GAINESVILLE, Ga. (Legal Newsline) - The Department of Labor has no reason for changing rules governing what makes an independent contractor, freelancers challenging its actions say.
An April 29 motion for summary judgment in Georgia federal court says the Labor Dept., which is headed by a woman who has yet to gain confirmation from the U.S. Senate, is replacing clear guidelines put in place by the Trump Administration.
In January, President Joe Biden's Labor Dept. introduced a final rule intended to make clear when an independent contractor is actually serving as an employee and owed minimum wage and overtime pay. It's part of an onslaught of his administration's rulemaking that has federal agencies making major changes without Congressional approval.
Four plaintiffs represented by Wilson Freeman of the Pacific Legal Foundation have sued to block the rule and recently moved for judgment.
"Plaintiffs are four freelance writers. They have no desire to be employees and their clients have no desire to employ them," the motion starts.
"The Department of Labor is threatening their livelihoods in a new regulation which reimagines the scope of the Fair Labor Standards Act in order to restrict freelancing nationwide."
The rule passed at the end of the Trump Administration was good enough, they say. It added "clarity and uniformity in a confusing and difficult area of law."
Acting Labor Secretary Julie Su's rule does the opposite, the freelancers say. A press release said the new rule "aligns with longstanding judicial precedent" and implements a multifactor analysis that addresses six factors.
Those are the opportunity for profit or loss, the financial stake and nature of resources invested in work, the degree of permanence of the relationship, how much control an employer has over the work, whether the work is essential and the worker's skill and initiative.
"(T)he Department announced it would be withdrawing the 2021 rule and replacing it with a confusing and vague 'know-it-when-we-see-it' rule based on cherrypicked statements drawn from 70 years of circuit court caselaw," the freelancers' motion says.
"When a federal agency completely changes its view of a statute, it must, at the very least, provide 'good reasons' for such a change. The agency not only lacks good reasons for its changes, but it relies almost exclusively on an incorrect understanding of the FLSA to justify all its actions.
"This mistaken legal understanding alone is enough reason to set the rule aside."
The Trump Administration rule found two of the factors should be given the most weight - the opportunity for profit or loss and the degree of an employer's control over a freelancer's work.
Adding four more factors makes the new rule vague, the freelancers say.
"As a result of the rule, Plaintiffs have had to renegotiate contracts, change business practices, terminate freelancers working fo them, and undertake other expenses to protect themselves and their clients from liability under the FLSA," the motion says.
"Plaintiffs' businesses would benefit from a more certain, clear rule. The prior rule's emphasis on core factors and other aspects sharpening the standard provided predictability for their businesses and for their clients.
"The withdrawal of that rule and the turn to a polar opposite policy has left Plaintiffs unable to know if their livelihood is legal and unable to protect their clients."
Other Biden Administration rules include the FTC's move to ban noncompete agreements and the Consumer Financial Protection Bureau's attempt to cap late fees on credit card payments at $8.