Four intrepid freelancers, writers, and editors have decided they won't take it lying down. They are challenging the Labor Department and the Biden administration in Georgia federal court. They claim that the new rule, devised to make classifying certain workers as independent contractors more difficult, contradicts the U.S. Constitution due to its ambiguity. Moreover, they believe it's illegal and have demanded its annulment.
Where is This Coming From?
The regulation in question saw the light of day just last week. The freelancers filed their lawsuit on a Tuesday; the rule will come into play on March 11. The suit filed by these four workers is the first stone thrown in what could turn into a legal barrage - with the U.S. Chamber of Commerce and congressional Republicans already mooting potential litigation and legislative revocations, respectively.
While awaiting the outcome, the freelancers aim to obtain an order that temporarily renders the rule inoperative.
Who's The Most Impacted?
If realized, the ripple effect of this rule may cause a surge in labor expenses for businesses that heavily engage independent contractors and freelancers. The regulation might trouble sectors such as trucking, manufacturing, healthcare, and gig-based services.
Trade Groups' Point of View?
Construction trade group Associated Builders and Contractors (ABC) also claimed they had plans to oppose the new rule on behalf of the industry. This isn't the first time they've gone against the Labor Department; in 2021, they showcased their disagreement when the Labor Department decided to withdraw the Trump-era regulation. The case remains suspended in a New Orleans-based U.S. appeals court, waiting for the completion of the new rule. ABC now hopes to return the case to the lower court to determine the rule's legality.
What's the Department's stance? The Labor Department, when approached, directed queries to the U.S. Department of Justice, who preferred to withhold comments.
Clarity or Complexity?
The Labor Department affirmed that introducing the rule is to distinguish clearly whether an individual is an independent contractor or an employee who should enjoy legal protections, including minimum wage and overtime pay. The freelancing group, with the aid of the libertarian Pacific Legal Foundation, trades blows in the lawsuit, highlighting the Department's incapacity to offer a solid explanation for deserting the more uncomplicated Trump-era rule that business conglomerates favored.
Time to Decipher the Rules
Shedding some light on the two rules, the 2021 rule was based on two main elements to establish worker classification: a company's degree of control over the worker and the worker's potential for profit or loss. On the contrary, the new rule factors in a few more aspects apart from these, such as the job's permanency, the required degree of skill and initiative, and whether the task performed is integral to the company's business.
In their lawsuit, the freelancers highlight that businesses are left in the lurch, unsure about the statute's range and how to mold their behavior to comply with it. They expressed their apprehensions about losing business due to the rule's uncertainty and possible liability risks.
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