Labor regulators issued a ruling on Tuesday that makes it more likely that workers would be considered employees, rather than contractors, under federal law.
By overturning a ruling issued when the board was under Republican control, the decision actually increases the number of employees — such as drivers, construction workers or janitors — who have a federally protected right to associate or take other class action, such as protest against unsafe working conditions.
The ruling ensures that “employees seeking to organize or exercise their rights under the National Labor Relations Act will not be unduly excluded from its protection,” said a statement from Lauren McFerran, the Democratic president of the Labor Council, who voted in favor of 3 against 1 voted. party lines to broaden the standard.
Determining whether an employee is an employee or a contractor has long depended on several variables, including the prospective employer’s control of the work and the provision of tools and equipment.
In 2019, when the board was run by appointees of President Donald J. Trump, it elevated one consideration — employees’ chances of making more money based on their business knowledge, often described as “entrepreneurial opportunities” — over the others. It concluded that such opportunities should be an important link when some factors pointed to contractor status and others to employment.
In its 2019 decision, the board said a ruling during the Obama administration improperly subordinated the issue of money-making opportunities.
That 2019 ruling appeared to be a win for gig companies like Uber and Lyft, whose supporters have argued that share-car drivers should be considered contractors in part because of the opportunities they have for potential profit — for example, by determining which neighborhoods they have to work.
The latest decision returned the administration to the standard established in the Obama era, which explicitly rejected putting entrepreneurial opportunity ahead of other factors.
The turnaround drew criticism on Tuesday from companies that rely heavily on contractors. In a statement, Evan Armstrong, president of the Coalition for Workforce Innovation, which represents companies like Uber and Lyft, as well as industry associations, said the ruling “diminished clarity and threatens the flexible independent model that workers, consumers, entrepreneurs, businesses and the economy in general.”
However, some labor experts say it’s not clear that gig companies like Uber and Lyft, which set the prices passengers pay, provide drivers with enough bona fide entrepreneurial opportunities to qualify them as contractors even under the old standard.
In his dissenting opinion, Marvin E. Kaplan, the sole Republican member of the board of directors, made a version of this argument, concluding that the workers in the case before the board — wig, hair, and makeup stylists who work with the Atlanta Opera – “having little opportunity for economic gain or, conversely, risk of loss.”
As a result, he agreed with the majority of the board that the stylists should be regarded as employees with the right to join a union.
But Mr. Kaplan wrote that the lack of entrepreneurial opportunities meant the stylists should have been considered employees even below Trump-era standards, and there was no need to change this.