This past Tuesday,the Labor Department for Old Uncle Joe announced a newly proposed rule alteration that could wind up discouraging independent contraction, a work arrangement on which millions of Americans currently rely for their livelihood.
This new rule, which is slated to undergo a period of public comment that starts on Thursday and finishes in November, would force regulators to look into whether independent contractors are “economically dependent” on the people employing them or are truly conducting business for themselves. Those within the Labor Department claimed that individuals who are in the former category could be more easily cheated by the companies where they do their work.
“While independent contractors have an important role in our economy, we have seen in many cases that employers misclassify their employees as independent contractors, particularly among our nation’s most vulnerable workers,” explained Secretary of Labor Marty Walsh via a release. “Misclassification deprives workers of their federal labor protections, including their right to be paid their full, legally earned wages.”
Because of the large variety of laws regarding labor standards, hiring an employee is between 25% to 40% more expensive than the base salary, as reported by an analysis issued by the Massachusetts Institute of Technology. Almost 16% of Americans have taken part in the gig economy and independent contraction work such as delivering packages, delivering groceries, or cleaning homes, according to a recent survey released by Pew Research, which discovered that young Americans and those labeled as low-income are most likely to attempt to make a living via a gig platform.
These new federal rules seem to be in the same vein as Assembly Bill 5 out of California, which claims that workers are often “exploited” via their label as independent contractors. The law officially went live earlier this past year in the wake of an extensive series of court battles, including a series of protests carried out by owner-operator truckers and the following rebuke from the government of the state to “move forward” and “comply with the law.”
This change in rules takes place after almost two straight years after Democratic legislators brought forth the Protecting the Right to Organize Act, also known as the PRO Act, which would, in the same vein, narrow the overall definition of an independent contractor and increase average access to unionization. The bill made it through the House of Representatives late last year, but is quite unlikely to garner enough support within the Senate to get past the current filibuster.