New York: Attorney General Letitia James announced she has co-led a coalition of 24 attorneys general, in addition to the cities of Philadelphia and Pittsburgh and city agencies in New York and Chicago, in calling on the Trump Administration to stop the implementation of a proposed rule that would strip workers of key protections provided under the Fair Labor Standards Act (FLSA). The proposed rule — issued by the Wage and Hour Division (WHD) of the U.S. Department of Labor (DOL) — would make it easier for employers to change the classification of workers from employees to independent contractors, removing these workers from federal minimum wage and overtime pay requirements and increasing taxes and other out-of-pocket costs for workers. Attorney General James and the coalition sent a comment letter to Labor Secretary Eugene Scalia calling on the DOL to withdraw the rule and ensure protection of US workers.
“The Trump Administration’s proposed rule could lower wages and strip employer-sponsored health coverage for millions of workers,” said Attorney General James. “Even more troubling is the fact that the Trump Administration has had no issue proposing this rule in the middle of a public health and economic crisis affecting every corner of this country.”
Attorney General James and the coalition argue, in the letter, that the proposed rule would disregard the statutory text and purposes of the FLSA and break with established court precedents on the definition of “employee” and what qualifies as an independent contractor. By making this change, the DOL would specifically:
Expose workers reclassified or misclassified as independent contractors to tax liability; Increase out-of-pocket costs for workers reclassified or misclassified — including potentially adding costs for unemployment insurance, workers’ compensation, and health care coverage; and Remove federal minimum wage and overtime pay requirements for workers since independent contractors do not qualify for FLSA protections, thus further creating confusion about whether state labor standards laws continue to apply to such workers.
The coalition also highlights how the DOL makes no satisfactory explanation for the proposed rule and makes no effort to quantify its real-world effects, such as how many workers will be reclassified or misclassified as independent contractors or how much money will transfer from workers to employers as a result of the rule.
The coalition finally argues that the proposed rule is particularly troubling in light of the ongoing coronavirus disease 2019 (COVID-19) pandemic, which has left millions unemployed.