U.S. House panel approves repeal of independent contractor rule

The U.S. House of Representatives committee on March 21 advanced a proposal to repeal a Biden administration rule heavily criticized by trade groups that makes it more difficult for companies to treat workers as independent contractors rather than their employees. 

The House Committee on Education & the Workforce approved the resolution in a 21-13 vote, making it eligible for a vote by the full House. 

Even if it passes both houses of Congress, Republicans are unlikely to muster the two-thirds majority needed to overcome a likely veto by President Biden. 

The U.S. Department of Labor rule, which took effect March 11, is widely expected to increase labor costs for businesses in industries that rely on contract labor or freelancers, such as trucking, manufacturing, health care and app-based "gig" services. 

Employees are entitled to the minimum wage, overtime pay, unemployment insurance and other protections not afforded to contractors, and can cost businesses up to 30% more, according to several surveys. 

At least four legal challenges to the rule are pending, including lawsuits by freelance writers, business groups and a trucking company that treats drivers as independent contractors. 

During debate on the resolution, Republicans on the House panel said the rule will lead to millions of self-employed Americans losing their contractor status and the flexibility, independence and earning potential that come with it. They cited surveys showing that most independent contractors prefer their status over a traditional job. 

Democratic lawmakers pushed back, saying businesses in an array of industries intentionally misclassify workers as a way to contain costs and undercut competitors. 

The Labor Department rule that adopts a test for determining whether workers are employees looks at six factors, including the degree of control a company has over a worker, the permanence of a job, the degree of skill and initiative required, and whether work performed is integral to a company's business. 

The rule replaced a Trump administration regulation favored by business groups that said the key factors in determining worker classification were control and a worker's opportunity for profit or loss.