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Ride-sharing companies lobby to delay worker classification rule

On Behalf of | Feb 23, 2023 | Employment Law |

Last October, the Department of Labor proposed a rule concerning the test to determine whether to classify worker as an employee or independent contractor. Expected to take effect early this year, the rule would return to a test used previously. The resignation of Secretary of Labor, Marty Walsh, this week has prompted the lobbying group for companies directly affected by the decision to delay implementation of the new rule.

Acting Secretary of Labor requires confirmation by Senate

The three companies—Uber Technologies, Inc., Lyft, Inc., and Door Dash, Inc.,—experienced different earnings for the year (-4.00%, +2.64% and -7.59%, respectively). However, all claimed that the new rule would not change their classification of drivers and couriers as independent contractors. Despite that, their lobbying group, Flex, has asked for a delay in finalization of the rule. Specifically, they contend that the rule take effect only after the President has nominated and the Senate confirmed a permanent Secretary of Labor.

The battle of classification pits the business model of these app-based platforms to treat drivers as independent contractors with those who seek an in-between approach that gives workers some benefits but not full employee status. Walsh accepted a position as executive director of the NHL Players’ Association, a role he will begin in mid-March. Deputy Secretary Julie Su will serve as acting secretary under the Labor Department’s rules.

Livery drivers in New York affected by potential change

For-hire vehicles (FHV) comprise a significant portion of the workforce in New York City. According to NYC Open Data, there are currently 95,673 active FHV vehicles licensed in the five boroughs. Moreover, that means that approximately three of every four contracts with Uber USA, LLC. A change in classification would significantly alter the economics of transportation within the city.

New frontiers lie ahead for those under the umbrella of “workers.” Any change in worker classification will affect many, from those working from home to those who use opportunity gig work to provide supplemental income. Attorneys who understand how the law distinguishes these legal categories can offer guidance.