STORY: Big changes might soon be coming to the gig economy.
The U.S. Department of Labor proposed a rule on Tuesday that would make it harder for companies to treat workers as independent contractors. This change would shake up ride sharing, delivery, and other industries that rely on gig workers.
It could have wide-ranging impacts on company hiring and profits, household incomes and worker quality of life, says Reuters correspondent David Shepardson.
“This proposed rule from the Labor Department could affect millions of contractors and make it harder for businesses to classify them as independent contractors. You know, upwards of 60 million Americans reported doing at least some freelance work in the last 12 months. And there has been a big push by businesses to try to reduce the number of full-time employees and focus using independent contractors instead, because it's oftentimes cheaper not to pay benefits and health insurance.”
That would be harder to do under the rule, which would mandate some companies relying on contractors to give their workers additional benefits, a minimum wage, overtime pay and legal protections.
The National Retail Federation on Tuesday said it "staunchly opposes a change" and called the rule unwarranted and unnecessary.
The Flex Association, which represents Uber, Lyft, DoorDash, said it is still reviewing it and will "work to ensure that any final policy preserves the independence" gig workers want.
Lyft said in a separate statement that "there is no immediate or direct impact" at this time.
Still, investors were spooked. Shares of Uber, Lyft and DoorDash fell sharply on Tuesday.
The final rule is expected in 2023.