DOL Secretary Defends Worker Classification Approach

During a recent congressional hearing, U.S. Department of Labor (DOL) Secretary Marty Walsh addressed the DOL’s approach to misclassifying workers as independent contractors and employees’ freedom to join unions. Walsh appeared before the House Committee on Education and Labor to discuss the DOL’s request for a $118 million budget increase to reach a total budget of $303 million for FFY 2023. Much of the increased budget would go to creating registered apprenticeship opportunities and increasing work opportunities for underrepresented workers, particularly women of color.

Several committee members questioned Walsh about the DOL’s approach to regulating worker classification. Walsh reminded committee members that the agency’s goal is to protect workers rather than to work against companies. To that end, Walsh stated that the DOL’s objective is to ensure that employers provide the correct benefits to workers based on whether the employees have chosen to work as independent contractors or employees. DOL wishes to avoid situations where employers force workers into independent contractor positions when they thought they were being hired as employees. 

One committee member remarked that if the DOL’s true goal was to address employers’ misclassification of workers, it should have kept the previous administration’s rule, titled the Independent Contractor Status Under the Fair Labor Standards Act, in place. That member cited the rule as providing clear rules about which workers are employees and which are independent contractors. 

The DOL delayed and ultimately withdrew the Trump-era rule in May 2021. A Texas District Court then ruled that the DOL impermissibly delayed and withdrew the rule since it was already in effect. The DOL appealed that decision, but the U.S. Court of Appeals for the Fifth Circuit has paused the appeal at the DOL’s request so that the agency has time to draft a new rule. 

Other committee members also expressed skepticism about the DOL’s approach to worker classification. They stated that the DOL is trying to overreach the classification of independent contractors to give them rights under union contracts and that the classification methods will harm the trucking industry, in particular. 

Walsh pushed back, stating that he favors the rise in entrepreneurship but that independent contractors, working in the trucking industry, recently reported that their jobs are not as lucrative as they used to be. 

HBL has experience in all areas of benefits and employment law, offering a comprehensive solution to all your business benefits and HR/employment needs. We help ensure you are in compliance with the complex requirements of ERISA and the IRS code, as well as those laws that impact you and your employees. Together, we reduce your exposure to potential legal or financial penalties. Learn more by calling 470-571-1007.

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