Department Of Labor: "Most Workers Are Employees"

A new reinterpretation of employee classification could help win on-demand workers rights and protections in court.

Ed Brown

Last month, the California Labor Commission ruled that an individual Uber driver was an employee. Today, the Department of Labor has issued a set of guidelines that suggests that all of them might be.

The 15-page document is a new interpretation of the existing labor laws that determine which workers should be classified as employees, and which as independent contractors. Misclassification of workers is an issue that has landed a number of tech companies — Instacart, Hand, Homejoy, Uber, and Lyft, to name a few — in court. The DOL found that, despite these companies' insistence that the flexibility they offer workers makes them contractors, most workers in the United States should be classified as employees.

The memo strongly links employment to financial dependence on one's boss — it argues, essentially, that whether or not one is "an employee" depends mainly on whether one is working for a living or as a side project.

David Weil, administrator of the DOL Wage and Hour Division, issued the new interpretation, which breaks down the definition under the Fair Labor Standards Act, and blogged about its implication for "overtime pay, unemployment insurance, worker's compensation," and other benefits.

The guidance stresses all factors should be considered in service of "the ultimate determination of whether the worker is really in business for him or herself (and thus is an independent contractor) or is economically dependent on the employer (and thus is its employee)."

Harvard labor law professor Benjamin Sachs told BuzzFeed News that the memo "clarifies the DOL's view of what it means to be an employee for purposes of minimum wage, overtime, and family leave. Courts that defer to this interpretation are likely to conclude that Uber and Lyft drivers — and most other on-demand workers — fit the bill. After all, according to the labor department, you can be an 'employee' even if you set your own schedule and even if your work is never directly supervised."

But, Sachs added, while the guidelines do make a statement, it would be "not that radical" for a court to come to a decision that was not in alignment with the DOL's new guidelines.

Increasingly, the drama of employee classification in the tech world is playing out on a national stage. Just this week, Sen. Mark Warner and presidential hopefuls Hillary Clinton and Gov. Jeb Bush each weighed in on the issue, with the Democrats in favor of classifying on-demand workers as employees and the Republicans in opposition. While some of this is, undoubtedly, bloviating by politicians, these theatrics do have the power to sway public opinion.

The class-action lawsuit against both Uber and Lyft stands not only to potentially threaten those companies' business models but to set a precedent for regulating the gig economy at large. Given that it will be decided by not a judge but a jury, what the public generally considers to be true about classifying on-demand workers could potentially have enormous impact.