The Biden administration is facing mounting pushback over a new Department of Labor rule set to go into effect Monday that would re-classify millions of gig workers as employees.
Trade groups, small business advocates, lawmakers and a coalition of independent workers themselves are scrambling to try to stop the rule, arguing it threatens the livelihoods of the very people it is meant to protect.
The DOL’s rule would make it more difficult for companies to classify their workers as independent contractors — a change that could have major consequences for ride-hailing, delivery and other industries that depend heavily on gig workers.
Critics liken the regulations to California’s controversial AB 5, which required businesses to treat their gig workers as employees, and received enormous backlash. After the law’s passage, California’s legislature passed over 100 exemptions for industries impacted by the law, as professionals from independent truckers to freelance writers decried its negative impacts.
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So far, at least five lawsuits have been filed against the Biden administration to stop the rule. The latest challenge came earlier this week from trade groups including the U.S. Chamber of Commerce, whose suit follows separate pending challenges filed by freelance writers and a trucking company.
Republicans in Congress also took action against the rule this week. Sen. Bill Cassidy, R-La, and Rep. Kevin Kiley, R-Calif., introduced a joint Congressional Review Act (CRA) resolution Wednesday aimed at overturning the rule, warning the worker classification rule “threatens the gig economy and jeopardizes the ability of 27 million Americans to work as independent contractors.”
In a FOX News op-ed in January, Cassidy accused the Biden administration of “spreading California’s war on gig workers to the rest of the country” with the new DOL rule. The senator argued that “AB 5 is deeply unpopular across the political spectrum in California,” and “[f]orcing this troublesome regulation onto Americans nationwide is the wrong move.”
Also Wednesday, a coalition of independent workers and advocacy groups known as Save Independent Work (SIW) – which fought against California’s AB 5 – launched a new campaign to stop the DOL’s rule.
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Karen Anderson, a member of the SIW coalition and founder of Freelancers against AB5, told FOX Business why she sees the new DOL rule as a similar threat to California’s AB 5.
“With 18,500 members in my group Freelancers Against AB5, I’ve had a front-row seat to thousands of stories of lost livelihoods since AB5 was first signed into law by Gov. Newsom in September 2019,” said Anderson, who has been a freelance writer, managing editor and photographer for more than 25 years.
“Within our membership, we’ve identified more than 600 categories of professions affected by this destructive, disruptive and cruel law.”
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She added, “Like AB5 in California, the new DOL rule is a one-size-fits-all policy that jeopardizes self-employment across a vast swath of professions, everyone from indie-film producers, event planners and healthcare professionals, to transcribers, writers, truckers and tutors.”
The DOL argues its new rule preserves workers’ rights and offers consistency across all entities covered by the Fair Labor Standards Act.
“Misclassifying employees as independent contractors is a serious issue that deprives workers of basic rights and protections,” Acting Labor Secretary Julie Su said in a statement at the time the changes were announced. “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.”
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A DOL spokesperson did not immediately respond to FOX Business‘ requests Thursday for the agency’s response to independent contractors who do not want to be forced to classify as employees and those who say the rule would destroy their livelihoods.
FOX Business’ Megan Henney and Reuters contributed to this report.