Today, EPI Director of Policy Heidi Shierholz submitted comments to the Wage and Hour Division of the U.S. Department of Labor (DOL), opposing the DOL’s proposed independent contractor rule, which would make it easier for employers to classify workers as independent contractors. The rule, Shierholz finds, would cost workers more than $3.7 billion annually—at least $400 million in new annual paperwork costs, and at least $3.3 billion every year in the form of reduced pay and benefits. Further, social insurance funds (Social Security, Medicare, Unemployment Insurance, and Workers’ Compensation) would lose at least $750 million annually in the form of reduced employer contributions. Shierholz notes that these estimates are conservative, and the true impact could be many times these numbers.
Additionally, due to occupational segregation by race, discrimination, and other labor market disparities rooted in structural racism, Black and Latinx workers are more likely to work in the occupations affected by this rule.
The Fair Labor Standards Act (FLSA) is one of our nation’s fundamental worker protection statutes, providing wage and hour protections like the minimum wage and overtime to employees, but not independent contractors. The DOL is attempting to narrow the broad definition of “employee” in the FLSA, making it easier for firms to classify workers as independent contractors instead of as employees.
“It is disgraceful that during a deadly pandemic and a deep economic downturn that the Trump administration is choosing to spend its resources further weakening protections for millions of workers,” said Shierholz. “The Department of Labor is doing a disservice to its mission, and our country, by pursuing this agenda instead of providing much-needed protections to U.S. workers.”