NEW YORK – New York Attorney General Letitia James announced she has co-led a coalition of 24 attorneys general, in addition to the cities of Philadelphia and Pittsburgh and city agencies in New York and Chicago, in calling on the Trump Administration to stop the implementation of a proposed rule that would strip workers of key protections provided under the Fair Labor Standards Act (FLSA). The proposed rule — issued by the Wage and Hour Division (WHD) of the U.S. Department of Labor (DOL) — would make it easier for employers to change the classification of workers from employees to independent contractors, removing these workers from federal minimum wage and overtime pay requirements and increasing taxes and other out-of-pocket costs for workers. Attorney General James and the coalition yesterday sent a comment letter to Labor Secretary Eugene Scalia calling on the DOL to withdraw the rule and ensure the protection of U.S. workers.
“The Trump Administration’s proposed rule could lower wages and strip employer-sponsored health coverage for millions of workers,” said Attorney General James. “Even more troubling is the fact that the Trump Administration has had no issue proposing this rule in the middle of a public health and economic crisis affecting every corner of this country. Our coalition stands ready to protect workers throughout New York and the rest of this nation and we will do all in our power to stop this proposed rule from being finalized.”
The FLSA was signed into law over 80 years ago to establish a baseline of critical workplace protections — such as minimum wage and overtime — for workers across the country. Attorney General James and the coalition argue, in the letter, that the proposed rule would disregard the statutory text and purposes of the FLSA and break with established court precedents on the definition of “employee” and what qualifies as an independent contractor. By making this change, the DOL would specifically:
- Expose workers reclassified or misclassified as independent contractors to tax liability;
- Increase out-of-pocket costs for workers reclassified or misclassified — including potentially adding costs for unemployment insurance, workers’ compensation, and health care coverage; and
- Remove federal minimum wage and overtime pay requirements for workers since independent contractors do not qualify for FLSA protections, thus further creating confusion about whether state labor standards laws continue to apply to such workers.
The coalition also highlights how the DOL makes no satisfactory explanation for the proposed rule and makes no effort to quantify its real-world effects, such as how many workers will be reclassified or misclassified as independent contractors or how much money will transfer from workers to employers as a result of the rule. Further, the proposed rule would only exacerbate the sharp increase seen in recent decades of employers misclassifying workers as independent contractors.
The coalition finally argues that the proposed rule is particularly troubling in light of the ongoing coronavirus disease 2019 (COVID-19) pandemic, which has left millions unemployed. The consequences of reclassification or misclassification at this time are concerning to workers who rely on workplace protections and benefits only available to employees, including wage and hour standards, employer-provided health insurance, and paid leave programs.
For these reasons and others, the coalition argues that the proposed rule, if finalized, would violate the Administrative Procedure Act.
The coalition asks the DOL to withdraw the proposed rule immediately.
Last month, Attorney General James and a coalition of attorneys general asked the DOL to extend the comment period from 30 days to 60 days so that stakeholders could provide thoughtful input. Every other significant regulatory action WHD published in 2019 and 2020 had at least 60 days to comment. The DOL rejected the coalition’s request.
Joining Attorney General James in drafting this comment letter were Massachusetts Attorney General Maura Healey and Pennsylvania Attorney General Josh Shapiro. Joining the three in filing this letter are the attorneys general of California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Iowa, Maine, Maryland, Michigan, Minnesota, New Jersey, New Mexico, North Carolina, Oregon, Rhode Island, Vermont, Virginia, Washington, Wisconsin, and the District of Columbia; the cities of Philadelphia and Pittsburgh; and the New York City Department of Consumer and Worker Protection and the Office of Labor Standards for the city of Chicago.
This matter was handled by Assistant Attorney General Fiona Kaye of the Federal Initiatives Unit, as well as Deputy Bureau Chief Julie Ulmet and Assistant Attorney General Jessica Agarwal of the Labor Bureau — all under the supervision of Chief Counsel for Federal Initiatives Matthew Colangelo. The Federal Initiatives Unit is a part of the Executive Division and the Labor Bureau is a part of the Division for Social Justice, which are both overseen by First Deputy Attorney General Jennifer Levy.