The Department of Labor released a final rule interpreting the independent contractor test under the Fair Labor Standards Act (FLSA), which will go into effect on March 11, 2024, unless there is a clearly stated delay in applicability. While we are still reviewing the new final rule, our initial view is there is no immediate or direct impact on Lyft’s business at this time.
The Final 2024 Department of Labor Rule:
Does not reclassify Lyft drivers as employees.
Does not force Lyft to change our business model.
Is similar to the approach the Obama Administration used to determine employee status. This approach previously applied to app-based companies, including Lyft, and did not result in reclassification of drivers.
The new rule emphasizes a broader approach to determining if a worker is an employee or independent contractor under the FLSA. The rule’s independent contractor test considers 6 factors, with specific examples throughout for each factor, and finds that no one factor controls - each can be weighted differently depending on the circumstances. While the intent of the rule was to provide clarity, this new guidance creates additional complexities and ambiguities for companies and courts alike across the country.
Based on surveys, people choose app-based work because of the flexibility and independence it enables. The Department of Labor's references to app-based work during this rulemaking process create unnecessary confusion and make clear that the agency misunderstands our industry and the needs of app-based workers. Here are the facts:
There are also proven examples of new policies that support app-based workers by protecting their independence while giving them access to benefits. In Washington state, app-based drivers now have access to workers compensation, sick leave, a minimum earnings guarantee, as well as paid family leave and unemployment insurance benefits, all while maintaining the ability to work on their own terms.
In fact, 92% of Lyft Drivers support a policy proposal under which drivers would remain independent contractors, maintain the current flexibility they enjoy, and be given some, but not all, of the benefits that employees receive. And Lyft remains ready to work with federal lawmakers to ensure the voices of app-based workers nationwide are heard and to advocate for a model that protects their independence
Background on DOL Rulemaking:
In 2022, the U.S. Department of Labor issued a proposed version of the rule on employee or independent contractor status under the FLSA - which sets minimum wage, overtime and recordkeeping requirements under federal law. The rule that was finalized today is similar to the proposed rule released in 2022, and provides interpretative guidance that the Department of Labor and courts can use to determine what an “employee” is under the FLSA.
Forward-Looking Statements:
Certain statements contained in this announcement are “forward-looking statements” within the meaning of the securities laws, including statements about regulatory matters. Such statements, which are not of historical fact, involve estimates, assumptions, judgments and uncertainties. There are a number of factors that could cause actual results or outcomes to differ materially from those addressed in the forward-looking statements. Such factors are detailed in Lyft’s filings with the Securities and Exchange Commission. Lyft disclaims any obligation to update any forward-looking statements to reflect future events, except as required by applicable law.