New challenge to labor rule for freelancers

NASHVILLE, Tenn. — A Tennessee free-market nonprofit group on Wednesday joined the ranks of organizations challenging a new Biden administration labor rule that changes the criteria for classifying workers as independent contractors or employees.

The Beacon Center of Tennessee filed its federal lawsuit in Nashville on behalf of two freelance journalists, Margaret Littman and Jennifer Chesak. The lawsuit against the

U.S. Department of Labor, its wage division and two top officials claims the new rule will “force freelancers to enter undesirable employment relationships or to refrain from working at all.”

Others are also challenging the rule, including business coalitions in an ongoing case before the 5th U.S. Circuit Court of Appeals, and a group of freelance writers represented by a libertarian legal organization who sued in a Georgia federal court.

The rule replaces a Trump-era standard regarding classification of employees as contractors. Such workers are not guaranteed minimum wages or benefits, such as health coverage and paid sick days. The new rule aims to prevent the misclassification of workers as independent contractors.

President Joe Biden’s administration proposed the rule change in October 2022, approved it in January and set it to go into effect on March 11.

Labor advocates have supported the rule, saying employers have exploited lax rules to misclassify workers and avoid properly compensating them. Business groups contend that the rule creates uncertainty for employers.

The Beacon Center’s lawsuit argues that the Labor Department lacks the authority to change the rule and didn’t provide a reasoned explanation for it as required by the federal Administrative Procedure Act.