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Business Coalition Sues Biden for Axing Trump’s Gig-Worker Rule

May 13, 2021, 10:19 PM

Business groups are trying to advance a lawsuit that would force the Biden administration to implement a Trump-era rule easing the use of independent contractors, even after the U.S. Labor Department cemented its decision to repeal the regulation.

The Coalition for Workplace Innovation, whose ranks include gig-economy powers such as Uber Technologies Inc., Lyft Inc., and Postmates, urged a federal judge in Texas Thursday to invalidate a final rule, issued May 5, that withdrew the Trump administration’s business-friendly interpretation.

The coalition’s members, who are seeking to protect their workforce models from potential intervention by the Biden administration, filed the complaint to amend an earlier lawsuit. The initial complaint, filed with the U.S. District Court for the Eastern District of Texas in March, argued the department lacked authority to delay implementation of the Trump rule.

Because the delay was unlawful, the coalition and three other industry groups who have signed on to the lawsuit argued Thursday that the department’s subsequent effort to revoke the rule is also a violation of law. The department, they argued, didn’t provide “substantive justification” for enacting the rule, nor did it offer the public a “meaningful” comment period.

“The department is acting rashly, and their actions are harming the very workers they say they are trying to protect,” Evan Armstrong, vice president for workforce at the Retail Industry Leaders Association, said in a statement. “Political agendas are inevitable, but they are not above the law. We are optimistic that we will prevail in court and force the Department of Labor to reimagine their strategy towards independent workers.”

The Trump measure, which drew support from business groups, was issued in the final weeks of the former president’s administration but was frozen when President Joe Biden took office. That prompted the initial legal complaint. In rolling back the Trump regulation, Biden’s DOL argued it needed to broadly extend wage protections while cracking down on employer abuses.

Workers who are considered independent contractors rather than employees aren’t eligible for overtime pay and minimum wage under federal law. The Biden administration wants to curb businesses’ use of independent contractors by adopting a broader view of the term “employee.”

The administration hasn’t said, however, whether it will issue a rule to advance a new interpretation of employee status under the Fair Labor Standards Act, or whether it would investigate gig-economy companies for relying on independent contractors.

—With assistance from Austin Ramsey

To contact the reporter on this story: Ben Penn in Washington at bpenn@bloomberglaw.com

To contact the editors responsible for this story: John Lauinger at jlauinger@bloomberglaw.com; Martha Mueller Neff at mmuellerneff@bloomberglaw.com; Travis Tritten at ttritten@bgov.com

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