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President-elect Donald Trump has tapped Keith Sonderling as his deputy labor secretary, handing employers in the so-called gig economy an ally.
Sonderling previously served as Trump’s acting administrator of the Department of Labor’s (DOL) wage and hour division, as well as a Republican commissioner on the Equal Employment Opportunity Commission (EEOC). The deputy labor secretary job requires Senate confirmation and occasionally ends up leading the agency.
“Keith will work with our great nominee for secretary of labor, Lori Chavez-DeRemer, to put our country and workers FIRST,” Trump said in a late-night Truth Social post on Tuesday.
In 2019, while serving at the DOL, Sonderling issued a 10-page opinion letter concluding that an unnamed “virtual marketplace” employer’s workers are classified as independent contractors, not as employees. The letter found that workers were not an integral part of the company’s business because they “do not develop, maintain or otherwise operate” the platform connecting them with customers.
The guidance was welcomed by lawyers at gig companies, which touted the letter as potentially persuasive material that could be used in court. Although such letters aren’t legally binding, they can be applied as guidance for other companies.
The question of whether gig workers are independent contractors or employees has plagued companies like Uber (UBER), Lyft (LYFT), DoorDash (DASH), and others for years. Some 36% of respondents to a 2022 McKinsey survey identified as independent workers. Misclassifying workers can cost workers as much as $18,000 each year in income and job benefits, according to the left-leaning Economic Policy Institute.
Several corporations have gone to court to fight to classify their workers as independent contractors. Such workers lack basic protections, such as overtime and unemployment insurance, that employees are granted and usually make less than the minimum wage.
Last January, President Joe Biden’s Labor Department rescinded a Trump-era rule that made it easier for companies to label workers as independent contractors, allowing millions of workers to be considered employees. Several trade associations quickly filed lawsuits, including the U.S. Chamber of Commerce.
Fisher Phillips, a law firm specializing in labor and employment issues, in November, said it was confident that the Trump administration would again change federal rules on the independent contractor issue. It recommended that employers prepare for potential shifts in federal rules but keep state laws in mind.