House panel weighs repeal of Biden's independent contractor rule

A House committee is set to hold a hearing on Thursday regarding a bill that would overturn President Biden's independent contractor rule that took effect earlier this month.

The Labor Department's rule makes it more difficult for businesses to classify workers as independent contractors instead of employees by superseding a rule adopted during the Trump administration and changing the criteria for classifying a worker as an independent contractor.

Under the rule, six factors are analyzed to determine whether a worker is an independent contractor, including things like the opportunity for profit or loss, investments by the worker and the business, as well as the nature and degree of control exercised by the company over the worker. 

Critics of the rule argue it hurts the workers it aims to help by preventing them from entering into a work arrangement that suits their needs and those of the business, with trade groups, small business advocates and independent workers backing the effort to overturn the Biden Labor Department's rule using the Congressional Review Act (CRA).

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A coalition of independent workers and advocacy groups known as Save Independent Work (SIW) is leading a campaign to overturn the rule. Some have cited the impact of a similar California law known as AB5, which was enacted in 2019 and revised a year later, as a reason for the federal rule to be repealed.

SIW coalition member Karen Anderson, founder of Freelancers Against AB5, said in a statement to FOX Business that the federal rule "will have horrible consequences for independent contractors throughout the country."

"In California, workers in 600 categories of professions know firsthand how being reclassified as a W-2 employee can destroy countless careers," Anderson added.

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Tom Manzo, president and founder of the California Business and Industrial Alliance, added that the "new rule robs independent workers of their ability to choose where and how they earn a living. That's not to mention the burden it places on small business owners that can't afford to hire full-time staff."

The House Education and Workforce Committee will markup legislation that, if enacted, would overturn the Biden administration's rule using the Congressional Review Act. Chairwoman Virginia Foxx, R-N.C., said the Biden administration is holding "workers hostage with their we-know-better-than you policies" with the rule.

If the bill advances from the committee, it will likely receive a vote on the House floor and if it's passed by the chamber it would go to the Senate. The CRA allows Congress to pass a joint resolution disapproving of a federal rule with simple majority votes in the House and in the Senate, which ordinarily requires a three-fifths majority to pass most legislation.

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However, the resolution reversing the Biden administration's independent contractor rule would still face long odds at being enacted. President Biden is unlikely to sign a bill reversing a regulation put forward by his own administration and would likely veto the bill if it reached his desk as he has done with several other CRA resolutions in the current Congress.

FOX Business' Breck Dumas contributed to this report.