Shares of rideshare and delivery companies including Uber, Lyft, Doordash, and Grubhub all fell on Thursday after reports out of Reuters said US labor secretary Marty Walsh believes most gig workers should be classified as employees.
“We are looking at it but in a lot of cases gig workers should be classified as employees,” Walsh said in his interview with Reuters on Thursday.
“These companies are making profits and revenue and I’m not (going to) begrudge anyone for that because that’s what we are about in America… but we also want to make sure that success trickles down to the worker,” Walsh added.
The US labor secretary also said that the Department of Labor will have conversations with companies that employ gig workers in the coming months to ensure they have access to “all of the things that an average employee in America can access,” Reuters reported.
Gig workers are independent contractors who enter into contracts with on-demand companies to provide services to clients.
The last decade has seen an explosion in the so-called “gig economy” with companies like Uber and Lyft fighting to maintain the independent contractor status of their workers.
In March, California voters approved a ballot measure that exempts companies that utilize the “gig economy” from having to treat workers as employees.
The measure freed companies like Uber and Lyft from a 2019 state law that entitled workers to overtime pay, sick leave, and unemployment benefits.
Now, these new comments from the US secretary of labor again call into question the longevity of the gig worker business model.
Walsh noted in his interview that if the federal government didn’t cover gig economy workers during the pandemic, they would “not only have lost their job, but they wouldn’t have had any unemployment benefits to keep their family moving forward.”
Gig workers received a reported $80 million in benefits from the US government during the pandemic, according to an analysis of government data by The Washington Post.
Shares of Uber and Lyft fell as much as 8.34% and 13.67% on Thursday after the news broke, while DoorDash and Grubhub saw their shares fall as much as 11.05% and 4%, respectively.