The Biden Administration is circling back to create a rule that could upend independent truckers after a Texas judge indicated the U.S. Department of Labor had not followed proper rule-making procedure.
Much like the AB5 law that effectively banned independent trucking in California, the new rule would force freight carriers to classify many owner-operators as employees. To say the Biden Administration policy would have a chilling effect on independent truckers, Uber, Lyft, and the gig economy would be an understatement.
In the waning days of the Trump Administration, a rule was implemented that relaxed independent contractor criteria, as it relates to federal wage law. Essentially, if someone owns their own business or works for multiple entities — such as owner-operators — companies were relatively free to broker agreements with them. The current Secretary of Labor, Marty Walsh, disagrees with the notion truckers, Uber drivers, and gig workers can freely make decisions about earning a living outside the employee-employer context.
“We are looking at it but in a lot of cases, gig workers should be classified as employees. In some cases, they are treated respectfully, and in some cases, they are not. And I think it has to be consistent across the board,” Sec. Walsh reportedly said. “These companies are making profits and revenue, and I’m not (going to) begrudge anyone for that because that’s what we are about in America.”
While the intent to ensure vulnerable people are not exploited may be noble, creating a rule that disrupts gig workers and owner-operators threatens the freedom to choose who Americans work for and negotiate their value. The Biden Administration plans to hang its employee classification hat on being “economically dependent.” These are the basic tenets of the proposed rule, according to the Department of Labor.
- Align the department’s approach with courts’ Fair Labor Standards Act (FLSA) interpretation and the economic reality test.
- Restore the multifactor, totality-of-the-circumstances analysis to determine whether a worker is an employee or an independent contractor under the FLSA.
- Ensure that all factors are analyzed without assigning a predetermined weight to a particular factor or set of factors.
- Revert to the longstanding interpretation of the economic reality factors. These factors include the investment, control and opportunity for profit or loss factors. The integral factor, which considers whether the work is integral to the employer’s business, is also included.
- Assist with the proper classification of employees and independent contractors under the FLSA.
- Rescind the 2021 Independent Contractor Rule.
Like the AB5 law that lumped truckers in with hourly-wage workers, truckers could be easily considered economically dependent on freight carriers, logistics outfits, and distribution companies.
Those who earn a living in the freight hauling sector have an opportunity to submit comments through Nov. 28, 2022, online or in writing to the Division of Regulations, Legislation and Interpretation, Wage and Hour Division, U.S. Department of Labor, Room S-3502, 200 Constitution Ave. NW, Washington, DC 20210.
Sources: reuters.com, reuters.com
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