Sunday, April 14, 2024

Another lawsuit filed to challenge new independent contractors rule

by BIZ Magazine

(The Center Square) — A lawsuit filed on Thursday in Louisiana federal court seeks to challenge a Biden administration rule that would reclassify independent contractors as employees.

The U.S. Department of Labor’s rule is set to take effect March 11, though it is being challenged in multiple states. Julie Su, interim secretary of the department, has said misclassification “deprives workers of basic rights and protections” and believes the rule “will help protect workers.”

The plaintiffs in the lawsuit disagree with the government’s contention.

Six criteria, none weighted more than the other, are to determine independent workers’ legal protections and compensation under the new law. The previous rule prioritized the company’s control of the worker and the “entrepreneurial opportunity” the work provides.

Enforcement and interpretation were among the immediate critiques of the Biden administration move.

In Georgia, a January request for an injunction was filed in the U.S. District Court for the Northern District of Georgia, known as Warren v. U.S. Department of Labor.

“By attempting to implement a rule with no basis in law, the Department of Labor is overstepping the bounds of the limited rulemaking authority Congress gave it,” said Buck Dougherty, the senior counsel at the Liberty Justice Center, in a news release. “We ask that the court set aside the Biden administration’s arbitrary rule change and reinstate the rules that employers, independent contractors and courts have relied on for decades.”

The lawsuit, filed in the U.S. District Court for the Eastern District of Louisiana by the Liberty Justice Center and Louisiana’s Pelican Center for Public Policy, was filed on behalf of Cully Frisard. The plaintiff is owner of a trucking business that has operated in Louisiana since 2014 and employs 30 truck drivers as independent contractors who receive a flat percentage for each load they haul.

The lawsuit says the new rule is “arbitrary, capricious, an abuse of discretion and otherwise not in accordance with law” and tilts the balance against firms like Frisard’s trucking company, which is dependent on independent contractors who can set their hours, decide on partnerships with companies and what products or services they’ll offer.

“The 2024 rule risks turning independent contractors into unwilling employees, threatening their freedom and livelihood,” James Baehr said in a release. He’s the special counsel at the Pelican Institute’s Center for Justice. “This one-size-fits-all approach undermines the essence of entrepreneurship opportunity, putting Cully’s American dream in jeopardy.”

It also says the rule “abandons the key factors most probative of employee status and classification, opting for an open-ended inquiry expressly designed to be vague and amorphous.”

The lawsuit seeks an injunction to stop the rule from being enacted and attorney’s fees.

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