The latest opinion letter is at odds with guidance issued by the DOL under the Obama administration, which suggested that gig workers like drivers for Uber and Lyft were likely to be employees. (Photo: Shutterstock)
Workers won't be happy about the latest decision by the Department of Labor about the status of gig workers, although the companies they work for could be.
The New York Times reports that DOL has reversed yet another Obama administration-era decision concerning the classification of gig workers via an opinion letter.
The unidentified company recipient of the letter has been told that its home-cleaning workforce is made up of contractors, not employees. That means that the company using them need not offer them the federal minimum wage or overtime, or pay a share of their Social Security taxes.
Although this is a ruling for just one company, and not overall guidance, legal experts believe that it will have an outsized effect on the gig sector as a whole. That could make companies like Lyft and Uber happy, since, according to NYT, “industry officials estimate that requiring them to classify their workers as employees would raise their labor costs by 20 to 30 percent.”
It was different under the Obama administration, with the DOL's guidance instead suggesting that gig workers like drivers for Uber and Lyft were likely to be employees. That opinion, the report says, was rescinded within months of Trump taking office.
According to David Weil, the administrator who issued the guidance under President Obama, “there are few more contentious issues currently than the status of workers operating on platform-type business models.”
Although this is a decision for a single company, other companies will likely take it as a model to protect themselves—and since the company receiving it will not be the target of enforcement proceedings by DOL, decision letters are often called “get-out-of-jail-free cards.”
“It is outrageous for the Department of Labor to set policy in such an important area through the device of an opinion letter,” Weil told NYT. “The Obama administration discontinued opinion letters precisely because they are a capricious tool for settling complicated regulatory questions.”
The uniqueness of this particular letter is reinforced by Kathleen M. Anderson, a partner at the law firm Barnes & Thornburg, who represents employers in misclassification cases who is cited agreeing that DOJ “appeared to have broader policy ambitions in devising its letter.”
“This doesn't read like a normal opinion letter,” Anderson said. ”You go back historically to most opinion letters and they are short, defined, with multiple disclaimers. This is expansive—it's back to the basics, applicable to numerous situations.”
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Marlene Satter
Marlene Y. Satter has worked in and written about the financial industry for decades.
