Uber, Lyft sink after Biden administration proposes new gig work rule
Shares in the largest gig economy companies in the US tumbled after the Biden administration proposed a new rule that would make it more likely that gig workers will be classified as employees instead of independent contractors.
Ride-hailing app Uber fell as much as 16.7 per cent, while shares in rival Lyft and food delivery service DoorDash hit record lows during trading in New York on Tuesday as investors worried the US labour department’s proposal would dramatically raise wage costs.
The proposal would establish a “test” that the labour department could use to determine if workers are employees or independent contractors based on how much control they have over their hours and their job responsibilities. It lowers the bar to employee status from the rule written under the Trump administration.
“While independent contractors have an important role in our economy, we have seen in many cases that employers misclassify their employees as independent contractors,” labour secretary Marty Walsh said in a statement. “Misclassification deprives workers of their federal labour protections, including their right to be paid their full, legally earned wages.”
The labour department said it will give the public 45 days to comment on the proposal before proceeding with the rulemaking process.
This story originally appeared on: Financial Times - Author:Taylor Nicole Rogers
