Though the drama and tension of the election season are close to peaking, the four founders of Fight for Freelancers, all of us ASJA members, continue to focus on anti-freelancer legislation and regulations, including the Department of Labor’s Independent Contractor Rule.
We sued the Department of Labor and related parties in January to prevent the rule from taking effect on March 11, 2024. Unfortunately, we were unsuccessful. This month, a Georgia federal judge dismissed our case with prejudice, agreeing with the defendants that we lacked standing to pursue our claims.
The Independent Contractor Rule
As a refresher, the DOL rule redefines who can be classified as an independent contractor under the DOL’s Fair Labor Standards Act. The act guarantees employees certain protections, such as minimum wage and overtime pay if appropriate, plus potential benefits like sick pay, vacation pay, retirement plan contributions, and health insurance. Employees also have the right to unionize, whereas freelancers do not.
As freelancers, we can negotiate rates and terms, work when and where we want, turn down assignments, fund our own retirement plans, and write off expenses on our taxes, among other advantages.
The DOL rule is based on six factors (plus a catch-all seventh), using a “totality of the circumstances” approach that does not indicate how a company should weigh each factor. We argued, “The Department’s vague, new standard provides no objective direction to anyone. It enables the Department’s enforcement officers and trial lawyers to label anyone performing services for another company to be deemed an ‘employee’ under essentially any circumstance.”
The 2024 rule replaces the previous administration’s rule, which relied on fewer factors to determine who is an employee and who is an independent contractor. Those factors included the person’s economic dependence on the company and the person’s opportunity for profit and loss. We found that rule to be more advantageous for independent contractors.
What’s Next
We’re back to focusing on legislative efforts that restrict freelancing. The November election will bring about changes in elected representatives who may wish to revive the Protecting the Right to Organize Act, a federal bill designed to broaden workers’ ability to organize, which previously died in the Senate. This legislation uses the restrictive, three-factor “ABC test” to determine who is an independent contractor and who is an employee—and that is our beef with it. Very few freelancers can pass the ABC test and remain self-employed.
Though the PRO Act did not advance during this Congressional term, changes in the political makeup of the House of Representatives and Senate, and of course the presidency, will help determine whether the bill is revived in the next session.
Moving Forward on Labor Issues
Labor issues will continue to be important for individuals, small businesses, and corporations, and the use of independent contractors will remain at the forefront. Currently, about 20% of company work is performed by freelancers, and that figure is expected to grow, according to a 2023 Harvard Business Review Analytic Services’ survey. We wish to protect our right to be our own bosses.
Even if the PRO Act is currently dormant, we’re still seeing activity on the state level, including in Minnesota, where some legislators are considering implementing the ABC test as the state’s determining employee or independent contractor test. Our local Fight for Freelancers chapters are working on behalf of independent contractors in their states.
Along with our pro bono legal counsel, Pacific Legal Foundation, we are weighing our options after this month’s lawsuit dismissal. Yet there is hope. There are still several other pending suits against the DOL about the rule, including Littman v. Department of Labor by fellow freelancer and ASJA member Meg Littman. We are hopeful that one of the suits will invalidate the DOL rule.
In the meantime, we invite you to join Fight for Freelancers to stay on top of what’s happening. ASJA offers additional advocacy resources on our website.
Debbie Abrams Kaplan is a journalist and content marketing writer, focusing on health and medical, supply chain, and business. She is a co-founder of Fight for Freelancers and a long-time ASJA member. Learn more at Kaplanink.com.
Jen Singer is a ghostwriter, developmental editor, and author, long-time ASJA member, and a co-founder of Fight for Freelancers. Learn more at Jen-Singer.com.