House Democrats to DOL: Proposed Rule to Increase Employee Misclassification Will Cost Workers and the Economy
WASHINGTON, DC – Today, led by Committee on Education and Labor Chairman Robert C. “Bobby” Scott (VA-03) and Workforce Protections Subcommittee Chair Alma Adams (NC-12), over 100 House Democrats wrote to Department of Labor Secretary Scalia opposing the Department’s proposal to narrow its interpretation of employee status under the Fair Labor Standards Act (FLSA), leaving workers even more vulnerable to employee misclassification. The Members express deep concern that the proposal will have wide reaching consequences for both workers and the economy.
In the letter, the Members note that the Department’s proposal will lead to increased instances of employers misclassifying workers as independent contractors—denying workers basic wage and hour protections. The Members also note that, as our local communities continue to struggle in the midst of the COVID-19 pandemic, the proposal could worsen conditions for small businesses and local governments.
“This proposal would lead to misclassification, subjecting vulnerable workers to wage theft, placing law-abiding businesses at a competitive disadvantage, and depriving state and federal governments of much-needed tax revenue. We strongly urge the Department to withdraw its harmful proposal,” the Members wrote.
Despite the fact that misclassification is sure to cause significant income loss for workers, the Department failed to quantify exactly how much workers stand to lose under this proposal—even though the Department is legally required to do so. The Economic Policy Institute estimates that, if finalized, this proposal would cost workers more than $3 billion each year. Moreover, social insurance programs, such as Unemployment Insurance, would take a $750 million hit each year, leaving workers even more vulnerable right in the midst of an economic crisis.
The Members also question the Department’s attempt to quickly push through such a significant rule while disregarding rulemaking standards that require full public comment, consideration of such comments, and a careful consideration of the economic impact to workers—a responsibility the Department has repeatedly failed to fulfill in previous rulemakings.
To read the full letter, click here.