A group of freelance writers and editors has sued the U.S. Department of Labor. They claim that the federal government’s new rule, which makes it difficult for companies to treat some workers as independent contractors, is illegal.
The four freelancers filed the lawsuit in Georgia federal court. They alleged that the new rule is so vague that it violates the Constitution. Their lawsuit is the first to challenge the rule, which will take effect March 11.
However, more legal challenges are ahead, and the U.S. Chamber of Commerce has said it is considering suing. Republicans in Congress also threaten to repeal the rule via legislation.
The freelancers seek an order temporarily blocking the rule while their lawsuit proceeds. The rule will increase labor costs for businesses in industries that rely on contract labor or freelancers. This includes trucking, manufacturing, and healthcare.
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When it issued the rule, the Labor Department said it was to clarify the test for determining whether workers are independent workers entitled to legal protections like minimum wage and overtime pay.
The freelancers claim the department did not explain why it was abandoning a simpler rule business groups prefer. The rule from 2021 states that the key factors in determining worker classification include the degree of control a company exercises over a worker and their opportunity for profit or loss.
The new rule looks at several additional factors. This includes the permanence of a job, the degree of skill it requires, and whether work done is integral to a company’s business.
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“Businesses are given no useful guidance on the scope of the statute and cannot structure their conduct to comply with its demands,” the freelancers said in the lawsuit.
They said they have “a reasonable fear that they will lose business due to uncertainty or fear of liability risks under the Department’s new rule.” The Pacific Legal Foundation, a libertarian group, represents them.
Naturally, they are not the only ones taking action. The construction trade group Associated Builders and Contractors (ABC) also shares their mindset. In a court filing, it said that it plans to challenge the new rule on behalf of other businesses.
The group sued the Labor Department in 2021 when it first tried to rescind the Trump-era regulation. A federal judge took their side, claiming that the agency did not adequately explain why it was scrapping that rule.
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The department appealed. And a New Orleans-based U.S. appeals court put the case on hold pending the release of the new rule. ABC has asked the appeals court to send the case back to the lower court to decide whether the new rule is valid.
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