Division of Regulations, Legislation, and Interpretation
Wage and Hour Division
U.S. Department of Labor
200 Constitution Avenue NW
Washington, D.C. 20210
Re: Comments on Independent Contractor Status Under the Fair Labor Standards Act: Delay of Effective Date (RIN 1235-AA34)
Dear Ms. DeBisschop:
The Economic Policy Institute (EPI) is a nonprofit, nonpartisan think tank created in 1986 to include the needs of low- and middle-income workers in economic policy discussions. EPI conducts research and analysis on the economic status of working America, proposes public policies that protect and improve the economic conditions of low- and middle-income workers, and assesses policies with respect to how well they further those goals. EPI submits these comments on the Department of Labor’s (DOL) request for comment on the delay of the effective date of the rule entitled “Independent Contractor Status Under the Fair Labor Standards Act” (Independent Contractor Rule).
The Fair Labor Standards Act (FLSA) is one of our nation’s fundamental worker protection statutes, providing wage and hour protections like the minimum wage and overtime to employees, but not independent contractors. The Independent Contractor Rule narrows the broad definition of “employee” in the FLSA, making it easier for firms to classify workers as independent contractors instead of as employees.
By making it easier for employers to classify workers as independent contractors, EPI estimated the finalized rule would cost workers more than $3.7 billion annually—at least $400 million in new annual paperwork costs, and at least $3.3 billion every year in the form of reduced pay and benefits. Further, social insurance funds—such as Social Security, Medicare, Unemployment Insurance, and Workers’ Compensation—would lose at least $750 million annually in the form of reduced employer contributions. However, as noted in EPI’s submitted comments for the proposed rule, these estimates are conservative, and the true impact could be many times these numbers.1
EPI strongly urges the Department of Labor to delay implementation of the Independent Contractor Rule. This rule will cost workers billions of dollars annually and will cost the social insurance system hundreds of millions of dollars annually. Further, due to things like occupational segregation by race, discrimination, and other labor market disparities rooted in structural racism, Black and Latinx workers are more likely to work in the occupations affected by this rule. As a result, this final rule would exacerbate existing racial disparities. It must not be implemented.
Director of Policy and Senior Economist
Economic Policy Institute
Economic Policy Institute
1. Heidi Shierholz, “EPI Comments on Independent Contractor Status Under the Fair Labor Standards Act,” comments submitted on behalf of Economic Policy Institute to U.S. Department of Labor, February 24, 2021.