💎 Fed’s first rate cut since 2020 set to trigger market. Find undervalued gems with Fair ValueSee Undervalued Stocks

US trade groups sue over Biden rule on 'gig' work, contracting

Published 03/05/2024, 04:22 PM
Updated 03/05/2024, 04:48 PM
© Reuters. U.S. President Joe Biden delivers remarks before a meeting of his Competition Council, in the State Dining Room at the White House in Washington, U.S., March 5, 2024. REUTERS/Evelyn Hockstein

By Daniel Wiessner

(Reuters) - Major U.S. business groups on Tuesday filed the latest lawsuit challenging a Biden administration rule that would make it more difficult for companies to treat some workers as independent contractors rather than employees.

The groups including the U.S. Chamber of Commerce, the country's largest business lobby, said in a complaint filed in federal court in Beaumont, Texas, that the U.S. Department of Labor rule violated federal wage law by adopting too broad a definition of who counts as a company's employee.

Employees are entitled to the minimum wage, overtime pay and other legal protections not afforded to contractors, and studies suggest that they can cost companies up to 30% more than contract workers.

The rule, which takes effect March 11, is expected to have a broad impact on an array of industries including app-based services that rely heavily on "gig" workers to contain costs. At least four other challenges to the rule are pending, including lawsuits by freelance writers, trade groups and a trucking company that treats driver as independent contractors.

The new lawsuit also claims that the Labor Department violated a federal law governing rulemaking by agencies by failing to justify its reversal of a Trump administration rule favored by trade groups.

The business groups had sued the department in 2021 when it first attempted to repeal the Trump-era rule. A judge blocked the repeal, saying the agency had not adequately explained its decision. Tuesday's filing came as an amended complaint in that case.

The Labor Department did not immediately respond to a request for comment.

The Labor Department has said that the rule is designed to clarify the standard for determining worker classification and crack down on industries where misclassification is common, such as construction, healthcare, retail sales and security and janitorial services.

© Reuters. U.S. President Joe Biden delivers remarks before a meeting of his Competition Council, in the State Dining Room at the White House in Washington, U.S., March 5, 2024. REUTERS/Evelyn Hockstein

Tuesday's filing comes as Republicans in Congress are separately working to repeal the rule. Senator Bill Cassidy, a Republican from Louisiana, has said he plans to introduce a resolution under the Congressional Review Act to nix the rule.

Lawmakers would need a two-thirds majority to overcome a likely veto by Democratic President Joe Biden.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.