Coalition asks court to strike down DOL rule on independent contractors

Washington — The U.S. Chamber of Commerce has filed a lawsuit challenging the Department of Labor’s rule on determining if a worker is an employee or an independent contractor.

The suit was filed March 5 in the U.S. District Court for the Eastern District of Texas by a coalition of groups that also includes the American Trucking Associations, Associated Builders and Contractors, and the National Federation of Independent Business.

The rule, which went into effect March 11, replaced the Wage and Hour Division’s analysis for determining if a worker is an employee or an independent contractor under the Fair Labor Standards Act of 1938. DOL claims the rule is “more consistent with judicial precedent and the act’s text and purpose,” as opposed to a 2021 final rule.

The new rule uses six factors to guide WHD’s analysis, including:

• A worker’s opportunity for profit or loss.
• A worker’s financial stake and the nature of any resources they’ve invested in the job.
• The permanence of the employer-worker relationship.
• The amount of control an employer exerts over a worker.
• How essential the worker is to the business.

The other factor is the worker’s skill and initiative. Acting Labor Secretary Julie Su said the rule “will help protect workers, especially those facing the greatest risk of exploitation, by making sure they are classified properly.”

The U.S. Chamber of Commerce contends the rule will create “confusion and uncertainty” when determining how to classify a worker.

Marc Freedman, vice president for the Chamber’s Employment Policy Division, added in a statement: “DOL’s rule would deprive millions of Americans the freedom to choose to work as an independent contractor. Individuals work as independent contractors for all kinds of reasons, including greater work-life balance, the ability to choose when and how to work, and the opportunity to be one’s own boss.”

On March 21, the House Education and the Workforce Committee approved a resolution (H.J. Res. 116) aimed at repealing the rule. The resolution is now before the full House for consideration. However, it likely won’t get past the Democrat-controlled Senate.