Gig Economy Faces Major Shift With Labor Department's Latest Rule; Uber, Lyft React

The U.S. Department of Labor announced a final rule on Tuesday, aimed at redefining the criteria for classifying workers as employees or independent contractors.

The newly issued regulation, set to take effect on March 11, focused on the economic dependence of workers on companies to determine their employment status. CNBC reported the rule could significantly increase labor costs for industries heavily dependent on contract labor.

Under the new rule, workers are considered employees if economically reliant on a particular company, rather than contractors. This shift is expected to affect sectors such as trucking, manufacturing, healthcare and app-based services, as well as those reliant on gig workers, including Uber Technologies Inc UBER and LYFT Inc LYFT. Representatives from the ride-hailing companies expressed concerns but also believed the rule won't lead to their drivers being classified as employees, according to CNBC.

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Uber Head of Federal Affairs CR Wooters said, "Drivers across the country have made it overwhelmingly clear — in their comments on this rule and in survey after survey — that they do not want to lose the unique independence they enjoy."

Meanwhile, acting U.S. Labor Secretary Julie Su highlighted the importance of this change, especially for low-income workers who stand to benefit from employee protections such as minimum wage and unemployment insurance.

"A century of labor protections for working people is premised on the employer-employee relationship," Su stated.

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This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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