Congress Fights to Block Department of Labor Rule

The United States federal government has the three branches interwoven to make sure that power remains fragmented. One such example is deliberations within the House of Representatives and a provision in a bill that would prohibit the Department of Labor (DOL) from implementing its contractor rule.

Details

The contractor rule is similar to the AB-5 requirement in California. It uses six factors to determine whether a person or business entity must be labeled an employee with all the strings attached to that moniker:

• Opportunity for profit or loss depending on managerial skill
• Skill and initiative
• Investments by the worker and the potential employer
• Degree of permanence of the work relationship
• Nature and degree of control
• Extent to which the work performed is an integral part of the potential employer’s business

When it comes to the trucking industry, five out of six of these are usually passed, but the final one, driving under the Authority of a larger carrier that also provides trucking delivery services, is a major red flag for the Department of Labor and could cause similar reverberations in the trucking industry as California’s AB-5 did.

However, the rule the DOL wants to implement is a “multi-factor balancing test”, meaning that if one or two factors apply, workers can still be classified as an independent contractor. Truckers could still drive under the Authority of a larger carrier provided the smaller enterprise uses its own trucks, determines its own routes, and works with multiple carriers.

Conclusion

Despite it being a multi-factor balancing test, some in Congress are fighting against the DOL’s ambitions. The appropriations bill to which this provision is attached is still in its Committee, meaning that it is still in its infancy.

One thing is for sure: one of the strongest arguments from detractors of AB-5 is that it violates the Constitution and the Federal Aviation Administration Authorization Act (F4A), both of which say that state governments cannot influence interstate commerce (though courts have disagreed on the extent to which this is true). Should the employee-contractor debacle extend nationwide through the Department of Labor, this will become a moot point.

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