On March 21, the U.S. House of Representatives Committee on Education and the Workforce passed a Congressional Review Act (CRA) resolution to nullify the new independent contractor rule. We’ve gathered articles on the news from SHRM Online and other outlets.
‘Threat to the Livelihood of Millions’
At the committee meeting, Rep. Kevin Kiley, R-Calif., called the new independent contractor rule “a threat to the livelihood of millions of Americans.” He added, “It is the last thing our economy needs right now.” Committee Democrats characterized a repeal of the new rule and restoration of a Trump-era rule as authorized wage theft and dodging of legitimate costs of doing business.
The resolution faces a long road ahead. It must pass both the House and the Senate and be signed by President Joe Biden, which is unlikely. If the resolution passes both chambers of Congress and is vetoed, the resolution has to pass by two-thirds of the members of each chamber.
(CCJ)
Criticism of New Rule
Critics of the independent contractor rule maintain it hurts the workers it aims to help by preventing them from entering into a work arrangement that suits their needs and those of the business. Trade groups, small business advocates and independent workers have backed the effort to overturn the rule.
Court Challenges
Several business organizations are challenging the new rule in court. The new rule replaced a 2021 rule’s framework, which designated two core factors—control over work and opportunity for profit or loss—with a more indeterminate six-factor test to assess whether a worker is an employee or an independent contractor, according to the U.S. Chamber of Commerce, which has joined a lawsuit challenging the rule.
“SHRM stands in firm support of the CRA's initiative to repeal the recently published worker classification rule under the FLSA [Fair Labor Standards Act] and return to the 2021 rule,” said SHRM Chief of Staff and Head of Public Affairs Emily M. Dickens. “We believe that the current rule fosters ambiguity, deterring businesses from extending essential training to independent workers, a detrimental scenario for both parties involved. The 2021 rule struck a balanced approach, promoting business flexibility while curbing misclassification risks.”
New Rule Has Taken Effect
The new rule took effect as of March 11. This means, barring a court order blocking the rule, employers need to come into compliance. For some workers, switching to employee status may not be easy or welcome. But employers should emphasize to them the benefits of becoming employees, experts say.
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