By Daniel Wiessner, Reuters
Summary:
- Republican-led panel sends proposal to House floor
- Bill would nix DOL rule on worker classification
- Freelancers, trade groups have sued over the rule
A Republican-led U.S. House of Representatives committee on Thursday advanced a proposal to repeal a Biden administration rule heavily criticized by trade groups that makes it more difficult for companies to treat workers as independent contractors rather than their employees.
The House Committee on Education & the Workforce approved the resolution in a 21-13 vote, making it eligible for a vote by the full House.
The resolution was introduced in the Senate by Sen. Bill Cassidy, a Republican from Louisiana. Even if it passes both houses of Congress, Republicans are unlikely to muster the two-thirds majority needed to overcome a likely veto by Democratic President Joe Biden.
The U.S. Department of Labor rule, which took effect March 11, is widely expected to increase labor costs for businesses in industries that rely on contract labor or freelancers, such as trucking, manufacturing, healthcare and app-based “gig” services.
Employees are entitled to the minimum wage, overtime pay, unemployment insurance and other protections not afforded to contractors, and can cost businesses up to 30% more, according to several surveys.
At least four legal challenges to the rule are pending, including lawsuits by freelance writers, business groups and a trucking company that treats drivers as independent contractors.
During debate on the resolution on Thursday, Republicans on the House panel said the rule will lead to millions of self-employed Americans losing their contractor status and the flexibility, independence and earning potential that come with it. They cited surveys showing that the vast majority of independent contractors prefer their status over a traditional job.
“To eliminate an employment model that has allowed millions of Americans to have the flexibility they need … is inconceivable,” said. Rep. Rick Allen, a Republican from Georgia.
Democratic lawmakers pushed back, saying businesses in an array of industries intentionally misclassify workers as a way to contain costs and undercut competitors.
“When you say it’s popular to become independent contractors, I don’t know how popular it is to give away your right to minimum wage, overtime, and all your other rights,” said Rep. Robert Scott of Virginia, the top Democrat on the committee.
The Labor Department rule that adopts a test for determining whether workers are employees looks at six factors, including the degree of control a company has over a worker, the permanence of a job, the degree of skill and initiative required, and whether work performed is integral to a company’s business.
The rule replaced a Trump administration regulation favored by business groups that said the key factors in determining worker classification were control and a worker’s opportunity for profit or loss.
This article previously appeared on Reuters.
For more information regarding the independent contractor rules, see Payroll Guide ¶18,030.
