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The Labor Department on Monday examined a question that could be worth billions of dollars to businesses in the big economy, deciding that workers in a company were entrepreneurs and not employees.
As a result, the unidentified company – whose workers, it seems, owns residences – will not have to offer the federal minimum wage or overtime, nor pay part of the social security taxes. . And although the decision officially applies only to this company, legal experts have said it is likely to affect a larger part of the industry.
This decision is a testament to the Trump administration's approach to how large corporations, which account for a growing share of the economy, must treat their staff. While companies like Uber and Lyft are starting to sell shares to the public, industry officials believe that imposing on them to classify their workers as employees would increase their labor costs by 20 to 30 percent. %.
"Today, the US Department of Labor provides additional insight into the link between current labor law and labor market innovations," said Keith Sonderling, Division Manager who oversees these issues, in a statement. It has long been the policy of the Ministry not to disclose the names of companies receiving such letters.
Under the Obama administration, the Department of Labor published advice suggesting that industry workers, such as Uber and Lyft drivers, would likely be employees, a position the ministry canceled several months after President Trump took office.
"There are currently few litigation issues other than the status of workers operating under platform-based business models," said David Weil, the administrator who led President Barack Obama and is today Dean of the Heller School of Brandeis University.
Contrary to the major directions issued by the Obama administration, the action announced on Monday took the form of an "opinion letter" only applying to the company who solicited him. But other companies in the sector tend to analyze these letters closely to better understand the department's approach.
And the letters have more practical legal force than the departmental guidelines for the society in question. They are often referred to as "leak free cards" because they mean that the Labor Department will not initiate enforcement proceedings against a company with a favorable letter.
The letter can also be a powerful defense for the company if the workers pursue it or begin an arbitration procedure to resolve allegations of inappropriate classification.
"It is outrageous that the Ministry of Labor defines a policy in such an important area through a letter of opinion," said Weil. "The Obama administration has stopped the opinion letters precisely because they are a capricious tool for dealing with complex regulatory issues."
Kathleen M. Anderson, a partner at the Barnes & Thornburg law firm, who represents employers in cases of misclassification, agreed that the ministry appeared to have broader political ambitions in developing her letter.
"It does not read like a normal letter of opinion," said Ms. Anderson. "Historically, most of the letters of opinion date back to the origin, they are short, defined and contain multiple disclaimers. It is an expansive solution: it returns to the essential, applicable to many situations.
On the basis of the description in the opinion letter, the company that requested it is obviously not Lyft, which made public in March, or Uber, which intends to become so in the coming weeks.
But the letter could nevertheless have important implications for these companies. Uber, as part of its public offering, told potential investors that classifying drivers as employees would result in "significant additional expenses" and "force us to fundamentally change our business model." and, therefore, to adversely affect our business and financial condition. "
Lyft made similar statements.
In recent years, the two companies and various other companies in the huge, large economy have been aggressive in their search for laws and regulatory decisions to ensure that their workers are classified as subcontractors.
There are no precise figures on the number of workers in the online advertising economy in the United States, but an estimate based on the methodology of two former Obama administration officials suggests that there would have been between one and five million. Other researchers have produced similar estimates.
In its letter, the department wrote that the company "did not require its service providers to perform their duties, such as the route to be followed, the cleaning order of the company. An apartment "or the type of equipment that they had to use. The description suggested that it referred to a company, such as Handy or TaskRabbit, whose platform allows customers to hire cleaning agents.
Sharon Block, senior manager of the Obama Department of Labor and executive director of Harvard Law School's Work and Life at Work program, said that it was difficult to tell from the facts reported in the letter from the Ministry of Labor if the workers using the platform in question were actually independent contractors. But she said that there seemed to be a stronger argument to justify the status of entrepreneur in this case than for Uber.
She nevertheless speculated that the finding might be useful from a procedural point of view for the department if it later sought to consider Uber drivers as independent contractors.
"It's a strategy that makes sense," Block said. "They set the standard in such a way that it's really clear that this company is able to surpass it, and in a way that will help them in the most difficult cases."
The department could then argue that Uber's business model largely overlaps with the business model of the company and concludes that its workers are also entrepreneurs.
Uber declined to comment, and Lyft said he had no immediate comment. These companies could ask the department for a similar letter, which could help relieve anxiety investors about profitability were the department to give a favorable opinion.
Employment status decisions generally depend on a number of factors, including the extent to which the prospective employer controls how the worker does his work and the central role the worker plays in the enterprise.
In explaining his conclusion about the company in question, the department mentioned the fact that workers were free to choose when, where and how long they worked; the fact that they provided their own equipment; and the fact that the company did not have a mandatory training program.
The ministry also stated that workers were not an integral part of the company's activities because they "do not develop, maintain or operate" the platform that connects them to customers.
All of these factors would also apply to the Uber and Lyft drivers, although some workers' representatives questioned the department's reasoning by applying them in this case. Catherine Ruckelshaus, General Counsel of the National Employment Law Project, said it was illogical to say that people who found work through a concert company that sent housekeepers in clients were not at the heart of its activities.
"This is a close analysis of this company's business," said Ruckelshaus. "It's a huge red flag."
The Ministry has cited many ways in which the company in question appears to differ somewhat from Lyft or Uber. For example, platform employees have room to negotiate wages, although the company provides default prices and they are allowed to schedule future work with the company. the same customer without using the platform.
Mrs. Anderson, the management's attorney, said the workers were clearly contractors, based on all the factors taken into account by the department, and that the case of workers on a platform like Uber was maybe less clear.
But Ms Ruckelshaus asked if the differences between the company and Uber were significant in practice. A customer who has been shown the price of a service may not want to pay more if a worker tries to bargain, she said, leaving the cleaner with no more control over the pay than one Uber driver.
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