The U.S. Department of Labor (DOL) should rescind a proposed rule that would change the criteria for determining whether an individual is classified as an employee or an independent contractor, said U.S. Sen. John Thune (R-SD) and 46 of his Republican colleagues.
“We oppose this proposed rule as it is unclear, overly restrictive, and unsuitable for workers who are seeking flexibility as they pursue opportunities as independent contractors,” Sen. Thune and the bicameral contingent of lawmakers wrote in a Dec. 13 letter sent to DOL Secretary Martin Walsh.
Specifically, the DOL’s Wage and Hour Division on Oct. 13 published its Notice of Proposed Rulemaking entitled “Employee or Independent Contractor Classification Under the Fair Labor Standards Act,” which would rescind and replace the independent contractor rule adopted in 2021.
In its place, the DOL proposes a six-factor economic reality test to determine whether a worker is “economically dependent” on a company under a totality of the circumstances, according to the lawmakers’ letter.
“This guidance outlined six economic reality factors, all of which must be considered to determine whether the worker is economically dependent on the business; no one factor is considered determinative,” the lawmakers wrote. “DOL inappropriately used the guidance to assert broadly and incorrectly that ‘most workers are employees under FLSA’s [Fair Labor Standards Act’s] broad definitions.’”
The rule adopted in 2021 clarified and simplified independent contractor classification under the FLSA, and emphasizes two core factors: a worker’s control over his or her work and his or her opportunity for profit or loss, they wrote.
“If these factors are not clear, the rule includes three guidepost factors,” wrote Sen. Thune and his colleagues. “By adopting a clearer and more transparent test, the rule encouraged innovation and flexibility in the economy.”
They added that the DOL’s new proposal is far less clear than the 2021 rule and is largely a return to “the Obama-era multi-factor test” that they called restrictive, overly complex, and inconsistently applied.
The lawmakers urged the DOL to rescind its proposed rule for determining independent contractor classification due to its negative impact on workers and businesses, the test’s lack of clarity, and the “devastating consequences” for the U.S. economy.
“The proposed rule,” Sen. Thune and the lawmakers wrote, “will jeopardize millions of individuals’ independent contractor status under the FLSA. Instead, DOL should maintain the 2021 rule, which was designed for the modern economy and brought clarity to workers and businesses.”
Among the Republicans who joined Sen. Thune in signing the letter were U.S. Sens. Richard Burr (NC), Marsha Blackburn (TN), Bill Cassidy (LA), John Hoeven (ND), Mitt Romney (UT), Tim Scott (SC), Todd Young (IN), Michael Rounds (SD), Joni Ernst (IA), Deb Fischer (R-NE) and U.S. Reps. Glenn “GT” Thompson (PA) and Mariannette Miller-Meeks (IA).