Biden erodes Trump’s deregulatory legacy with new gig worker rule
The Biden administration dealt yet another blow to former President Donald Trump’s legacy of deregulation today with the release of proposed regulations that would expand (and complicate) the federal definition of who counts as an employee by compared to an independent contractor.
It’s the latest spat in the war waged in states across the country (most notably/notoriously California) over how to categorize Uber drivers, tattoo artists and opera singers as gig-saving deals crumble. developed compared to traditional employment.
Labor unions and liberal lawmakers have tried to lump as many workers as possible into the “employee” category in an effort to secure more people overtime pay and the benefits that come with that designation. But these efforts have often provoked rebellions from workers themselves (and the companies they do business with) who object to the extra regulation and rigidity that comes with being an employee.
The proposed regulations released by the US Department of Labor (DOL) today side with the former group. They propose to reinstate a pre-existing six-factor “totality of the circumstances” test for determining who counts as an employee under the Fair Labor Standards Act (FLSA).
This test more closely aligns with the expanded definition of an employee offered by bills like California’s AB 5 or the federal PRO law.
“While independent contractors play an important role in our economy, we have seen in many cases that employers incorrectly classify their employees as independent contractors, especially among the most vulnerable workers in our country,” the secretary said. at Work Marty Walsh.
The DOL proposal would replace a narrower test issued in recent days by the Trump administration that determined a worker’s employment or contractor status based on the worker’s control over their time and ” possibility of profit or loss”.
In a messy legal-regulatory back-and-forth, the Biden administration’s efforts to delay this rule have been shot down by the courts. The DOL regulatory filing moves today to rescind and completely replace this rule.
The proposed new rule is drawing criticism from business interests who argue the Trump administration’s narrower rule is better suited to the modern economy.
“The current rules clearly define the difference between employees and independent contractors, providing much-needed legal certainty for employers, employees and independent contractors,” said David French (not the one) of the National Retail Federation . “The changes proposed by the Labor Department will dramatically increase costs for businesses in all industries and fuel already rampant inflation.”
The associations of entrepreneurs also opposed it.
“[We’re] deeply disappointed that the Biden DOL is moving forward with a rule proposal that will disrupt legitimate independent contractors, who are a critical component of the construction industry,” said Ben Brubeck of the Associated Builders and Contractors, a co-plaintiff in the successful lawsuit that stopped the Biden administration from revoking Trump administration regulations. “Undoing the 2021 Common Sense Final Rule Will Increase Litigation Confusion and Chaos.”
Sean Higgins, labor policy researcher at the Free Market Competitive Enterprise Institute, says litigation chaos is unlikely given that the DOL is restoring federal standards that had been in place for decades. But the Biden administration’s new normal reduces certainty for businesses and workers that an employer-employee relationship exists.
The Trump rule “came down to a pretty simple question of who was in charge here. It determined whether a worker was self-employed or not. It put the hands of power on the worker themselves,” Higgins said. Raison. Going back to the old six-factor test “makes everything more confusing”.
The primary impact of the DOL’s rulemaking, Higgins says, will be to make it easier for states to pursue AB 5-style bills and regulations by reimposing this broader federal definition of employee.
The proposed DOL rule will be published in the Federal Register later this week. The public will have until November 28 to submit their comments.