The proposal is a potential blow to gig companies and other service providers that argue their workers are contractors, though it would not immediately affect the status of those workers.
The Labor Department on Tuesday unveiled a proposal that would make it more likely for millions of janitors, home-care and construction workers and gig drivers to be classified as employees rather than independent contractors.
The proposal is intended as a so-called interpretive rule that doesn’t have the legal force of a regulation specifically authorized by Congress, and it applies only to laws that the department enforces, such as the federal minimum wage. States and other federal agencies, such as the IRS, set their own criteria for employment status, and the rule would not directly affect what they decided about the status of gig workers.
Uber and Lyft have said in federal filings that having to treat drivers as employees could force them to alter their business models, and some gig economy officials have estimated that their labor costs would rise 20% to 30%. Under President Donald Trump, the department argued that two factors should predominate in determinations of whether a worker is an employee or a contractor, even if other factors are relevant: the degree of control a company has over the worker, and the extent to which a worker can increase his or her income by taking entrepreneurial initiative, like marketing his or her services.
Administration officials cautioned that determining whether gig workers are employees would hinge on applying the test laid out in the proposal to individual cases and that they were not prejudging the outcome of any one of them. They also emphasized that the proposal did not target a particular industry.
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