ASA Submits Comments on DOL’s Independent Contractor Proposed Rule

ASA, along with the Small Business Legislative Council (SBLC), submitted comments on the Department of Labor (DOL)’s Independent Contractor Rule.  The SBLC (ASA is a long-standing member) is an independent, permanent coalition of national trade and professional associations whose goal is to maximize the advocacy and presence of small business on Federal legislative and regulatory policy issues, and to disseminate information on the impact of public policy on small businesses.

Per our comments, “we appreciate the need for guardrails that protect workers and prevent unscrupulous employers from misclassifying employees as independent contractors to avoid the application of the Fair Labor Standards Act and other wage and hour laws. However, it is critical that these tests be flexible and dynamic to capture the many legitimate areas where independent contractors play a critical function in our economy. Small businesses use legitimate independent contractors for a whole range of different purposes – from outsourcing functions like marketing, to an independent contractor who might provide these services, to a whole host of different small businesses to engaging experts to provide specialized industry-specific services in areas where the business lacks expertise. Small business owners are generally not lawyers or accountants and the more complex the rules, the more businesses have to spend on obtaining professional advice – money that could otherwise be invested in their business. While the SBLC has not taken a position on whether the economic realities test strikes the right balance, applying a test like the economic realities test that has been fleshed out over years through case law and administrative guidance certainly makes this complex issue easier to navigate.”

We concluded our comments by applauding the DOL for declining calls to adopt an ABC test, like what is currently used in California, or a similar test that would apply a stringent requisite factor test rather than a balancing test. Because of the broad and varied ways in which legitimate contractors operate, particularly in the context of small businesses – a requisite factor test does not work. In fact, these tests come very close to establishing an outright ban on independent contractors. Particularly for brick and mortar small businesses that are already struggling to compete and recover from COVID, a change of this magnitude to the way that many of them have structured their businesses and workforces could be catastrophic.  We appreciate the DOL’s recognition of these concerns and encourages the DOL to maintain this position in the final rule.