DOL Wants to Take Away Worker Independence | Citizens Against Government Waste

DOL Wants to Take Away Worker Independence

The WasteWatcher

The Department of Labor unveiled a new proposed rule that will upend large segments of the economy and take away the independence of Americans to work where, when, and how they choose.

The COVID-19 pandemic led to a significant change in how and where tens of millions of Americans work.  Fewer people go to the office five days a week or work eight hours a day when they do, and far more people work at home than ever before.  Americans like having the flexibility and freedom to do whatever they want on their own schedule without having to answer to anyone but themselves, particularly those who are independent contractors.

But much of this independence would be destroyed under the October 11, 2022, announcement by the Department of Labor (DOL) of a proposed rule that is purportedly intended to reduce employer “misclassification,” which the agency claims, “denies workers’ rights and protections under federal labor standards, promotes wage theft, allows certain employers to gain an unfair advantage over law-abiding businesses, and hurts the economy at-large.”  The promulgation of this rule would expand the disastrous provisions of California’s AB 5 to every state in the country.  It would deprive independent contractors of the flexibility they enjoy under current federal law and potentially lead to the loss of millions of jobs. 

 The DOL rule would apply a multi-factor test that would use a “totality of the circumstances” analysis.  It would essentially overturn the multi-factor test that was promulgated by the DOL during the Trump administration, which gave more weight to workers’ control over their duties and opportunity for profit and loss. 

Under current law, independent contractors can determine their own schedule and work for multiple companies at the same time.  This flexibility allows someone to deliver groceries through Instacart on Friday, drive for Uber on Saturday, and for Lyft on Sunday.  Workers for app-based companies are not the only people who would be affected by the proposed DOL regulation.  Health aides, housekeepers, landscapers, nail salon workers, physical therapists, rabbis, surveyors, and truckers could see their worker status change.  While AB 5 included exceptions for some businesses and professions, and a California ballot initiative passed in 2021 added rideshare services, there are no exceptions in the DOL rule.

Some formerly independent contractors will be kept while others will no longer be affordable.  And the independent contractors themselves may not want to pick one job over another, since they will lose their flexibility and independence by having to work a set schedule for a set rate, which is essentially a cap on earnings, while those who lose their jobs will likely be forced to look for other ways to make additional money. 

 The DOL rulemaking could not come at a worse time.  Americans are facing the highest level of inflation in 40 years and by the traditional definition of two quarters of negative growth the economy is already in a recession.  And as wages erode, the opportunity to make additional money on one’s own time grows even more appealing.

According to a Qualtrics survey  released on October 17, 2022, 64 percent of respondents said they were currently looking for a second job or plan to look for an extra job to keep up with rising living expenses.  Many of these second jobs are performed as independent contractors.  The National Retail Federation (NRF) and the National Federation of Independent Business (NFIB) both expressed their support for the certainty provided by the current rules and their strong objections to the confusion, costs, and litigation that would result from the proposed rule.  The NRF also cited the negative impact on innovation and reduced opportunities for independent contractors and employers.

If the DOL changes how employees are classified, millions of Americans will be stripped of their freedom to choose how, when, and where they work, and significant segments of the economy will need to change their business model.  As the economy continues to struggle and prices continue to rise, the need for certainty and the opportunity to boost income has never been more important.  The Biden administration and Congress should focus on enacting policies that will spur economic growth instead of creating more burdensome regulations that will only hurt companies and workers alike.