Trump moves to repeal Biden contractor rule
The Department of Labor announced plans to repeal a 2024 rule that made it harder for companies to classify workers as independent contractors rather than employees. The proposal would replace the standard with one favored by business groups, benefiting industries like trucking, retail, and app-based services that rely heavily on contractors.
The Trump administration has officially moved to repeal a Biden-era regulation that made it more difficult for businesses to classify workers as independent contractors. This decision, announced by the Department of Labor on Thursday, marks a significant shift in labor policy within the United States.
The proposal seeks to eliminate a 2024 rule that required companies to treat workers as employees if they were deemed economically dependent on the business. By scrapping this rule, the administration aims to restore a standard that prioritizes the level of control a company exercises over its workers.
The 2024 rule was legally flawed and had deprived many workers of the flexibility that comes with independent contracting.
This policy change is expected to provide substantial relief to various industries, particularly those that rely on gig-economy models. Major players such as Uber Technologies, Inc. and Instacart (Maplebear Inc.) have long advocated for clearer contractor classifications to avoid the higher costs associated with full-time employment. Research suggests that employees can cost a business up to 30% more than contractors due to requirements for minimum wage, overtime pay, and unemployment insurance.
The new proposal would largely revive a standard from the first Trump term, which allowed workers who own their own businesses or work for multiple platforms to be classified as contractors. This would apply to individuals such as drivers who simultaneously use both Uber and Lyft, Inc..
While the Biden-era rule was intended to protect workers from misclassification, it faced immediate legal challenges from trade groups and freelance workers. Although a judge in New Mexico previously upheld the rule, many pending lawsuits are now expected to be dismissed as the new rulemaking process begins. The Department of Labor will formally publish the proposal on Friday, initiating a 60-day public comment period.
