March 8, 2024
The Honorable Bernie Sanders
U.S. Senator
332 Dirksen Building
Washington, D.C. 20510
The Honorable Virginia Foxx
U.S. Representative
2462 Rayburn House Office Building
Washington, D.C. 20515
The Honorable Bill Cassidy
U.S. Senator
455 Dirksen Building
Washington, D.C. 20510
The Honorable Robert C. Scott
U.S. Representative
2328 Rayburn House Office Building
Washington, DC 20515
Dear Members of Congress,
On January 10, 2024, President Biden’s Department of Labor (DOL) under Acting Secretary Julie Su published a final rule significantly amending how the DOL determines employment status under the Fair Labor Standards Act (FLSA). On behalf of the undersigned organizations and a 70 million strong freelancing workforce in America, we urge you to consider how this economically damaging rule, which demonstrates administrative overreach, will impact American workers.
Tens of millions of Americans earn income as self-employed workers across a broad spectrum of industries including transportation, construction, health care, education, entertainment, finance, legal work, housing, agriculture, and more. Additionally, many independent contractors start and run small businesses that employ tens of millions of additional workers that fuel the economy of countless American communities in all 50 states.
These self-employment pathways not only lead to increased income for many workers, but they also provide the additional flexibility needed to raise children as well as deal with personal and family health issues. Traditional employment often makes it prohibitively difficult to adequately address these competing priorities. Look no further than the 12 million women-owned businesses in the U.S. for victims, 90 percent of which are non-employer businesses. It’s no wonder a Bureau of Labor Statistics (BLS) survey showed that “fewer than 1 in 10 independent contractors would prefer a traditional work arrangement.”
The new Biden DOL rule will end many self-employment and small business careers by improperly classifying many independent contractors as employees against their will. Just as concerning, this rule contains new confusing and subjective criteria for determining employment status, which will have a chilling effect on businesses and individuals that will decline to form new productive relationships because they are unable to navigate regulatory requirements rife with gray areas. Many small businesses and even charities may struggle to keep operating, unable to use contractors for limited services anymore or to afford to hire traditional employees without stable, permanent roles for them.
Issues with the rule include:
● De-emphasizing a focus on the core factors of the “nature and degree of control over the work” and the “worker’s opportunity for profit and loss,” instead claiming to equally
consider six factors, many of which have subjective definitions and emphasis points that have never previously been used.
● Emphasizing strong consideration of not just evidence of direct control but even reserved or theoretical control, imposing a chilling effect on businesses and workers who are fully committed to compliance but unable to navigate unpredictable DOL regulatory oversight.
● Diminishing the value of certain types of earnings, initiative, and investment when considering the independent status of a worker in order to give DOL greater ability to restrict contracting.
DOL argues that this new rule is “more consistent with judicial precedent and the Act’s text and purpose” and focuses on adding new criteria to existing “economic realities” test factors. Instead, the rule constitutes a shift towards more restrictive, confusing criteria with interpretations left to the whims of agency bureaucrats that undermine the right to earn a living as a self-employed worker.
It is well documented that President Biden and Acting Secretary Su are strong supporters of destructive “ABC tests” such as the one Acting Secretary Su helped implement in California while serving as the state’s Secretary of Labor. Recent research from the Mercatus Center now indicates that the Assembly Bill 5 law in California that instituted an ABC test is now associated with an over 10.5% drop in self-employment and an overall 4.4% drop in employment in affected industries, foreshadowing the type of harm this new rule may impose on employment across America.
Acting Secretary Su’s support of California’s law restricting independent contracting undoubtedly played a significant role in Congress choosing to reject her nomination to become Secretary of Labor. Congress can now reject her attempt to foist this regulation with a similar intent onto the American people.
In order to prevent the lost economic opportunity and flexibility American families enjoy from self-employment careers, the Congressional Review Act can stop the implementation of this very damaging rule. We hope that Congress will fight to protect independent contracting in America.
Sincerely,
Paul Teller
Executive Director
Advancing American Freedom
Rachel Oglesby
Director
Center for the American Worker
America First Policy Institute
Emily Paulsen
President
American Society of Journalists and Authors
Richard Manning
President
Americans for Limited Government
Americans for Limited Government Foundation
Austen Bannan
Employment Policy Fellow
Americans for Prosperity
Grover Norquist
President
Americans for Tax Reform
Tom Manzo
President
California Business and Industrial Alliance
Save Independent Work Coalition
Daniel Mitchell
President
Center for Freedom and Prosperity
Diana Petrak
Founder
Colorado Policy Pathways
Sean Higgins
Research Fellow
Competitive Enterprise Institute
Ildikó Santana
Freelance Translator
Cypress Language Services
Maxford Nelsen
Director of Research and Government Affairs
Freedom Foundation
Karen Anderson
Founder
Freelancers Against AB5
Ryan Walker
Executive Vice President
Heritage Action For America
Mario H. Lopez
President
Hispanic Leadership Fund
Mailee Smith
Senior Director of Labor Policy
Illinois Policy Institute
Carie Lukas
President
Independent Women’s Forum
Vincent Vernuccio
President
Institute for the American Worker
Andrew Langer
President
Institute for Liberty
Alfredo Ortiz
President & CEO
Job Creators Network
Jacob Huebert
President
Liberty Justice Center
Mark Janus
Senior Fellow
Liberty Justice Center
Isabel Soto
Policy Director
Libre Initiative
Steve Delie
Director of Labor Policy
Mackinac Center for Public Policy
Brandon Arnold
Executive Vice President
National Taxpayers Union
Mike Hruby
President
New Jobs America
Tom Hebert
Executive Director
Open Competition Center
Karen Kerrigan
President & CEO
Small Business & Entrepreneurship Council
Tracie Sharp
President & CEO
State Policy Network
Derrick Max
President and CEO
Thomas Jefferson Institute for Public Policy
Shannon Meade
Executive Director
Workplace Policy Institute