NCLA Lawsuit Seeks to Set Aside the Department of Labor’s Unlawful New Independent Contractor Rule
26 Abril 2024 - 8:33AM
The New Civil Liberties Alliance has filed a Complaint in the
U.S. District Court for the District of New Mexico, challenging the
U.S. Department of Labor’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.
Representing the family-owned company Colt & Joe Trucking, NCLA
asks the court to overturn this rule, which leaves small businesses
like theirs completely unable to hire independent contractors
without risking FLSA liability.
The Labor Department previously maintained a
2021 rule that generally allowed businesses to classify workers as
independent contractors if they exercised independent judgment and
control over their work and could profit as a result. Overthrowing
this simple standard, the January 2024 rule effectively broadens
FLSA’s definition of “employee” to cover anyone performing services
for another company under essentially whatever circumstance the
Department wants. To make matters worse, the new rule unlawfully
allows companies like Colt & Joe Trucking to be retroactively
punished for making worker classification decisions based on the
old definition.
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. On top
of all these fatal problems, Acting Labor Secretary Julie Su also
lacked authority to promulgate the new 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 is replacing a simple standard
for determining whether a worker is an independent contractor or
employee under the Act with a vague and indecipherable one. A vague
standard means businesses have no idea what the law requires, while
bureaucrats enjoy enormous power to penalize them for unpredictable
violations.”— Sheng Li, Litigation Counsel, NCLA
“The meaning of ‘independent contractor’ was
well understood in the industry before DOL’s latest unnecessary
intervention. Rather than clarify the law, this rule seeks to
obtain a political goal Congress did not adopt when enacting the
FLSA, namely dramatically reducing the number of independent
contractors.”— 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