(MENAFN- Live Mint) "The US 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 rule is widely expected to increase labour costs for industries that rely on contract labour or freelancers, such as trucking, manufacturing, healthcare and app-based \"gig\" services federal and state labour 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 Read | Who is Gabriel Attal, France's young and openly gay prime minister?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 replaces a regulation by Republican former President Donald Trump's administration that had made it easier to classify workers as independent contractors. The new rule is likely to be challenged in court by trade groups and businesses Read | Ram Mandir ceremony: UP govt announces holiday for all educational institutionsUnder the Trump era rule, workers who owned their own businesses or had the ability to work for competing companies, such as a driver who works for both Uber Technologies and Lyft, could be treated as contractors new rule is set to take effect on March 11 US Labor Secretary Julie Su during a call with reporters on Monday said the misclassification of workers as contractors rather than employees particularly harmed low-income workers who would benefit the most from legal protections afforded to employees such as a minimum wage and unemployment insurance Read | After SBI, HDFC Bank, IDFC and two other lenders raise MCLR; check latest rates here“A century of labour protections for working people is premised on the employer-employee relationship,” Su said according to some business groups, the rule tips the scales too far in favour of finding that workers are employees rather than contractors, which will deprive millions of workers of flexibility and opportunity.“Making matters worse, the rule is completely unnecessary, as the Department continues to report success in cracking down on bad actors that are misclassifying workers,\" Marc Freedman, vice president at the U.S. Chamber of Commerce, said in a statement. He added that the Chamber, the largest U.S. business group, is considering challenging the rule in court impact on 'gig' workersThe Labor Department has said the rule was designed to crack down on industries, including construction and healthcare, where misclassification of workers is common. But its potential impact on app-based delivery and ride-hailing services, whose business models depend on contract \"gig\" labour, has garnered the most attention Read | 'PM Modi takes everything personally': Congress chief Mallikarjun Kharge reacts to India-Maldives rowChamber of Progress, a trade group that represents tech companies, said the rule could impact gig workers depending on how the Labor Department enforces it. Reclassifying independent contractors as companies' employees would negatively impact an estimated 3.4 million gig workers, resulting in $31 billion in lost income, the group said including Uber and Lyft have expressed concerns about the rule but also have said they do not expect it to lead to their drivers being classified as employees. CR Wooters, Uber's head of federal affairs, said in a statement that the new rule \"does not materially change the law under which we operate.\"\"Drivers across the country have made it overwhelmingly clear - in their comments on this rule and in survey after survey - that they do not want to lose the unique independence they enjoy,\" Wooters said Read | India inflation likely crept to closer 6% in December: Mint pollLyft and DoorDash in separate statements also said they did not expect the rule to change the way they do business.\"The vast majority of Dashers already have a full- or part-time job or are primary caregivers, students, self-employed, or retired. That's why they're not looking for the structure, shifts, and hour demands of employment,\" DoorDash said Labor Department said it would consider factors such as a worker's opportunity for profit or loss, the degree of control wielded by a company over a worker, and whether the work is an integral part of the company's business to determine whether a worker should be classified as an employee or contractor Read | India-Maldives ties under stress: What trade, tourism data showsBusiness groups have said the long list of factors that could determine a worker's classification will create confusion and inconsistent results, which in turn could spur costly class actions alleging that workers were misclassified.|
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