The administration of President Joe Biden is set to release new guidelines that will provide additional protections to gig workers or independent contractors.

Citing an administration official, Reuters reported Monday that the updated Department of Labor rule could be handed down this week and would make it difficult for companies to classify workers as independent contractors.

This rule, proposed by the Labor Department in 2022, ensures that workers who are "economically dependent" on a company should be considered employees entitled to additional benefits and legal protections.

(Photo : Justin Sullivan/Getty Images)
OAKLAND, CALIFORNIA - JULY 21: In an aerial view, shipping containers sit idle at the Port of Oakland on July 21, 2022 in Oakland, California.

Does the New Rule of the Joe Biden Administration Reduce Flexibility for Workers?

While the rule is anticipated to affect various industries when it takes effect later this year, it has particularly drawn attention for its potential impact on app-based services that rely heavily on contract workers, such as Uber, Lyft, and DoorDash. 

Critics argued that the rule may reduce flexibility for workers, limiting their opportunities to earn money.

In a statement, Marc Freedman, vice president at the US Chamber of Commerce, said: "It is likely to threaten the flexibility of individuals to work when and how they want and could have significant negative impacts on our economy." 

The rule replaces a regulation from the Trump administration that allowed workers who own their businesses or can work for competing companies to be treated as contractors. 

READ ALSO: Joe Biden Slams Corporations Over Soaring Consumer Prices, Says 'It's Time to Stop the Price-Gouging'

Donald Trump-Era Rule

The administration of Joe Biden noted that the Trump-era rule violated US wage laws and did not conform with federal court decisions. Worker advocates have said that a stricter standard was needed to stop the rampant misclassification of workers in some industries.

Legal experts said that the Biden administration's break from the previous Trump-era law will likely be the focus of lawsuits challenging the new rule, as federal law mandates thorough explanations for decisions to withdraw or replace existing regulations. 

Business groups have criticized the proposed draft rule as they expect an increase in labor costs for many industries, including retail, manufacturing, and trucking.

READ MORE: Joe Biden Extends Suspension of Trump-Era EU Steel, Aluminum Tariffs for 2 Years