With legislation on employee classification still being considered in Congress, the Biden Administration has put forth its own version in a newly proposed rule from the U.S. Department of Labor.
The regulation, similar to California’s controversial AB 5, would reclassify worker status using a test.
Many professions have sought and received AB 5 exemptions, others have fought it by legal action or voters casting ballots, and it seems very likely that the DOL rule will be challenged in the courts, Wayne Winegarden, senior fellow in business and economics at the Pacific Research Institute (PRI), said in an email response to the Northern California Record.
“The proposed rule will take away opportunities, flexibility and independence from workers,” Winegarden said. “Making matters worse, the burdensome new requirements will discourage companies from hiring and encourage them to replace workers with automation. It is an anti-worker, anti-growth regulation.”
It’s unclear why Biden Administration chose to propose its own rule right now.
“This should be part of an Act by Congress and represents continued overreach by the administrative state,” Winegarden said.
Labor unions are among the organizations that support the rule.
“They see all these independent contract workers and they want to unionize them,” Kerry Jackson, a fellow with PRI’s Center for California Reform, told the Record by email. “They see a big payday if they can increase their membership rolls and charge dues.”
But Jackson noted many gig workers aren’t in favor of it.
“Most gig workers like their situations,” Jackson said. “The U.S. Labor Department has found that 79% prefer their freelance arrangements over traditional work. Only 9% would rather be hired employees.
“The vast majority of gig workers don't want to be reclassified because it will rob them of income and strip them of their freedom. Employers don't want it, either, especially those whose models are built on using contract workers and can't stay in business any other way.”