Image: Yassine Khalfalli
The United States Labor Department has unveiled a regulatory change, overturning the 2021 Independent Contractor Rule. This decision, igniting controversy within the trucking sphere, alters the approach to an economic reality test approved by the Supreme Court.
Under the now-rescinded 2021 Rule, independent contractors were exempt from Fair Labor Standards Act provisions, such as minimum wage, overtime, and recordkeeping requirements. The new ruling abandons the ‘core factors’ outlined in the 2021 rule, reverting to a more holistic examination of the economic reality test, where factors are not predetermined and are evaluated based on the entire activity.
The original Independent Contractor Rule was instituted during the tenure of former President Donald Trump. The recent shift underscores the contrasting labor policies between the Trump and current Biden administrations.
American Trucking Associations (ATA) President and CEO, Chris Spear, vehemently criticized the change, deeming it “un-American” and predicting chaos for the over 350,000 independent contractors in the trucking industry. Spear emphasized that being an independent contractor offers economic opportunities and flexibility for truckers, enabling them to manage their own businesses and schedules.
Spear conveyed his disappointment, stating, “It’s unfortunate that the (Biden) administration has chosen to replace a clear and straightforward standard with a tangled mess that weakens our supply chain and undermines the livelihoods of hundreds of thousands of truckers across the country.”
The ATA sees the simultaneous release of this rule with the renomination of Julie Su as the head of the Department of Labor as evidence of the administration doubling down on what they consider destructive policies.
The new rule outlines six factors for classification, including the worker’s opportunity for profit or loss, financial stake, degree of permanence of the work relationship, employer’s control, work’s importance to the employer’s business, and worker’s skill and initiative.
This move has not only drawn criticism from the trucking industry but also faced opposition from the National Retail Federation (NRF). NRF Senior Vice President of Government Affairs, David French, stated, “This decision will only foster confusion, endless litigation, and reduced innovation.” The NRF, representing retailers with diverse business relationships with independent contractors, argues that the change in classification rules is unwarranted and unnecessary.
Despite the opposition, the ruling is set to take effect 60 days from its publication in the January 10th Federal Register, leaving the trucking industry bracing for what may be a tumultuous period of adjustment.
Source: ATA
