A group of major businesses and associations stepped up its fight against the Biden administration’s impending gig worker protections on Tuesday, arguing in a legal complaint that the federal rule is “unlawful” and will ultimately harm the industry and its workers.
The Department of Labor issued a rule in January that would force companies to treat some workers as employees rather than independent contractors. It’s meant to bolster both legal protections and compensation for millions of gig workers in the U.S. workforce.
The rule is supposed to go in effect March 11, though this legal challenge could cause delays. The U.S. District Court for the Eastern District of Texas will review the complaint. Fast Company reached out to the Department of Labor for comment.
Major business groups have strongly opposed the new rule, arguing that it could lead to burdensome costs and job cuts. Organizations in Tuesday’s amended suit include the Coalition for Workforce Innovation (which includes Uber and Lyft as members), the Associated Builders and Contractors, the Financial Services Institute, the American Trucking Associations, the U.S. Chamber of Commerce, the National Retail Federation, and the National Federation of Independent Business.
“The 2024 Rule fails to address (and will only add to) the confusion over the proper classification of independent contractors, and will irreparably harm not just companies employing independent contractors nationwide, but the workers themselves,” the complaint said.
The Labor Department rule replaces a scrapped Trump-era standard that lowered the bar for classifying employees as contractors. Such workers neither receive federal minimum wage protections nor qualify for employee benefits, such as health coverage and paid sick days.
“Misclassifying employees as independent contractors is a serious issue that deprives workers of basic rights and protections,” said Acting Secretary of Labor Julie Su said in January. “This rule will help protect workers, especially those facing the greatest risk of exploitation, by making sure they are classified properly and that they receive the wages they’ve earned.”
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