A group of freelance writers and editors has sued the U.S. Department of Labor, claiming the Biden administration’s new rule making it more difficult for companies to treat some workers as independent contractors is illegal and should be struck down.
The four freelance workers filed the lawsuit in Georgia federal court late Tuesday, alleging that the rule unveiled last week is so vague that it violates the U.S. Constitution.
The lawsuit is the first to challenge the rule, which is scheduled to take effect March 11. The plaintiffs said in their complaint that they would seek an order temporarily blocking the rule while their lawsuit plays out.
The rule is widely expected to increase labor costs for businesses in industries that rely on contract labor or freelancers, including trucking, manufacturing, healthcare and app-based “gig” services.
The Labor Department did not immediately respond to a request for comment on the lawsuit. In issuing the rule, the agency said it was meant to clarify the test for determining whether workers are independent contractors or employees, who are entitled to legal protections such as a minimum wage and overtime pay.
But the freelancers in their lawsuit said the department failed to explain why it was abandoning a simpler Trump-era rule that was favored by business groups.
That 2021 rule said the key factors in determining worker classification were the degree of control a company exercises over a worker and the worker’s opportunity for profit or loss. The new rule looks at several additional factors including the permanence of a job, the degree of skill and initiative required, and whether work performed is integral to a company’s business.
“Businesses are given no useful guidance on the scope of the statute and cannot structure their conduct to comply with its demands,” the freelancers said in the lawsuit.
The workers said they have “a reasonable fear that they will lose business due to uncertainty or fear of liability risks under the Department’s new rule.” They are represented by the Pacific Legal Foundation, a libertarian group.