The Trump administration’s new independent contractor rule is yet another example of the administration siding with major corporations and stacking the deck against working people. This rule narrows the scope of coverage under the Fair Labor Standards Act, effectively allowing employers to strip workers of federal minimum wage and overtime protections.
This rule will have profound real-world consequences for working people. Misclassification is common in many labor-intensive, poorly-paid jobs—jobs like home health care, janitorial work, landscaping, personal services, and increasingly, app-dispatched ride-hail and delivery— where people of color and immigrants are overrepresented and workers lack the bargaining power to negotiate higher wages and better working conditions. Studies show that the earnings of independent contractors in poorly-paid occupations lag behind their employee counterparts[i], and some of these so-called independent contractors do not even earn the federal minimum wage.[ii] This new rule will accelerate this trend.
By elevating two factors above other equally important factors, the Trump administration’s test fails to account for the economic realities of many working relationships. Many workers labelled as independent contractors are not really in business for themselves because they are integrated into the operations of a larger business structure that sets most of the terms of the work. In app-dispatched ridehail and delivery jobs, for example, corporations like Uber, Lyft, DoorDash, and Amazon use apps and algorithms to offer shifts or assignments to so-called independent contractors doing the core work of the business, set the wages these workers receive, surveil and assess their performance, and determine if they are offered future assignments or get “deactivated.” App-based ridehail and delivery workers perform difficult and dangerous work without basic employment protections like the right to minimum wage and overtime, workers’ compensation, and unemployment insurance.
This rule threatens to enshrine a two-tiered labor system where similarly situated workers receive vastly different rights and protections based on the classification chosen by the business employing them.
[i] Lina Moe and James A. Parrott, The (Low) Wages of Misclassification: What One in 10 New York Workers Face, NEW SCHOOL CTR FOR NEW YORK CITY AFFAIRS (Jun. 2022), http://www.centernyc.org/urban-matters-2/the-low-wages-ofmisclassification-what-one-in-10-new-york-workers-face.
[ii] A national study of digital labor platform workers (classified as independent contractors) found that 1 in 7 earned less than the federal hourly minimum wage, and 30 percent of digital platform workers received a Supplemental Nutrition Assistance Program benefit, compared to 15 percent of employees in comparable service-sector jobs. Ben Zipperer, Celine McNicholas, Margaret Poydock, Daniel Schneider & Kristen Harknett, National Survey of Gig Workers Paints a Picture of Poor Working Conditions, Low Pay, ECON. POL’Y INST. (Jun. 2022), https://www.epi.org/publication/gig-worker-survey/.
