Dear Member of Congress,
The undersigned organizations write urging you to support H.J. Res 116 and S.J. Res 63. These Congressional Review Act resolutions will nullify the U.S. Department of Labor’s (“DOL”) recently finalized regulation (the “new rule”)1 that sets the enforcement standard DOL will use for determining whether a worker is an employee or an independent contractor under the Fair Labor Standards Act (“FLSA”). 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.
The New Rule Is Unnecessary
The new rule will replace the current worker classification rule (the “2021 rule”), which became effective only three years ago. The 2021 rule established a guidance standard based on a review of decades of court decisions which found that courts had consistently relied on two core factors when deciding worker classification issues under the FLSA. Carefully developed “to promote certainty for stakeholders, reduce litigation, and encourage innovation in the economy,”2 the 2021 rule provided a workable classification analysis rubric that was practical, predictable, and easy to apply to our modern economy. At the same time, the 2021 rule has not hampered DOL’s ability to bring enforcement actions and protect workers from bona fide misclassification.
The New Rule will Cause Confusion, Invite Unnecessary Litigation, and Harm Small Businesses
DOL’s new rule will abandon the two core factors of the 2021 rule and adopt a test where any of six different factors could be determinative of employee status—an approach that injects subjectivity and uncertainty into worker classifications. The new rule will result in confusion and invite frivolous litigation that could ultimately have a chilling effect on independent work opportunities and entrepreneurship generally. This will be particularly problematic for small businesses that rely on independent contractors.
The New Rule Seeks to Limit Independent and Flexible Work Opportunities
The reality is that today, there are over 9 million job openings across the country. Yet, millions of Americans continue to exercise their choice to work as independent contractors and run their own businesses. In fact, survey after survey find that independent contractors prefer to maintain their independent status.3 With this in mind, we are particularly concerned that DOL’s final rule is the latest workforce-related regulatory intervention by the federal government that stands against the preferences of workers and instead, could very well undermine them—and our country’s economy.4
Therefore, Congress should reject DOL’s final rule and instead advance policies that support independent work opportunities as well as the individuals who choose to pursue them. We urge support of this resolution and thank you for your continued leadership on this important issue.
Sincerely,
4A's - the American Association of Advertising Agencies
Alliance for Chemical Distribution (ACD)
American Foundry Society
American Hotel & Lodging Association
American Trucking Associations
Argentum
Associated Builders and Contractors
Associated Equipment Distributors
Associated General Contractors of America
Association of Bi-State Motor Carriers
Construction Industry Round Table
Financial Services Institute, Inc.
Flex Association
FMI – The Food Association
Global Cold Chain Alliance
Heating, Air-conditioning, & Refrigeration Distributors International
HR Policy Association
Independent Electrical Contractors
International Franchise Association
International Warehouse Logistics Association (IWLA)
Lanca Sales, Inc.
National Association of Convenience Stores
National Association of Electrical Distributors
National Association of Home Builders
National Association of Mutual Insurance Companies
National Association of Professional Insurance Agents
National Association of Wholesaler-Distributors
National Council of Chain Restaurants
National Demolition Association (NDA)
National Federation of Independent Business (NFIB)
National Lumber & Building Material Dealers Association
National Public Employer Labor Relations Association
National Ready Mixed Concrete Association
National Restaurant Association
National Retail Federation
NATSO, Representing America's Travel Plazas and Truckstops
New York New Jersey Foreign Freight Forwarders and Brokers Association Inc.
Shipping Association of New York and New Jersey
SIGMA: America's Leading Fuel Marketers
Small Business & Entrepreneurship Council
TechNet
The Transportation Alliance
Tile Roofing Industry Alliance
Truck Renting and Leasing Association
U.S. Chamber of Commerce
Virginia Trucking Association
Workplace Solutions Association
