Proposed Labor Department rule to make it easier for companies to classify people as gig workers

Who your boss is makes a huge difference when it comes to taxes, worker protections, benefits, and more. If your boss is you, because you're an independent contractor — also known as a gig worker — you're on your own in a lot of ways. But if your boss is somebody else, that employer has obligations to offer benefits, take out taxes, etc.  

Workers, employers, and governments often fight over this classification, and the Labor Department has just proposed a new rule on this.

The proposed Trump administration rule would make it easier for companies to classify people as gig workers. The Labor Department’s Wage and Hour Division Administrator Andrew Rogers makes it sound simple: “Generally, if a worker is in business for him or herself and isn’t dependent on an employer for work, the worker is an independent contractor,” he said.

The proposed rule also puts more weight on how much control workers have and whether they face a profit or a loss. That standard tends to favor employers. But there are gray areas, and the ultimate deciders here are the courts, according to Richard Reibstein, a partner with the law firm Troutman Pepper Locke.

This proposed rule is “much ado about nothing from the legal standpoint,” he said, adding that that’s because anyone disagreeing with the rules goes to court.

Besides, he said, the gig worker rules change every time there’s a new president. President Barack Obama’s guidelines were erased by the first Donald Trump administration. And that was then overridden by the Biden White House. Now, the rule is ping ponging back to where it was during Trump’s first term.

“Therefore, the courts are saying, ‘We don’t need any help,’” Reibstein said. “That’s why they’ve essentially disregarded these prior rules on independent contractor status.”

Reibstein expects this latest Trump administration rule to also wind up in court, but first it has to be finalized — and that can only happen after a 60-day public comment period.