The comments, which were pulled from a larger interview with Reuters that was not published in full, were interpreted as signal that the Labor Department could move more aggressively to crack down on the use of contract labor by some of Silicon Valley’s most prominent companies.
Many labor policy experts say that gig companies Uber, Lyft and DoorDash improperly classify their workers as contractors, instead of as employees. This lowers the companies’ labor costs but leaves workers in a more precarious position, as contractors are not typically subject to protections such as minimum-wage laws, mandatory overtime, unemployment insurance, workers’ compensation and other benefits.
But the Labor Department cautioned against reading too deeply into Walsh’s comments, saying they were in line with other public moves the agency has made on the question of gig work since Biden was inaugurated.
Earlier this year, the department’s Wage and Hour Division withdrew a Trump-era letter indicating that gig workers were typically properly classified as independent contractors.
“The Secretary was reiterating that misclassification is a pervasive issue that impacts both the economy and workers,” a spokesman said in a statement. “Worker protections under federal law create a safety net of security and benefits that provide ladders of opportunity into the middle class. This safety net should be further strengthened. As our recovery continues, we should be supporting the employer-employee relationship and all of the opportunities that it provides.”
The Labor Department also reportedly plans to nominate David Weil, a leading proponent of the push to crack down on worker misclassification who has criticized the business model of gig companies, to lead the Wage and Hour Division again, according to Bloomberg Law. Weil ran that division during the Obama administration.
Uber’s stock price was down just shy of 6 percent, Lyft was down nearly 10 percent, and DoorDash was down 7.6 percent on Thursday afternoon.
The companies did not respond to immediate requests for comment.
But the companies argue that their workers are properly classified as contractors, working aggressively to beat back attempts to regulate their workforce. Company officials say that they will not able to offer the workers the same flexibility, if they are found to have improperly classified their workers, and are pushed to classify them as employees.
“Dashers have overwhelmingly told us that they value the flexibility to earn when and how they choose,” Elizabeth Jarvis-Shean, a vice-president at DoorDash, said in a statement. "We look forward to continuing to work with the Biden Administration and lawmakers across the political spectrum to help craft modern policies that preserve worker flexibility and create a new portable, proportional, and flexible benefits framework.”
In California, where the legislators passed a law aimed at cracking down on the issue of misclassification of gig workers, the companies bankrolled a $200 million ballot measure to exempt themselves. After the measure passed in November, the companies’ stocks soared.
But the question of how the federal government will deal with the question remains one of the most pressing labor issues facing the Biden administration.
Because gig companies don’t pay into unemployment insurance systems for their workers, the federal government created a new program — and footed the bill — for unemployment payments for gig and self-employed workers during the pandemic, underscoring questions about the companies’ lack of support for its workers.
Walsh has been noncommittal about the question of gig work so far, telling The Washington Post on March 24 that he needed to be briefed more on the matter before commenting.