A non-governmental organization in Tennessee has recently joined other groups in opposing a new labor regulation under the Biden administration. This rule alters the standards for determining whether workers should be classified as independent contractors or employees.

The Beacon Center of Tennessee submitted a lawsuit in Nashville on behalf of two freelance journalists, Margaret Littman and Jennifer Chesak. The lawsuit targets the U.S. Department of Labor, its wage division, and two high-ranking officials, arguing that the recently implemented rule will compel freelancers to either accept undesirable employment arrangements or cease working altogether.

There are other parties disputing the regulation as well. This includes business alliances involved in a current case being heard by the 5th U.S. Circuit Court of Appeals, as well as a collection of independent writers represented by a libertarian legal group who filed a lawsuit in a federal court in Georgia.

The regulation modifies a standard established during the Trump administration for determining whether employees should be classified as contractors. These workers do not receive guaranteed minimum wages or benefits, such as healthcare and paid sick leave. The updated rule seeks to prevent workers from being wrongly labeled as independent contractors.

In October 2022, President Joe Biden’s administration suggested a modification to the rule. It was officially approved in January and is scheduled to take effect on March 11.

Labor activists have backed the regulation, arguing that employers have taken advantage of loose regulations to incorrectly label employees and sidestep fair compensation. Business organizations claim that the regulation introduces ambiguity for employers and that its effectiveness will be determined by the Labor Department’s enforcement approach.

The lawsuit filed by the Beacon Center asserts that the Labor Department does not have the power to alter the rule and did not adequately justify the change, as mandated by the Administrative Procedure Act. Furthermore, the organization contends that the rule raises the risk of misclassifying independent contractors, such as Littman and Chesak, as employees.

According to the lawsuit, Chesak is now being asked by one company to record her work as a freelancer without compensation, another is restricting the number of hours she can work, and she is also being asked to sign an agreement that would protect the company in the event of misclassification.

According to a press release, Littman has been a freelance writer for nearly three decades due to the flexibility, autonomy, and potential it offers. They are opposing the Labor Department’s rule as it jeopardizes their ability to make a living as a freelancer.

The guideline instructs employers to use six factors to determine if a worker should be classified as an employee or a contractor, without giving more importance to one over the other. This differs from the previous rule during the Trump administration, which placed emphasis on two factors: the level of control a company has over its workers and the potential for entrepreneurial opportunities in the work.

Employers are responsible for determining the importance of various factors when making decisions, such as the level of control they have over the employee, the necessary skills for the job, the length and nature of the working relationship, and any investments made by the employee (such as car payments).

Uber and Lyft, two major platforms, have stated they are confident that the new regulation will not require them to change the classification of their gig workers. They are also part of a business coalition that is contesting the rule in court.

Source: wral.com