US Announces Labor Rule Changes to Protect 'Short-Term Workers'... Uber Stock Drops 10%

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] On the 11th (local time), the Biden administration in the United States announced a change in labor regulations to protect "gig workers." The changes include strengthening the criteria for classifying gig workers working with shared platform companies such as Uber as independent contractors. As the cost burden on platform companies is expected to increase, the stock prices of Uber and Lyft plummeted by more than 10%.

According to Bloomberg News and others, the U.S. Department of Labor announced that it will repeal the regulation introduced by the Trump administration last year, which made it easier for companies to classify gig workers as "independent contractors."

The key point is to strengthen the regulations for determining whether a worker is an employee of a company or an independent contractor. If classified as an employee rather than a contractor, workers can receive labor law protections such as minimum wage, sick leave, and overtime pay. There have been criticisms that gig workers working for companies like Uber and Lyft are effectively controlled by the company but classified as independent contractors, placing them in a legal blind spot without protection.

Marty Walsh, U.S. Secretary of Labor, explained the purpose of the regulation change, saying, "We have seen many cases where employers misclassify employees, including the most vulnerable workers in our country, as independent contractors. This misclassification deprives workers of federal labor protections, including the right to receive the full wages they legally earn."

The Wall Street Journal analyzed that this regulation change reverses the Trump-era rule completed just before the Biden administration took office and returns to the approach favored by the Obama administration. The Trump administration made it more difficult to classify gig workers such as Uber and Lyft drivers in the sharing economy as employees protected by federal law.

The business community is concerned about the Biden administration's move. In particular, platform companies like Uber and Lyft would face increased costs as they would need to provide additional benefits such as health insurance if gig workers they contract with are classified as "employees." Some predict that costs related to gig workers could rise by about 20-30%.

Amid growing market concerns, Uber's stock price fell 10.43% in a single day, and Lyft closed down 12.02%. DoorDash's stock also dropped nearly 6%.

This content was produced with the assistance of AI translation services.