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The announcement from the Department of Labor on January 9 of a final rule on the issue of when a worker qualifies as an employee, and when they may be considered an independent contractor under the Fair Labor Standards Act, has drawn strong criticism from the American Trucking Association. CEO Chris Spear issued this statement: I can think of nothing more un-American than for the government to extinguish the freedom of individuals to choose work arrangements that suit their needs and fulfill their ambitions. More than 350,000 truckers choose to work as independent contractors because of the economic opportunity it creates and the flexibility it provides, enabling them to run their own business and choose their own hours and routes. That freedom of choice has been an enormous source of empowerment for women, minorities, and immigrants pursuing the American Dream. |
The ruling was also criticized by the Intermodal Association of North America (IANA) who said that the "burdensome new requirement significantly limit the use of independent contractors in the trucking industry and threaten to force the reclassification of over 80% of intermodal drayage drivers that currently enjoy independent contractor status."
Joni Casey, president and CEO of IANA, issued the following statement:
For decades, the independent contractor business model has been widely favored by intermodal motor carriers and drivers. Although employee-driver positions are readily available, these owner-operator drivers explicitly chose the freedom, flexibility, and independence that comes with small business ownership. By maintaining control over their schedules, opportunities and business decisions, independent drivers are highly incentivized to provide safe, efficient, and cost-effective services that contribute to our nation's economic growth.
DOL's final rule would eliminate a worker's ability to determine their own preferred career path and instead force them to either become an employee or leave their chosen profession - a profession in which they have already heavily invested. Among other things, this investment includes significant safety training, and in many instances, the purchase of a power unit. The rule will have detrimental impacts on the intermodal freight industry; reducing service efficiency and reliability, exacerbating existing workforce shortages, and increasing consumer costs. Already, the trucking industry is experiencing a shortage of qualified drivers. This shortage stands to worsen with the implementation of this rulemaking.
IANA is concerned about the forthcoming changes that risk the livelihood of our industry's drivers and the owner-operator business model, which could adversely impact the supply chain and the greater economy. We urge Congress to act swiftly to overturn this ill-conceived rulemaking.
Acting Secretary of Labor Julie Su sees the rule in a different light. “Misclassifying employees as independent contractors is a serious issue that deprives workers of basic rights and protections. This rule will help protect workers, especially those facing the greatest risk of exploitation, by making sure they are classified properly and that they receive the wages they’ve earned,” Lu said in a statement.
In a statement the DOL said the guidance provided by the final rule aligns with longstanding judicial precedent on which employers have previously relied to determine a worker’s status as either an employee or independent contractor. The new rule will preserve essential worker rights and provide consistency for entities covered by the Fair Labor Standards Act.
The DOL noted that the new “independent contractor” rule restores the multifactor analysis used by courts for decades, ensuring that all relevant factors are analyzed to determine whether a worker is an employee or an independent contractor.
The rule addresses six factors that guide the analysis of a worker’s relationship with an employer, including any opportunity for profit or loss a worker might have; the financial stake and nature of any resources a worker has invested in the work; the degree of permanence of the work relationship; the degree of control an employer has over the person’s work; whether the work the person does is essential to the employer’s business; and a factor regarding the worker’s skill and initiative.
The rule separately rescinds the 2021 Independent Contractor Rule that the department believes is not consistent with the law and longstanding judicial precedent.
In crafting the new rule, the department’s Wage and Hour Division considered feedback provided by stakeholders at forums in the summer of 2022 and during the comment period after the proposal’s announcement in October 2022. The final rule takes effect on March 11, 2024.
