Pirate's Cove

They didn’t learn the lesson from the fiasco in California (AB5 then Prop22), which created all sorts of problems and reduced the number of gig workers? The government needs to stop messing with things they do not understand, things that are working

Biden’s proposed gig worker rule could deal a major blow to small businesses

The Biden administration has proposed a new rule that could re-classify millions of gig workers as employees, a move that could deal a significant blow to small businesses across the country.

The Labor Department on Tuesday unveiled a new proposal that would make it more difficult for companies to classify their workers as independent contractors — a change that could have major consequences for ride-hailing, delivery and other industries that depend heavily on gig workers.

Companies are required to provide certain benefits and legal protections to employees but not contractors, making employment of those types of workers more expensive. That includes minimum wage, overtime, Social Security and Medicare payroll taxes, unemployment insurance and workers’ compensation insurance.

In determining whether a worker qualifies as an independent contractor or not, the Labor Department said it would take into consideration the worker’s “opportunity for profit or loss, investment, permanency, the degree of control by the employer over the worker, (and) whether the work is an integral part of the employer’s business,” among other factors.

Which would require a heavy hand from the federal government over small businesses. Which would mean a lot of small businesses would simply opt out of using gig employees. It won’t give millions employment status, it will give them unemployment

While the proposal could give millions of workers employee status, it could also have potentially catastrophic consequences for small businesses already struggling with the hottest inflation in four decades and a persistent labor shortage.

“This is a rule that’s only going to make it more challenging for small businesses to operate in today’s already difficult economy,” Beth Milito, executive director of the National Federal of Independent Business’ legal center, told FOX Business.

Businesses say their operating costs could surge if they are required to classify gig workers as employees, and as a result, employers could be forced to cut payroll or freeze hiring in order to keep their bottom line strong. They have also noted that some employees like the flexibility that gig work provides, including the option to work for different companies if they choose to do so.

It could raise operating costs 20%-30%, meaning fewer employees. And small businesses will just simply not want to deal with it all, because they just do not have the time. It could mean that many would be limited to part time hours to avoid all the benefits. It’ll be a big mess.

And, beyond that, this seems more of making law with such a huge, encompassing law, something that the duly elected Legislative Branch should do. At least in California the general assembly passed AB5, then Proposition 22 via direct voting of the citizens. The Supreme Court has already ruled that major, heavily impactful rules are unconstitutional, should go through the Legislative Branch.