Lawsuit Filed Against Biden’s Regulation on ‘Gig’ Work
On March 5, major U.S. business groups, including the U.S. Chamber of Commerce, filed a lawsuit challenging a Biden administration rule that is set to make it more challenging for companies to classify workers as independent contractors rather than employees. This rule, scheduled to take effect on March 11, has broad implications for various industries, particularly those reliant on gig workers for services. The lawsuit argues that the U.S. Department of Labor rule violates federal wage law by adopting an excessively broad definition of who qualifies as an employee.
Under the rule, employees are entitled to legal protections, such as the minimum wage and overtime pay, that are not afforded to contractors. The legal action claims that the Labor Department failed to justify its reversal of a Trump administration rule that was favored by trade groups. At least four other challenges to the rule are pending, involving freelance writers, trade groups, and a trucking company that treats drivers as independent contractors.
The lawsuit represents an amended complaint in a case initiated in 2021 when the department first attempted to repeal the Trump-era rule. A judge blocked the repeal, citing the agency’s inadequate explanation for the decision. The Labor Department has asserted that the rule is designed to clarify worker classification standards and target industries where misclassification is prevalent, such as construction, healthcare, retail sales, and security and janitorial services.
In addition to the legal challenges, Republicans in Congress are actively working to repeal the rule. Senator Bill Cassidy from Louisiana plans to introduce a resolution under the Congressional Review Act to nullify the rule. The ongoing legal and legislative efforts underscore the contentious nature of the rule, with businesses expressing concerns about the potential impact on their operational models and labor practices.
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