Biden Labor Department Rule Makes “Employee” or “Freelancer” Even Harder to Determine

The Biden Labor Department today announced plans to use not a formal rulemaking but an interpretive rule to upend guidelines that help businesses determine whether a worker is a contractor or an employee — a policy that will also make it harder for freelancers/contractors, predicts CEI labor policy expert Sean Higgins:

“The Labor Department has proposed today to make the murky issue of when a worker is truly an independent contractor even murkier, likely upending the livelihoods of millions who see themselves as freelance workers. 

“There is no clear definition of employee in federal law, a problem made worse as the current administration is rescinding the previous administration’s attempt to create a concise two-factor test for when a worker is a traditional employee: 1) How much control does the employer have? 2) What is the worker’s opportunity for profit or loss? 

“The Biden administration instead proposes reinstating the older, much vaguer test that uses six separate factors, none of which are controlling, and to further amend the rule to clarify that ‘economic dependence’ on an employer ‘does not focus on the amount the worker earns or whether the worker has other sources of income’. In short, ‘economic dependence’ would no longer require being economically dependent on one employer.

“The administration’s new rule will perpetuate and deepen confusion over worker status. It may please unions since employees are easier to organize than independent contractors, but it will frustrate honest freelancers who prize the freedom to control how and when they work.” 

Related analysis: The Best Thing the Department of Labor Can Do for Freelancers is Keep the Trump-era Rule