The US Department of Labor has proposed new rules aimed at determining whether firms should classify workers as employees or independent contractors.

The measure, to be published on 13 October, is seen as being targeted at companies in the ‘gig economy’ – including transport firms such as Uber, whose shares fell after the announcement.

The department said that the plan, which is subject to a public consultation process, was aimed at combating the misclassification of employees.

‘Unfair advantage’

“Misclassification is a serious issue that denies workers’ rights and protections under federal labour standards, promotes wage theft, allows certain employers to gain an unfair advantage over law-abiding businesses, and hurts the economy at large,” it said in a statement.

Marty Walsh (Secretary of Labor) said: “While independent contractors have an important role in our economy, we have seen in many cases that employers misclassify their employees as independent contractors, particularly among our nation’s most vulnerable workers.”

The department said that the new rules proposed a framework more consistent with long-standing judicial precedent, on which employers have relied to classify workers as employees or independent contractors under US legislation.

It argues that the new rules will preserve essential worker rights, and provide consistency for regulated entities.

Last year, Uber lost a long-running battle in the UK Supreme Court over the rights of its 60,000 drivers in that country.