As the balance of power in the Senate hangs by a thread, the Administration finalized a rule protecting independent contractor status for millions of workers nationwide. The rule clarifies whether a worker is an employee under the Fair Labor Standards Act (FLSA) or an independent contractor based on a straightforward framework. With the incoming Biden administration eyeing legislation that would crack down on American’s ability to work independently, the significance of this new rule for the estimated 57 million Americans who choose to work as freelancers cannot be overstated.
“The Department of Labor took an important step to protect choice for workers, especially women who depend on flexible work opportunities to supplement their family’s income or earn a living while still caring for their loved ones,” said my colleague Patrice Onwuka, Senior Policy Analyst at IWF. “They can be their own boss and work on their own schedule.”
Hundreds of Americans voiced their support for the Labor Department’s Independent Contractor rule, warning against the Left’s crackdown on independent work.
“While well-intentioned, the proposed bill such as the PRO Act would kill my career,” wrote Brittany Risher. “I chose to be self-employed. For the past four years, I paid for my own health insurance and sick days, well, they just happen. Because I chose this path, I deal with it. And you know what? I have earned more each of these years working as my own boss than I ever did being employed at another company.”
It’s estimated that half of the nation’s independent contract workers are women, and the threats to their flexible work arrangements are real and growing. Already, the Democrat-controlled U.S. House of Representatives passed the PRO Act—a nationalized version of California’s job-killing Assembly Bill 5 (AB5), which already has caused thousands of the state’s two million independent contractors to lose jobs and essential income. AB5 took effect on Jan. 1, 2020, and imposed a strict legal test on employers to determine who they can hire as independent contractors or freelance workers. By limiting employers’ ability to hire workers as independent contractors, AB5 intended to force businesses to hire workers as traditional employees with benefits and employment protections. But because many businesses couldn’t afford the required new benefits, independent workers in the state instead lost contracts and essential income. Not only did this injure independent workers, but it also hurt the people they support and serve who faced higher prices and fewer hiring options.
Already, the incoming Biden administration has singled its support for the PRO Act, which would apply California’s AB5 policy nationwide. States including New York, Illinois, New Jersey, and Virginia are also contemplating their own copy-cat AB5 legislation.
The Trump administration’s rule protecting independent workers will be published in the Federal Register on January 7, 2021 and take effect March 8, 2021. The Biden administration has signaled its intention to freeze this rule from taking effect, so this is likely not the end of the story.
In November, California voters acknowledged the devastating effects AB5 was having on independent workers and voted in favor of Proposition 22, a ballot measure that allows tech platforms to continue to classify these workers as independent contractors rather than force them to hire these drivers as employees. Meanwhile, thousands of other independent workers from florists to Santa Claus are stuck trying to operate under the unworkable law.
The Labor Department’s new rule is a welcomed step in the fight to protect American’s ability to work as free agents, but with the threats to their employment status ongoing and an incoming administration bent on reversing it, far more must be done.
““More importantly to me than money,” she added, “the flexibility of self-employment has gifted me the opportunity to stop neglecting my mental and physical health. I was able to see therapists and doctors on my own terms, rather than facing punishment for leaving the office early or during the day. And this helped me overcome a decades-long battle with anorexia.”
