Biden administration issues rule that could curb ‘gig’ work, contracting

The U.S. Department of Labor on Tuesday issued a final rule that will force companies to treat some workers as employees rather than less expensive independent contractors, in a move that has riled business groups and will likely prompt legal challenges.

The rule is widely expected to increase labor costs for industries that rely on contract labor or freelancers, such as trucking, manufacturing, healthcare and app-based “gig” services.

Most federal and state labor laws, such as those requiring a minimum wage and overtime pay, apply only to a company’s employees. Studies suggest that employees can cost companies up to 30% more than independent contractors.

The rule will require that workers be considered employees rather than contractors when they are “economically dependent” on a company. It does not go as far as wage laws in California and other states that place even greater limitations on independent contracting.