Chairman Scott: Final DOL Rule Will Rob Workers of More than $3 Billion a Year

WASHINGTON Chairman Robert C. “Bobby” Scott (VA-03) released the following statement after the Department of Labor announced its final rule on the classification of independent contractors under the Fair Labor Standards Act (FLSA). The Department’s rule would narrow its interpretation of who is considered an employee under the FLSA. The rule creates a new test that effectively rejects the inquiry into whether a worker is economically dependent on a potential employer and instead makes employee status a question of control—an approach rejected by Congress and the courts. Employers using the Department’s narrow control test might improperly classify their workers as independent contractors, depriving these workers of minimum wage and overtime protections under the FLSA.

"Today, the outgoing administration finalized a rule that will lead to widespread worker misclassification and have enormous implications for our nation’s workers and the economy. When workers are misclassified, they are subject to potential wage theft, law-abiding businesses are placed at a competitive disadvantage, and state and federal governments are deprived of much-needed tax revenue.

“Despite the fact that misclassification causes significant income loss for workers, the Department of Labor failed to quantify exactly how much workers stand to lose under this rule—a direct violation of the law. However, the Economic Policy Institute estimates that this rule will cost workers more than $3 billion each year.  Moreover, social insurance programs, such as Unemployment Insurance, would take a $750 million hit each year, leaving workers even more vulnerable right in the midst of an economic crisis.

“The finalization of this rule is particularly egregious as COVID-19 cases continues to rise. Now more than ever, workers need basic workplace protections, such as the minimum wage and overtime pay. The Department even concedes that this rule could leave workers with fewer critical job-based benefits, including health insurance and retirement contributions.

“It is shameful that, in the middle of an economic crisis, the outgoing administration is using its last few weeks in advance its own political agenda, rather than help struggling workers.”


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