Depression-Era Laws Threaten the Sharing Economy

Imagine you’re driving for Uber or Lyft. As an independent contractor, you enjoy setting your own work hours, picking up people you like chatting with (well, for the most part), learning about new parts of town, and earning back some of the investment in your car. Then, one day, an email from your ride-sharing service informs you that some bureaucrats you’ve never heard of have decided that Uber is now your employer. You have to work a certain number of hours and within prescribed times, and the company will start withholding a portion of your pay for taxes, like a typical paycheck. More changes are probably coming. What do you do?

That’s the dilemma ridesharing drivers may soon be facing if the Department of Labor’s (DOL) Wage and Hour Division follows through on its stated intention to radically redefine what constitutes an employment contract. Ridesharing companies and other sharing-economy startups have operated somewhat freely thanks to the DOL’s relatively laissez-faire attitude toward contracting and other innovative work arrangements. All of that may soon change.

The Wage and Hour Division is, for all intents and purposes, the nation’s wage regulator. In a blog post last July, its head, David Weil, issued new guidance regarding what makes someone an employee rather than an independent contractor. The guidance relies on the expansive wording of the Fair Labor Standards Act (FLSA) of 1938, which President Franklin Roosevelt regarded as one of the most important parts of his New Deal.

That act defines employment as simply including “to suffer or permit to work,” giving the Department of Labor huge discretion in defining the term for practical purposes. The New Deal Congress, in choosing this language, specifically re…


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