What Is the Biden Labor Law and What Does It Mean for Gig Workers?

The Biden labor law is a set of regulations put forth by the current administration that aim to protect gig workers in the United States. The proposal outlines a number of changes or regulations in how the gig economy works.

The goal is, as the Department of Labor outlines, to address misclassification that continues to deny workers rightful wages and hurt businesses and economies.

These regulations can include specifying that gig workers must be paid at least the minimum wage, providing them with overtime pay, and mandating that they be given breaks throughout the day.

As stated in the press release,

“While independent contractors have an important role in our economy, we have seen in many cases that employers misclassify their employees as independent contractors, particularly among our nation’s most vulnerable workers,” said Secretary of Labor Marty Walsh. “Misclassification deprives workers of their federal labor protections, including their right to be paid their full, legally earned wages. The Department of Labor remains committed to addressing the issue of misclassification.”

In addition, the Biden labor law requires companies to provide health insurance and other benefits to gig workers.

For some, the Biden labor law is a welcome change for those who work in the gig economy, as it provides much-needed protections and benefits.

However, only time will tell how effective these regulations will be in practice. While for others, the change may be catastrophic.

How Will This Law Impact the Future of the Gig Economy and Freelance Work?

If passed, the reclassification of independent contractors will have a major impact on the economy.

With many of the potential benefits of gig work removed, contractors may choose to drop their side hustles or pursue other traditional employment.

In the end, only time will tell. While many are for the change, there are many advocates who starkly oppose changes like Biden’s labor laws.

If the laws are passed, gig workers will need to consider how the changes will help or hurt their goals of financial freedom.

Pros and Cons of the Biden Labor Law?

While the Biden labor law has been praised as a victory for workers’ rights, it has also been criticized for its potential to burden businesses with new regulations.

One of the key provisions of the law is the requirement that companies provide employees with paid sick leave. This is a valuable benefit for workers, but it can be costly for businesses, particularly small businesses.

In addition, the law contains new provisions governing overtime pay and workplace safety. These are also positive steps for workers, but they may add to the costs of doing business.

Overall, the Biden labor law is a mixed bag for businesses. It provides some valuable benefits for workers, but it also imposes new costs and regulations that may be challenging for businesses to comply with.

Let’s look at the pros and cons of independent contractors being considered just that, rather than employees.


More Control

Some pros of independent contractors being considered employees are that the company is responsible for less paperwork, they are able to control their work schedule more, and they may be able to receive benefits.

Lower Tax Bills

Independent contractors may also be able to file taxes as self-employed individuals who could result in a lower tax bill.

Job Security

Independent contractors usually have more job security because they are not as tied to one company. They have the freedom and skills to move from job to job as needed.


Increased Costs for Businesses

The main con of considering independent contractors to be employees is that it can be costly for businesses. When a worker is classified as an employee, the business is responsible for providing a range of benefits, including health insurance, retirement savings plans, and paid sick leave.

Decrease in Flexibility

Another con of considering independent contractors to be employees is that it can reduce the flexibility and independence of workers.

When workers are classified as employees, they are typically subjected to a greater level of control and supervision from their employers. This can limit their ability to work flexibly and on their own terms.

Potential Job Loss

Finally, another potential con of classifying independent contractors as employees is that it could lead to a loss of jobs in the gig economy.

Many companies in the gig economy rely on independent contractors rather than employees, so if these workers are reclassified as employees, it could lead to a significant loss of jobs.

This could have a negative impact on the economy as a whole.

How Will the Reclassification of Contractors Change the Way Businesses Operate?

The reclassification of contractors as employees will change the way businesses operate in a number of ways.

First, businesses will be required to provide a range of benefits to their employees, including health insurance, retirement savings plans, and paid sick leave. This will be costly for businesses, particularly small businesses.

In addition, businesses will be subject to new regulations governing overtime pay and workplace safety. These changes will add to the costs of doing business and may make it more difficult for businesses to comply with the law.

Finally, the change could have a negative impact on the economy as a whole, as businesses are less likely to push for recruiting more drivers or contractors with the additional costs associated with onboarding and maintaining the relationship.

For example, by having workers considered contractors, companies that specialize in facilitating gig work are able to skirt costs like:

  • Workers’ compensation – often necessary in businesses with as little as three employees
  • Paid time off
  • A certain minimum salary or range

The absence of these costs allows companies like Uber and Lyft to take on more and more employees, growing the workforce. As a result, more employees may be let go and new hires may stop.

The Takeaway

The Biden labor law is a major change for America’s workforce. It will impact the way businesses operate and hire employees.

While many states have tried to regulate the gig economy, Biden’s approach creates one of the most widespread plans Regardless, it’s unclear exactly how the labor laws could reshape the gig economy until the laws are passed and changes begin to phase in. 

What do you think about the Biden labor law? Is it a good thing or a bad thing for America’s workforce?

For more information:

U.S. Department of Labor