Argentum signed onto a coalition letter supporting Congressional Review Act resolutions that would nullify the Department of Labor’s independent contractor final rule, which took effect Monday.
HJ Resolution 116 / SJ Resolution 63 would invalidate the Labor Department’s rule, which was finalized in January and sets enforcement standards for determining whether a worker is an employee or an independent contractor under the Fair Labor Standards Act.
“The new rule is confusing, difficult to apply, and will invite unnecessary litigation and uncertainty for the tens of millions of workers that derive income as independent contractors,” reads the letter, dated March 7.
Specifically, the coalition maintains that the new rule rescinds and replaces a 2021 rule that provided a classification analysis rubric that was “practical, predictable and easy to apply.” The new rule, by contrast, the letter writers stated, harms small businesses that rely on independent contractors, would limit independent and flexible work opportunities, and could “very well undermine” the nation’s economy.
The coalition includes the US Chamber of Commerce — fresh off a court victory that resulted in the National Labor Relations Board’s ‘joint employer’ rule being vacated — as well as other business and professional organizations.
The independent contractor rule has raised concerns among senior living experts and others that providers will face greater legal and financial burdens under the rule.
Earlier this year, LeadingAge urged its members to “carefully evaluate their existing classifications” of workers. Argentum has said the rule will result in many workers being unfairly classified as employees, “depriving them of their choice of the manner in which they wish to work.”
History of the final rule
The new rule largely mirrors the rule proposed by the Labor Department in October 2022, retaining the framework the DOL laid out for determining independent contractor status versus employee status.
The rule restores the multifactor analysis to determine independent contractor status, including any opportunity for profit or loss a worker might have; the financial nature of any resources a worker invested in the work; the degree of permanence of the work relationship; the degree of control and employer has over someone’s work; whether the work performed is essential to the employer’s business; and a worker’s skill and initiative.
The new rule rescinds one issued during the final days of the Trump administration in January 2021. The Labor Department under the Biden administration had sought to delay the Trump-era rule, and then withdrew it in May 2021, believing that it was inconsistent with the FLSA’s text and purpose. A district court, however, in March 2022 determined that the rule had taken effect on its original effective date and remained in effect.
In June 2022, the DOL announced plans to hold public forums to gather feedback on writing a new rule. A proposed rule was issued in October of that year, and the department said it received more than 55,000 comments on the proposal during the comment period and listening sessions.
The Labor Department published answers to frequently asked questions on its website.
