The Department of Labor (DOL) rang in the New Year by finalizing a rule on independent contractor classification. The rule provides another way forward for freelancers after California’s disastrous AB 5 law decimated the incomes of hundreds of thousands of independent contractors in the state.
Unlike AB 5, the new DOL rule doesn’t assume that full-time employee status is what’s best for most workers. Instead, the rule establishes a clear method for distinguishing between a full-time employee and an independent contractor. It considers whether workers are economically dependent on their employer or mainly in business for themselves. It also takes into account how much control a worker has over their own profit and responsibilities.
Before finalizing the rule, the DOL accepted almost 2,000 comments regarding the proposed classification method, including hundreds from gig workers who voiced support for the rule. Below are just a few comments from workers who prefer the choice and flexibility that comes with being an independent contractor over full-time employment.
- “With our family and other responsibilities it is impossible for me to work a regular job with fixed hours. The gig flexibility allows me to work nearly every day when and where I can and still earn the needed income.”
- “In a year with a pandemic, record high unemployment and, for me, Covid-related heart failure, I made more money than I did last year. How? By being an independent contractor.”
- “As a working mom, the flexibility I have from being my own boss is priceless. I’m able to be there for my son and balance work and family obligations as I see fit, without having to depend on getting an employer’s approval.”
- “Driving as an independent contractor allows me the opportunity that no other part-time job can. As a father of 4, flexibility around my work schedule is CRITICAL for me to be able to uphold family values and still be able to fight to survive on this added income.”
According to DOL officials, the rule received about 900 comments from rideshare drivers alone, the majority of whom supported the rule. More than 200 comments came from other freelancers. Overall, freelancers supported the rule 20 to 1.
The DOL rule, which goes into effect on March 8, allows actual workers to decide how they earn a living — not the government. You can bet unions won’t be thrilled about this deference to worker choice, and will likely see the rule as yet another roadblock. (Classifying more freelancers as employees would make organizing much easier, particularly in the gig economy.) But workers will be better off for it.