Active: Federal lawsuit challenges Labor Department’s unconstitutional rule

The ability to work as an independent contractor—or freelancer—has afforded people in wide-ranging professions the ability to earn a living on their own terms. Whether they’re juggling families, seeking variety, or desiring control, freelancers can choose their own workload, hours, wages, and clients as fit their needs.

This arrangement is especially beneficial for professionals who need the freedom and flexibility in an evolving content landscape of consolidations, cost-cutting, and technology.

Unfortunately, a new Biden administration rule now threatens to shackle freelancers into employment relationships they neither want nor need.

Announced in January 2024 by the U.S. Department of Labor (DOL), the rule alters the scope of who is an independent contractor under federal labor law and who is an employee.

The Fair Labor Standards Act of 1938 governs federal minimum wage and overtime law. While the law sets out wage and hour standards, as well as civil and criminal punishment for non-compliant employers, the statute fails to define key terms like “employee” and “independent contractor.”

This lack of uniformly accepted definitions has frustrated courts and the regulated public and put businesses at risk of harsh penalties for over 80 years. Companies and contractors need to know the rules so they can enter into agreements without fear of future enforcement or lawsuits.

The Trump administration’s DOL simplified and clarified worker classifications with a rule that put the focus on two criteria: the worker’s degree of control and the worker’s ability to make a profit. But now, the Biden administration has upended that straightforward rule and replaced it with an interpretation so vague and uncertain that only the DOL itself can tell if an independent contracting relationship exists. It has made this change with a wholly inadequate justification, leaving millions of contractors twisting in the wind.

The government should protect the flexibility of freelancers and their clients to build mutually beneficial working relationships. Instead, the DOL’s new rule deliberately prevents workers and businesses from knowing whether anyone is an independent contractor and exposes those who work with freelancers to huge fines and criminal penalties for not knowing.

Worse yet, by creating a rule which clouds the standard in an impenetrable fog, the government accrues enormous power in the hands of the bureaucrats in Washington. Ordinary citizens do not know how to structure their relationships to avoid liability under federal law, giving the government a sword of Damocles it can bring down on the heads of businesses it doesn’t like.

The Supreme Court made clear in Sackett v. EPA (2023) that an agency cannot embrace a statutory interpretation with no useful guideposts without raising dire constitutional questions. The DOL’s rule is so freewheeling and open ended, it can’t be the correct interpretation of the Fair Labor Standards Act.

Every working American has the right to earn an honest living and businesses have the right to know the scope of their obligations under the law. Independent contractors are no exception. Instead of a legal framework that allows people to be their own boss under certain clear rules and safeguards, the Department of Labor is obscuring the law to the detriment of independent contractors.

A group of freelance writers has decided to fight back.

Kim Kavin is a freelance writer and editor from New Jersey. Kim writes and edits content for magazines, newspapers, and corporate brands and has authored multiple books. She is a past president of the professional association Boating Writers International, whose membership includes many freelance writers. Kim, along with Jen Singer and Deborah Abrams Kaplan, also from New Jersey, and Karon Warren, based in Georgia, founded an online group called Fight For Freelancers to contest policies like AB5 and the Department of Labor’s rule that seek to make it more difficult for them to work as independent contractors. Their livelihoods depend on them being able to work as freelancers, and they want to be able to keep the mutually beneficial business relationships they have with their clients.

Represented free of charge by Pacific Legal Foundation, Fight For Freelancers, Kim, Jen, Deborah and Karon are asking a federal court to restore their right to earn an honest living without interference by the DOL’s illegally vague independent contractor rule.

What’s At Stake?

  • Independent contracting allows people to be their own boss. Not everyone fits into restrictive employee arrangements.
  • The Labor Department’s new classification rule makes it harder to be an independent contractor, by muddying the waters between who is an independent contractor and who is an employee. These rules chill Americans’ ability to work by threatening businesses with ruinous civil and criminal liability.

Case Timeline

May 28, 2024
Defendant's Cross-Motion to Dismiss
United States District Court for the Northern District of Georgia
May 28, 2024
Defendants' Cross-Motion for Summary Judgment
United States District Court for the Northern District of Georgia
April 29, 2024
Plaintiffs' Motion for Summary Judgment
United States District Court for the Northern District of Georgia
January 16, 2024
Complaint
United States District Court for the Northern District of Georgia

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