Biden administration updates independent contractor rules

The U.S. Department of Labor introduced a final rule on Tuesday that rewrites the definition of an independent contractor, which could lead to extra expenses for businesses. The new rule requires that companies treat independent contractors as full-time employees if the contractors are “economically dependent” on a company. The new rule will take effect on March 11.

Why did they refine the rule? The department said the misclassification of full-time employees as independent contractors is “a serious problem that impacts workers’ rights to minimum wage and overtime pay.” It also reported that misclassification leads to wage theft and undercuts competitors by unfairly cutting costs. U.S. Sen. Bill Cassidy, R-La., plans to introduce a Congressional Review Act resolution to repeal the revised rule. Cassidy said the changes would unlawfully coerce independent contractors to join labor unions. He says the Biden administration is “prioritizing unions over Americans who choose to earn a living without participating in a union.”

Dig deeper: From the WORLD archives, read Sophia Lee’s report on the effects of California’s regulation of independent contractors.