Freelance, self-employment, side hustles, and gig work are at risk from new federal restrictions from the Biden Administration set to be enacted next week.

In light of the expected hardship that this will foist upon millions of Americans who are independent contractors and earn 1099 income, Congress has stepped up and introduced measures to repeal the Department of Labor’s independent contracting rules.

Yesterday, Senator Bill Cassidy (R-LA) and Representative Kevin Kiley (R-CA) introduced a joint Congressional Review Act resolution to rescind the DOL’s independent contractor rule. 

In a statement, Dr. Cassidy noted, 

The Biden administration’s priority should not be to do whatever makes it easier to forcibly and coercively unionize workers. It should be to increase individual freedom and opportunity. This new Biden rule does the opposite, jeopardizing 27 million workers’ ability to make their own hours and make a living without being pressured into joining a union.

Congressman Kiley explained in his statement,

Gavin Newsom and Julie Su’s AB 5 severely restricted independent contracting in California, destroying thousands of livelihoods and harming California’s economy. As Acting Secretary of Labor, Su and the Biden Administration have announced a new Department of Labor rule, modeled after on the same job-killing AB 5 that will cost millions of independent professionals across the country their livelihoods while restricting the freedom of many millions more to have flexible work arrangements. Our legislation under the Congressional Review Act nullifies this terrible regulation and protects independent contractors.”

The bill has over 30 Senate cosponsors.

Why It Matters

Earlier this year, the Biden Department of Labor finalized its rule to determine who can be classified as an independent contractor under the federal Fair Labor Standards Act. The new rule utilizes a six-factor test to determine if a worker is an employee or an independent contractor—a more stringent standard than what is currently in place.

This rule is expected to be devastating for many of the millions of people who are self-employed, freelancers, gig workers, or have side hustles earning 1099 income. Small businesses that depend on independent contractors may be forced to hire these individuals and abide by wage and benefit laws, which would dramatically increase costs for their business.

Not every independent contractor chooses or can become an employee. Very often, they seek flexibility to balance income generation with other priorities, such as raising children, caring for family members, or managing their own health conditions. Women, older Americans, students, and disabled people will be adversely affected. 

Similar restrictions implemented in California led to a reduction in self-employment of 10.5% and overall employment of over 4%.

What’s Next

This CRA is an important step in stopping the Biden Administration from destroying flexible work. If passed by both Houses, these repeal efforts face a likely veto from President Biden. That veto could be overcome by a significant margin of bipartisan support in Congress.

At the same time, several lawsuits are pending against the DOL in hopes of overturning the rule.

In the meantime, as employers and businesses learn about the regulatory changes afoot, they are likely trying to figure out if they can continue to contract with their independent contractor workforce. We can expect that many individuals nationwide will soon enough find out about the hardship that Californians endured.