WASHINGTON, D.C. – Today, Congressman Roger Williams (R-TX), Chairman of the House Committee on Small Business, wrote to the Department of Labor (DOL) expressing concern over DOL’s new rule regarding independent contractor classification.

“This rule from the DOL fails to appropriately consider its impact on small businesses,” said Chairman Williams. “Independent contractors and small businesses often work in concert with one another and the DOL’s rule would effectively ruin their agile partnership. It is incredibly frustrating to see the Biden Administration continue to put Main Street on its heels, but this Committee continues to work to hold them accountable and ensure our entrepreneurs have a voice at the table.”

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Read the full letter here.

Read excerpts from the letter below:

“The House Committee on Small Business (the Committee) writes to express our deep concern over the Department of Labor’s (DOL) finalization of the rule titled ‘Employee or Independent Contractor Classification Under the Fair Labor Standards Act.’ This rule will make it harder for businesses to classify workers as independent contractors (IC)—which in turn will decrease flexibility and employment opportunities resulting in lost earnings for millions of Americans. Further, the rule disproportionally impacts small businesses—particularly in construction, trucking, and health care sectors. It seems that the DOL failed to properly consider small entities in this rule.

“As outlined by the Small Business Administration’s Office of Advocacy (Advocacy), this rule threatens the livelihood of many small business owners by re-implementing a confusing multifactor analysis to determine whether a worker is an IC or an employee. As a result, businesses are less likely to hire gig workers with a fear of increased misclassification lawsuits. Instead of using the ‘core factors’ set forth in the 2021 IC rule, this final rule rescinds the 2021 rule and returns to a totality-of-the-circumstances analysis of the economic reality test which harms both small entities and ICs.

“This rule impacts over 22 million ICs and threaten their status. Many ICs who will be forced to be classified as employees under the new rule would no longer be able to operate as their own small business. With that, they lose the unique freedom of being a small business and the ability to innovate, adapt, and improve to survive and grow. These factors could prevent small businesses from hiring employees if the costs are too prohibitive. Businesses utilizing ICs are concerned that the rule will make it harder to hire, which is particularly concerning given today’s labor shortages. In fact, according to Advocacy, the only way employers would have certainty is by classifying their workers as employees requiring additional costs for benefits and wages.

“The DOL’s final rule as written, fails to provide adequate analysis and consideration of small entities. We therefore urge the DOL to delay the rule from coming into effect until DOL provides proper consideration of small entities.”

Background:

Signatories include Chairman Roger Williams (R-TX).

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