprietors, who, in certain situations, could end up looking like employees.”

Freedman identified two specific situations in which companies and the contractors who work for them could be harmed as a result.

“One is that you have businesses who [aren’t] going to understand when they’ve classified someone properly, and the other is you have the sole proprietors who are operating as small businesses who may be in jeopardy of being able to maintain their operations,” he explained.

U.S. Rep. Kevin Kiley (R-CA) has been among the GOP lawmakers pushing back against the implementation of this rule, as he detailed in a recent letter to acting Labor Department Secretary Julie Su.

“Today’s implementation of the independent contractor rule is indeed a dark day for American workers,” he wrote. “Acting Secretary Su and the Department of Labor should stay implementation of this new rule until the federal courts have resolved the many legal issues surrounding this terrible regulation.”

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