U.S. Labor Policy Shifts: DOL Proposes Independent Contractor Rule, NLRB Reinstates Joint Employer Standard
The U.S. Department of Labor (DOL) has proposed a new rule for classifying workers as independent contractors, while the National Labor Relations Board (NLRB) has reinstated a 2020 rule defining joint employment. The DOL's proposal seeks to revert to guidance similar to a rule from the previous Trump administration, superseding a 2024 policy. The NLRB's action, which is final, follows a court decision vacating a 2023 Biden-era rule.
Both actions have drawn criticism from worker advocacy groups and some members of Congress regarding their potential impact on worker protections.
Department of Labor's Independent Contractor Rule
The U.S. Department of Labor's Wage and Hour Division has proposed a new rule regarding the classification of workers as independent contractors under the Fair Labor Standards Act. This proposal aims to replace the Biden administration's 2024 policy and is consistent with guidance adopted at the end of the previous Trump administration's term.
Key factors for determining worker classification under the proposed rule include:
- The nature and degree of control exercised over the work.
- The worker's potential for profit or loss based on initiative or investment.
The National Employment Law Project (NELP) stated that the proposed rule could allow employers to diminish federal minimum wage and overtime protections for workers. NELP highlighted that worker misclassification is prevalent in certain low-paid, labor-intensive sectors, such as home healthcare, janitorial work, landscaping, and app-based services.
According to NELP, these sectors disproportionately affect people of color and immigrants, and some low-paid independent contractors may not earn the federal minimum wage, potentially creating a two-tiered labor system.
NELP also argued that prioritizing only the two identified factors might not fully reflect the economic realities of many working relationships, particularly for those in app-dispatched ride-hail and delivery services who are integrated into larger business operations but may lack certain employment protections.
The proposed rule is currently open for a 60-day public comment period.
National Labor Relations Board's Joint Employer Rule
Separately, the National Labor Relations Board (NLRB) has reinstated the Trump administration's 2020 rule concerning joint employers. This rule stipulates that entities qualify as joint employers only if they "possess and exercise substantial direct and immediate control" over at least one aspect of workers' employment conditions.
This decision follows a court's vacation of a 2023 Biden-era NLRB rule, which had offered a broader definition, considering entities as joint employers if they had an employment relationship with workers and influenced their terms and conditions of employment.
The NLRB, which currently comprises two Trump appointees, one Biden appointee, and two vacancies, clarified that its action is ministerial and serves to implement the court's decision. Unlike the DOL's proposed rule, this NLRB rule is final.
Lawmaker and Advocacy Reactions
U.S. Senator Patty Murray (D-Wash.) issued a statement criticizing both the DOL's proposed rule and the NLRB's reinstatement of the joint employer policy. She stated that these actions could benefit large corporations and potentially lead to reduced protections for workers, including those related to minimum wage, overtime, and collective bargaining rights.
Senator Murray connected these labor policy changes to broader Republican legislative approaches, referencing past corporate tax reductions, and affirmed her commitment to advocating for worker protection laws and policies aimed at supporting the middle class.