Independent Contractor Rule Would Permit Companies to Exclude More Workers from Minimum Wage and Overtime
NELP Files Comments Against Independent Contractor Rule
Washington, DC—In solidarity with workers nationwide, the National Employment Law Project today filed extensive comments against a proposed independent contractor rule issued only a month ago by the U.S. Department of Labor that interprets federal wage and hour laws in a way that makes it easier for corporations to cheat their workers and avoid minimum wage and overtime protections.
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“The Labor Department’s anti-worker proposal would dramatically and improperly narrow worker protections under the Fair Labor Standards Act, giving employers and corporations far more leeway in classifying workers as independent contractors,” said Rebecca Dixon, NELP’s executive director. “This would allow them to pay subminimum wages, hire child labor, and avoid overtime pay. This is yet another example of the Trump administration’s relentless push to stack the deck against workers at every turn.”
“Just like the recently invalidated joint employer interpretive regulation, this proposed rule ignores the clear language of the Fair Labor Standards Act and decades of court rulings, including by the U.S. Supreme Court.”
6 Points Urging Labor Department To Withdraw The Rule
NELP’s comments make six primary points in urging the Labor Department to withdraw the rule:
- Whether a worker is an “employee” covered by the FLSA or an “independent contractor” without protections is a key consideration for millions of workers and businesses. It is especially important in today’s economy, with its high unemployment and misclassification abuses.
- USDOL’s proposed interpretation is contrary to the FLSA because it ignores the statutory terms “suffer” and “permit,” which take the scope of employee coverage well beyond the proposed test. 29 U.S.C. §203(g).
- The proposed rule improperly collapses well-established Supreme Court and Circuit Court tests for independent contractor versus employee coverage, elevating two narrow “core” factors while ignoring others.
- The FLSA’s coverage is not determined by common-law employment relationships, and this proposed interpretation is narrower than even the common law.
- Independent contractor labels imposed by employers are pervasive in low-wage jobs, and the USDOL’s proposed test would leave behind workers in high-growth sectors with high rates of wage theft, contrary to the purposes of the FLSA.
- The proposed interpretation will negatively impact public coffers and businesses that will not be able to compete unless they too call their workers “independent contractors.”
Free Pass On Illegally Misclassifying Workers
“Companies must be accountable for how they treat their workers—no matter what the company calls the workers or how it classifies them. Companies that require their workers who are not running their own businesses to operate as ‘independent contractors’ in order to get a job should not get a free pass on illegally misclassifying workers,” said Dixon.
“This action hurts the very workers who have been organizing on the frontlines for better wages and more protections, including construction laborers, janitors, home care workers, and those called essential workers during the COVID-19 pandemic, who clean homes, care for children and elderly individuals, and deliver groceries. Workers of color must not be left to earn subminimum wages and work more than 40 hours per week without getting any overtime pay. We join them in fighting this harmful proposal, which affects them the most due to compounding systemic racism and occupational segregation into the lowest-paid jobs,” added Dixon.
“This action also hurts small businesses. Large corporations that misclassify their workers can underbid their competitors, creating a race to the bottom where jobs don’t pay and companies skirt payroll and unemployment insurance taxes that workers and public coffers rely on,” she added.
“Once again, the Trump Administration has given a gift to corporations that can simply hand an independent contractor agreement to any worker seeking a job, and then walk away from minimum wage, overtime, and child labor violations, leaving smaller businesses on the hook, and too often leaving employees empty-handed with no protections. NELP calls on the Department of Labor to withdraw this misguided proposal.”
The National Employment Law Project is a non-partisan, not-for-profit organization that conducts research and advocates on issues affecting underpaid and unemployed workers. For more about NELP, visit www.nelp.org. Follow NELP on Twitter at @NelpNews.