House Republicans Take Up Gig Worker Issues Ahead of Su Hearing

House Republicans are holding a hearing on independent contractors and the state of California’s approach to protecting their workplace rights in the wake of increased opposition to Julie Su’s nomination to be US Secretary of Labor.

The House Workforce Protections subcommittee will examine California’s Assembly Bill 5 on April 19, just a day before Su’s scheduled nomination hearing in the Senate. Su—the state’s former labor secretary—supported the measure, which codified the state’s “ABC” worker classification test that made it more difficult to classify gig workers as contractors.

Republican lawmakers, truckers associations, and app-based companies like Uber Technologies Inc. and Lyft Inc. have cried foul over the law, which creates a presumption that workers are employees rather than independent contractors.

The hearing comes as businesses and congressional Republicans wage an all-out campaign against Su ahead of her appearance before the Senate Health, Education, Labor and Pensions Committee, claiming her record in California is troubling for the US Department of Labor’s pending rulemaking on independent contractors and overtime pay.

The Senate is in charge of voting on Su’s nomination, but House Republicans hope a hearing on the issue could help raise awareness about her record ahead of the Senate’s consideration.

“By illustrating just how disastrous these policies are, it does provide a new perspective for the Senate to consider in the confirmation hearing,” Rep. Kevin Kiley (R-Calif.), the Workforce Protections subcommittee’s chairman, said in an interview with Bloomberg Law.

National Standard

The panel will focus on how AB5 could preview how the DOL will shape its independent contractor rule, which is expected to be finalized in the next few months, Kiley said. If confirmed, Su would make the California law the national standard, he added.

“She was an architect and primary enforcer led by one of the worst laws that our state certainly has ever seen and she’s committed to doing the same thing on a national level,” he said.

Kiley added he expects to introduce a resolution under the Congressional Review Act to reverse the DOL independent contractor rule once it’s issued.

The CRA allows Congress to overturn agency regulations by a simple majority vote in both chambers as well as the president’s signature.

“We shouldn’t have these far reaching policies with such negative ramifications for the American economy being done simply through the bureaucracy,” he said.

‘ABC Test’ Ditched

Business concerns about Su’s approach to worker classification largely hinge on her previous work as leader of California’s labor enforcement agencies, in particular her role implementing the state’s “ABC test” in 2020.

Unlike employees, independent contractors aren’t protected under the federal Fair Labor Standards Act, carrying fewer tax and legal liabilities for companies.

The Biden administration’s independent contractor rule would replace a business-friendly classification test finalized at the end of the Trump administration, considering more factors related to the working relationship when deciding whether a worker should be considered a contractor or an employee for purposes of the FLSA.

Business groups have feared that Su will adopt California’s approach if confirmed to lead the DOL, but the Biden administration has already said it doesn’t plan to replicate the Golden State’s independent contractor test at the federal level.

The proposed version of the rule, released in October, stated that codifying an ABC test similar to California’s “could establish a simpler and clearer standard” for deciding whether workers are employees or independent contractors, but the DOL is “legally constrained” by court rulings from implementing such a test.

“Because the ABC test is inconsistent with Supreme Court precedent interpreting the FLSA, the Department believes that it could only implement an ABC test if the Supreme Court revisits its precedent or if Congress passes legislation that alters the applicable analysis under the FLSA,” the DOL explained in its proposed rule.

However, some in the regulated community have suggested that at least one of the proposed factors included in the Biden proposal could give the DOL leeway to broadly limit contractor relationships, even if not identical to the entirety of the ABC test.

The DOL accepted input on the proposal through December, and is expected to release the final version in May, according to the administration’s latest regulatory agenda.