Labor Dept. terminates Trump-era gig worker rule to favor contractors

May 6 (UPI) -- A short-lived Trump-era rule that made it easier for businesses like Uber and Lyft to classify workers as independent contractors officially ended Thursday after it was terminated by the Labor Department.

Former President Donald Trump's administration finalized the gig worker rule as it left office in January, which made it harder for gig workers to be reclassified as employees under federal law.

Some independent contractors had fought such a change so they could qualify for benefits like paid sick leave, health insurance and minimum wage.

When President Joe Biden was inaugurated, he set out to revoke the rule, believing it favored companies over workers. The Labor Department signed off on the change on Wednesday and it took legal force on Thursday.

"By withdrawing the Independent Contractor Rule, we will help preserve essential worker rights and stop the erosion of worker protections that would have occurred had the rule gone into effect," Labor Secretary Marty Walsh said in a statement.

Walsh said the misclassification of employees as independent contractors violate the Fair Labor Standards Act, which requires employers to pay employees at least the federal minimum wage for every hour they work -- plus overtime at not less than 1.5 times their regular rate for every hour over 40 per week.

Gig-driven like companies Uber, Lyft and DoorDash have fought against measures to give independent contractors more employee-type rights. In November, they won the passage of Prop 22 in California that shielded them from state labor laws that would have qualified their workers as employees.