NCLA Asks Federal Court to Vacate the Dept. of Labor’s Unlawful New Independent Contractor Rule
2024年8月5日 - 10:20PM
The New Civil Liberties Alliance has filed a motion for
summary judgment in Colt & Joe Trucking v. U.S. Department of
Labor, asking the U.S. District Court for the District of New
Mexico to vacate DOL’s vague new independent contractor rule.
Promulgated earlier this year, the rule distorts the standard for
determining if someone hired by a company can be classified as an
independent contractor, instead of an employee subject to the Fair
Labor Standards Act’s (FLSA) wage and hour requirements. This
leaves small businesses like Colt & Joe Trucking unable to hire
independent contractors without risking FLSA liability.
DOL’s prior 2021 rule generally allowed
businesses to classify workers as independent contractors if they
exercised independent judgment and control over their work and had
an opportunity to earn profits—as opposed to wages or salaries—as a
result. Junking this simple standard, the 2024 rule effectively
broadens FLSA’s definition of “employee” to cover anyone performing
services for another company under essentially whatever
circumstance DOL decides.
The Labor Department says it abandoned the old
standard for classifying independent contractors because it
conflicted with judicial precedent, but no precedent prohibits
focusing on control and opportunity as the most probative factors
in determining whether a worker is in business for himself. The
2024 rule is arbitrary and capricious, worsening rather than
reducing confusion over which economic factors matter in
determining a worker’s classification. The Supreme Court prohibits
agencies from promulgating “vague and open-ended regulations that
they can later interpret as they see fit,” so DOL’s standardless
new rule violates due process.
DOL also violated the Administrative Procedure
Act (APA) and the Regulatory Flexibility Act by failing to
adequately consider significant costs of withdrawing the 2021 rule
and replacing it with the 2024 rule. Observers have criticized the
agency for ignoring harms to independent contractors whom the new
rule would reclassify as employees, explaining most independent
contractors do “not want to be employees” and “believe they will
lose work because of this rule.” On top of these substantive
defects, Acting Labor Secretary Julie Su also lacked authority to
promulgate the 2024 rule in the first place, having claimed
secretarial powers for over a year without Senate confirmation in
violation of the Appointments Clause.
NCLA released the following statements:
“The Department does not dispute its conclusion
in 2021 that workers’ control over the work and opportunity for
profit are the most probative factors in determining independent
contractor status. Instead, it claims that the law somehow
prohibits it from focusing on factors that it believes to be more
probative. DOL then tries to argue that a simple two-factor test is
more confusing to regulated employers than a freewheeling test that
includes seven factors—one of which is the ‘totality of the
circumstances.’ The APA prohibits such irrational
decision-making.”— Sheng Li, Litigation Counsel, NCLA
“Julie Su has unlawfully overstayed her term as
Acting Secretary of Labor, so she lacks authority to issue this
rule. A Senate controlled by the President’s party would not
confirm her due in part to her views about this policy. Yet, she
persisted in promulgating a rule implementing the very idea for
which the Senate refused to confirm her. This is outrageous
behavior on many levels, and the courts should have no qualms about
setting aside this rule.”— Mark Chenoweth, President,
NCLA
For more information visit the case page
here.
ABOUT NCLA
NCLA is a nonpartisan, nonprofit civil rights
group founded by prominent legal scholar Philip Hamburger to
protect constitutional freedoms from violations by the
Administrative State. NCLA’s public-interest litigation and other
pro bono advocacy strive to tame the unlawful power of state and
federal agencies and to foster a new civil liberties movement that
will help restore Americans’ fundamental rights.
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Ruslan Moldovanov
New Civil Liberties Alliance
202-869-5237
ruslan.moldovanov@ncla.legal