Published on Jan. 10, the new worker classification rule would rescind a Trump-era rule that would not require U.S. companies to pay a minimum wage or offer healthcare and other benefits typically available to full-time workers. The Labor Department says the rule change combats employers who facilitate wage theft, which administration officials say allow companies to “undercut their law-abiding competition,” despite independent contractors being legal. Officials also state that independent contractors hurt the economy. “Misclassifying employees as independent contractors is a serious issue that deprives workers of basic rights and protections,” Acting Secretary of Labor Julie Su said in a press release announcing the rule change. “This rule will help protect workers, especially those facing the greatest risk of exploitation, by making sure they are classified properly and that they receive the wages they’ve earned.” The rule change could have profound effects on the “gig economy,” which is made up of independent contractors and freelancers, such as truckers, musicians, ride share drivers, and countless other types of jobs. Several years ago, California implemented a similar policy, Assembly Bill 5 (AB5), in theory to help Uber and Lyft drivers get benefits and higher pay. However, since full-time employees can cost companies up to 30 percent more than contractors, California companies responded by firing freelancers. Business groups and Republicans have already pushed back on the bill, promising legal challenges that could upend the new policy. “Making matters worse, the rule is completely unnecessary, as the Department continues to report success in cracking down on bad actors that are misclassifying workers,” Marc Freedman, vice president at the US Chamber of Commerce, said in a statement quoted by the New York Post. Sen. Bill Cassidy (R-La.), the ranking member of the Senate Health, Education, Labor, and Pensions (HELP) Committee, announced that he will introduce a resolution to repeal the rule. “Independent contractors, or freelancers, are shielded from forced or coerced unionization that would strip their flexibility away. This has made eliminating freelancing a top priority for large labor unions who want more workers paying forced union dues,” Cassidy said. “This is yet another example of the Biden administration prioritizing unions over Americans who choose to earn a living without participating in a union.”The Biden administration is seeking a Department of Labor rule change that will make it more difficult for companies to hire workers as independent contractors.
