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Trump’s Gig-Worker Guidance Thrown Out by Biden Labor Department

Feb. 19, 2021, 4:19 PM

The U.S. Labor Department is retreating from the Trump administration’s opinion that workers at a gig company are exempt from wage protections because they’re independent contractors.

DOL’s Wage and Hour Administration Friday scrapped a pair of interpretative letters from 2019, including one that platform-based companies such as Uber Technologies Inc. and Instacart Inc. could have used as a legal defense against claims that their drivers are employees subject to the Fair Labor Standards Act’s minimum wage and overtime provisions.

The move signals the Biden administration will scrutinize more closely whether Silicon Valley app-based businesses can continue to avoid responsibility for wage standards by treating their workforce of service providers as independent contractors.

In an online notice, the agency said taking down this opinion letter is consistent with its recent decision to propose delaying the effective date of a final rule issued late in the Trump administration that would make it easier for businesses to classify workers as independent contractors instead of employees. That delay gives the department time to consider whether to repeal that regulation and return to an Obama-era stance that most workers are employees under the FLSA.

The opinion letter didn’t carry the same legal heft as the ensuing regulation, but companies facing claims of back wages owed still could have cited it to a judge or DOL investigator if their business practices replicated those of the unnamed “virtual marketplace company” that requested the 2019 guidance.

WHD also removed a July 2019 letter that found trucking companies don’t have to pay drivers for the time they spend in the sleeping compartment of their trucks.

“This letter was inconsistent with longstanding WHD interpretations regarding the compensability of time spent in a truck’s sleeper berth,” the agency said in eliminating the guidance. “Several courts have declined to follow this letter, determining, among other things, that it is inconsistent with the Department’s regulations; unpersuasive; and not entitled to deference.”

To contact the reporter on this story: Ben Penn in Washington at bpenn@bloomberglaw.com

To contact the editors responsible for this story: Martha Mueller Neff at mmuellerneff@bloomberglaw.com; Andrew Harris at aharris@bloomberglaw.com

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