The DOL’s Final Rule on worker classification (the “Rule”) took effect on March 11, 2024, and the fierce opposition that existed before that date has pressed forward in hot pursuit of overturning the Rule.
Critics of the Rule believe it is harmful to independent contractors—and to industry in general—because it severely restricts the freedom of Americans to have flexible work arrangements. It is particularly harmful across those industries that depend on hiring independent contractors, such as gig workers, financial advisors, realtors, construction workers, and the trucking industry. Those in opposition point out that the Rule is little more than a nationalizing of California’s Assembly Bill 5 (AB-5), which requires certain companies that hire independent contractors to reclassify them as employees, and which has had a severely negative impact on California’s unemployment rates and economy.
Within the first week after the Rule took effect, Representative Kevin Kiley (R-CA) and Senator Bill Cassidy, M.D. (R-LA), along with 65 cosponsors, introduced a Congressional Review Act resolution to overturn the Rule. The purpose of the joint resolution is to give Congress the opportunity to rein in the DOL’s far-reaching control by overturning the Rule, providing the means for resolution of the legal issues that surround the Rule’s implementation.
The joint resolution is succinct, complying with 5 USC § 802, and states: “Resolved by the Senate and House of Representatives of the United States of America in Congress assembled, that Congress disapproves the rule submitted by the [DOL] and such rule shall have no force and effect.” A copy of the Joint Resolution can be found here.
On March 21, 2024, the joint resolution was passed by the Committee on Education and the Workforce. So, where does that leave things?
Passage by the Committee means that the resolution is ordered to be presented to both the House of Representatives and the Senate for consideration. If the resolution receives full congressional approval, then it is enacted and the DOL’s Final Rule is made of no force and effect and will be treated as if it had never taken effect.
And so, we wait. We wait and watch for Congress to make its move.
If you have questions about this article or the Department of Labor’s Final Rule in general, please contact Desise Reverski (dreverski@setlifflaw.com) at (804) 377-1272 or Steve Setliff (ssetliff@setlifflaw.com) at (804) 377-1261.
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