The U.S. Department of Labor (DOL) has finalized a pivotal rule, offering new guidance on classifying workers as independent contractors under the Fair Labor Standards Act (FLSA). This significant move, set to take effect in March, aims to provide clarity and protection for workers often caught in the ambiguity of employment classifications.
Acting Labor Secretary Julie Su emphasized the rule’s critical role in addressing the serious issue of employee misclassification. “Misclassifying employees as independent contractors deprives workers of basic rights and protections,” Su stated. The rule aims to ensure proper classification, particularly for those most at risk of exploitation, ensuring they receive rightfully earned wages.
The announcement was met with approval from Democrats in Congress and labor unions. The Teamsters, on social media, expressed relief, stating, “It’s long past time for American employers to recognize and respect their employees.” Heidi Shierholz, president of the Economic Policy Institute, praised the rule for overturning a Trump-era policy that undermined worker protections.
Heidi Shierholz further pointed out the harm caused by the previous administration’s stance on worker classification. “Employer misclassification of workers as independent contractors robs workers of labor rights and threatens their economic security,” she noted. The new rule, she believes, will particularly benefit workers in lower-wage and more challenging jobs.
The rule is expected to face strong opposition, as reported by The Washington Post. Companies and industry groups, especially those representing gig economy giants like Uber and Lyft, have expressed significant criticism. Labor officials, however, remain confident that the rule will withstand legal challenges.
The policy has already sparked a political divide. U.S. Senate Committee on Health, Education, Labor and Pensions Ranking Member Bill Cassidy (R-La.) has threatened to challenge the rule, while Committee Chair Bernie Sanders (I-Vt.) lauded the administration’s efforts to “stop unscrupulous employers from deliberately misclassifying their workers.”
Congressional Progressive Caucus Chair Pramila Jayapal (D-Wash.) also endorsed the rule. “This new policy will ensure that workers who have fallen through the cracks will finally be able to access essential benefits,” Jayapal stated, highlighting the growing significance of gig work in the economy.
The announcement coincided with President Joe Biden’s renomination of Julie Su as Labor Secretary. Progressive leaders, including Jayapal and Sanders, have praised Su’s dedication to fighting for the lowest-wage workers, domestic workers, immigrant workers, and workers of color.
The DOL’s final rule introduces a six-factor test focusing on the economic realities of the worker-employer relationship. This test will play a crucial role in determining whether a worker is dependent on an employer for employment or is operating an independent business, thereby influencing their classification under the FLSA.
In the words of Julie Su, “This rule will help protect workers by making sure they are classified properly and that they receive the wages they’ve earned.”
COMMENTS