Labor Secretary Marty Walsh emphasized the DOL’s commitment to addressing worker misclassification in a hearing before the House Education and Labor Committee, claiming that most workers treated as independent contractors would prefer not to be. A proposed rule on worker classification is expected from the DOL later this year.
“19 million people don’t choose to be independent contractors all across the board,” claimed Walsh in his testimony. “Some of those folks may be forced into those different jobs, understanding that they’re hired as employees, and then they’re paid” as contractors.
Walsh’s testimony comes as the DOL is expected to issue a proposed rule on worker classification later this year, on the heels of a district court decision that reinstated the Trump-era rule defining independent contractors under the FLSA earlier this spring. The proposed rule is expected to significantly restrict an employer’s ability to classify workers as independent contractors under the FLSA.
In Massachusetts, a gig worker ballot initiative struck down: The Massachusetts Supreme Court struck down a proposed ballot initiative that would have provided gig workers access to more benefits such as a minimum wage while also cementing their status as independent contractors. The initiative was spearheaded by Uber and Lyft who hoped to duplicate the success of Prop 22 in California (which passed but was later struck down in court). The court ruled the proposed ballot initiative contained multiple distinct policy questions for voters in violation of the “related subjects” requirements that apply to ballot initiatives in the state.
ICs also a hot topic at the NLRB: A recent decision by an NLRB regional director held that more than 250 West Coast port truckers were employees and not independent contractors under the NLRA. Teamsters President Sean O’Brien commented that the decision could pave the way for “potentially millions” of other misclassified workers to form unions. A case is already pending before the Labor Board in which the Board could impose a new, more restrictive worker classification standard, while the Board’s General Counsel has separately pushed to make misclassification a standalone labor law violation.
Outlook: Worker misclassification continues to be a major policy initiative across several agencies and jurisdictions, including at the DOL, the NLRB, and at the state level. With a proposed rule from the DOL and a potentially precedent-setting decision from the NLRB expected later this year, along with continued state activity, employers could soon be facing a very different worker classification landscape. Meanwhile, the SEC is likely to require independent contractor data as part of a proposed human capital metrics rule expected soon.