The US Labour Department has proposed to redefine the status of gig workers or contract workers in the country. The move is expected to impact the business model of ride-hailing companies such as Uber, and other companies such as Lyft and DoorDash that depend on gig workers to run their businesses.
The newly proposed law will replace the old rule that allowed employees who operate their own businesses or have the ability to work for competing companies, such as drivers who work for Uber and Lyft, to be treated as contractors / contract workers.
If ‘gig workers’ is redefined, they will become eligible for additional benefits such as sick leave, overtime, medical coverage and others that are enjoyed by the regular employees. This will likely increase the cost of companies such as Uber, Lyft and DoorDash.
The new formula will include factors such as the tenure of the worker at a company, the degree of control the employer has on the employee, as well as the extent to which their work is integral to the business.
There is a 45-day public comment period for the new proposal. Meanwhile, the share prices of companies that employ gig workers took a hit. Uber and Lyft shares ended the formal day down by over 10 per cent.