Freelancers suffered a setback in the fight to overturn the new Biden-Harris regulations aimed at restricting independent contracting.
A legal challenge to the new Department of Labor (DOL) rule on independent contracting was recently halted by a federal court. Freelancers are appealing the decision in a move that keeps alive this legal challenge.
Independent contractors (ICs) are walking a tightrope as they straddle whether they can continue to operate independently due to the new regulations or face being reclassified as employees against their will. With legislative efforts exhausted, all eyes are on the courts or a new administration to undo the Biden-Harris pro-union, anti-freelancer labor agenda.
What Happened
Earlier this month, an Atlanta federal judge dismissed the case of four independent contractors, who sued the Biden-Harris DOL over the new independent contractor rule. Kim Kavin, Jen Singer, Deborah Abrams Kaplan, and Karon Warren, founders of the group Fight For Freelancers, which opposes policies that threaten independent contracting at the state and federal levels, were plaintiffs in the case. These women, like many others, value the flexibility that independent contracting affords them to balance work and life—from caregiving to personal health issues.
The group argued that the DOL independent contractor rule threatens their livelihood and that of millions of other freelancers who are not employees but are self-employed.
Background
The Biden-Harris independent contractor rule, which took effect earlier this year, narrowly interprets federal minimum wage and overtime law to set a stricter standard for whether a worker is an employee or an independent contractor. The new rule established a multifactor test that creates greater uncertainty and confusion as to whether a worker is independent. This rule replaced one established under the Trump Administration that determined independent contractor status by focusing on two core factors—workers who have control over their work and who have the opportunity for profit—was viewed as more friendly to ICs.
As we’ve written about many times (such as here, here, here, and here), the Biden rule heightens the uncertainty over determining worker status rather than bringing greater clarity. Freelancers, gig workers, and self-employed Americans now find themselves in limbo as they worry whether the rule may be enforced, leaving them without contracts, income, and livelihoods. Companies found to be misclassifying workers by treating them as independent contractors also face financial and legal risks.
Congress missed an opportunity to overturn this rule using the Congressional Review Act. Now, the fate of this rule sits in the hands of the legal system through several lawsuits.
The dismissal of the freelancers’ case was on procedural grounds. The court determined that because they could not show how they would be harmed by enforcement of the rule, they did not have standing to sue. Wilson Freeman, one of the lawyers from the Pacific Legal Foundation, which represents the freelancers, explained further in a blog post:
The court determined that they lack standing to pursue their lawsuit, based on the twisted logic that the regulation is too vague to determine whether it will apply to their businesses.
He added that the fight continues:
Despite this outcome, this case isn’t over: These fearless women plan to appeal their case to the United States Court of Appeals for the Eleventh Circuit. They plan to continue fighting for their right to work and to be free of overburdensome, unfair government regulation.
What’s Next
Four additional federal lawsuits against the DOL’s rule are pending, including cases in Texas, New Mexico, Louisiana, and Tennessee. In several of these cases, the plaintiffs are companies suing from the position of hiring entities, which legal experts believe might better position them to overcome the standing hurdle.
We will watch as these cases unfold. We hope that whether through legal, legislative, or administrative means, the Biden-Harris DOL rule can be overturned. The independence of America’s freelancers and self-employed depends on it.