A[M]TA Responds to Biden Administration Publishing Final Rule on IC Classification

Dear ATA Member:

Today the Biden Administration released a final rule on independent contractor classification under the Fair Labor Standards Act, which replaces the existing standard that ATA worked to enact under the Trump Administration.

The prior existing rule was clear, obvious, and straightforward in establishing two primary factors to establish IC or employment status:

• The control exercised by the hiring entity; and
• The entrepreneurial activity of ICs.

Under the new rule issued by the Biden Administration today, parties will now have to wade through six factors to determine IC or employment status—with varying weight depending on circumstance—plus a seventh catch-all, “totality-of-the-circumstances” analysis.

In short, this new standard muddies the waters, making it more difficult to determine whether an individual is properly classified as an IC or employee, and it opens the door for abusive litigation from the plaintiffs’ bar – all points that we made in our official comments during the rulemaking, which can be read here.

ATA President and CEO Chris Spear blasted the rule today in a press statement:

“I can think of nothing more un-American than for the government to extinguish the freedom of individuals to choose work arrangements that suit their needs and fulfill their ambitions. More than 350,000 truckers choose to work as independent contractors because of the economic opportunity it creates and the flexibility it provides, enabling them to run their own business and choose their own hours and routes. That freedom of choice has been an enormous source of empowerment for women, minorities, and immigrants pursuing the American Dream.

“The trucking industry has used independent contractors since the inception of interstate trucking, and court decisions over the last 90 years have continually reaffirmed the legitimate role ICs play in the economy. It’s unfortunate that the Administration has chosen to replace a clear and straightforward standard with a tangled mess that weakens our supply chain and undermines the livelihoods of hundreds of thousands of truckers across the country.

“The coordinated release of this rule with the renomination of Julie Su to lead the Department of Labor is proof positive that the Administration is doubling down on destructive policies that eliminate choice and opportunity for our workforce. Had Su actually taken the time to talk to independent contractors, she’d know firsthand what a misguided rule this really is. That is exactly why we opposed her nomination before and why we will continue to oppose it now. Radical California agendas have no place in federal policy.

“ATA will work with members of Congress and other stakeholders to defeat this ill-advised rule.”

While we strongly oppose this rule, it does include language clarifying that requirements imposed by motor carriers on their independent contractors to comply with the law, such as safety requirements, are not indicative of control that would be a factor leaning toward employment status. Here the final rule states, “[a]ctions taken by the potential employer for the sole purpose of complying with a specific, applicable Federal, State, Tribal, or local law or regulation are not indicative of control.”

The Biden Administration’s initial proposal said that required compliance with things like safety requirements may indicate employer control, but after our comments, it appears they did concede this point. However, they will consider requirements that go beyond what the law requires to be indicative of control, stating that “actions taken by the potential employer that go beyond compliance with a specific, applicable Federal, State, Tribal, or local law or regulation and instead serve the potential employer’s own compliance methods, safety, quality control, or contractual or customer service standards may be indicative of control.”

Notwithstanding, we’ll continue to work with our champions on Capitol Hill on efforts already underway to defeat this ill-advised regulation. We’ve been loud and clear about the importance of protecting IC choice during this Congress, of which you can watch clips of Spear’s Congressional testimony here.