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Democrats Intensify Legal Scrutiny of DOL’s Gig-Worker Proposal

Oct. 7, 2020, 7:18 PM

Democratic lawmakers and state attorneys general are amplifying attacks on the Labor Department’s proposal on independent contractor status, using requests to extend an abbreviated public comment period to preview a potential legal challenge.

In recent days, Democratic coalitions of 17 senators and attorneys general from 21 states plus the District of Columbia submitted letters to Labor Secretary Eugene Scalia that criticized the agency for only providing 30 days to receive public input on its major proposed rule. Released Sept. 22, the proposal gives employers a simpler legal framework to classify workers as independent contractors rather than employees, who are covered by federal minimum wage and overtime law.

The attorneys general, mostly reflecting the same group of blue states that successfully sued over the department’s joint employer regulation this year, implicitly threatened a new round of litigation by arguing the independent contractor rule would be vulnerable to an Administrative Procedure Act challenge. Executive agencies’ past practice of giving the public at least 60 days to comment on regulations makes “clear that an abbreviated 30-day comment period would fail the APA’s notice-and-comment requirements for reasoned agency decisionmaking,” the AGs wrote Sept. 29.

The requests for more time are consistent with responses to other recent DOL rulemakings Democrats have opposed, but the department isn’t likely to grant a delay beyond the Oct. 26 deadline. An extension would jeopardize DOL leadership’s stated goal of finalizing the regulation before year’s end. Still, the requests demonstrate the left is coordinating to tee up an expected lawsuit seeking to invalidate the rule, if it’s finalized.

The regulation remains a top priority for the business community and Republicans, who argue that the patchwork of state laws and varying court interpretations of employee status necessitate a clearer federal standard. They particularly favor a test, such as the one DOL proposed, that makes it harder for plaintiff attorneys to claim in court that workers have been misclassified.

Unions and Democrats favor more expansive definitions of employee status, contending that this prevents companies from shirking legal responsibility over workers’ wages while simultaneously controlling their economic conditions.

The senators’ letter, sent Tuesday, which includes signatures from Democratic Minority Leader Chuck Schumer (N.Y.) and ranking member of the labor panel Patty Murray (Wash.), called out DOL’s “dubious authority” to interpret employee status via regulation. The lawmakers also took issue with remarks Deputy Labor Secretary Patrick Pizzella made to Bloomberg Law in August, when he said the agency was “committed” to completing the rule by the end of President Donald Trump‘s first term in office.

“The amount of time provided by the Department to the public to comment on a proposed rule of such potentially large impact for workers should not be constrained by the political calendar,” the senators wrote to Scalia.

DOL spokespeople didn’t immediately respond to requests to comment Wednesday. The department also has yet to respond to media inquiries about whether it would consider similar public comment extension requests that a pair of House Democrats and the National Employment Law Project made in late September.

During a call for reporters last month to announce the proposed rule, a senior DOL official said, “We look forward to reviewing the comments very thoroughly.”

Another recent proposal from DOL that would impose more disclosures of labor union finances offered the public the traditional 60-day comment window.

Blown Deadline

In addition to the requests to extend the deadline, Democratic leadership of the House Education and Labor Committee has been attempting to investigate whether any outside groups unduly influenced the agency’s drafting of the independent contractor rule.

Regulations and legislation easing employers’ ability to call workers independent contractors have been a top priority of the business lobby, particularly among gig-economy companies such as Uber and Instacart that rely on a workforce of purported freelancers to shed labor costs.

On Tuesday, House Education and Labor Committee Chairman Bobby Scott (D-Va.) and Rep. Alma Adams (D-N.C.), who chairs the panel’s Subcommittee on Workforce Protections, re-upped their request for DOL to hand over records of all meetings and communications with nongovernmental entities about the proposed rule.

Their letter to Scalia included a new deadline of Oct. 12 for the agency to provide the records, noting that DOL didn’t comply with their original Sept. 22 letter, which asked for the documents by Sept. 29.

“As you are aware, this Committee has the duty and authority to conduct oversight of the Department,” Scott and Adams said in their Oct. 6 letter. “Due to the short public comment period that the Department has established for this rule as well as the Department’s stated intent to finalize this rule by the end of this calendar year, it is important that the Committee receives this information by the deadline above.”

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

To contact the editors responsible for this story: Karl Hardy at khardy@bloomberglaw.com; John Lauinger at jlauinger@bloomberglaw.com

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