Much of the resistance to Julie Su’s nomination as secretary of the Department of Labor has been based on her record as California’s labor commissioner—in particular, her role in the state’s effort to outlaw gig work. Her patrons have deflected the criticism as if it were baseless. But almost a year into her term as acting secretary (she has yet to be confirmed), Su has gone national with a California labor policy that stands as one of the most detested pieces of legislation produced by Sacramento in recent memory.
The Labor Department announced recently that it had issued a final rule, effective March 11, that revises “the Department’s guidance on how to analyze who is an employee or independent contractor.” Rather than following the constitutional process for making a law, the administration is legislating by regulation. The rule is a substitution, at least for now, for the PRO Act, a sop to unions rejected in the Senate, which has also declined to confirm Su.
In a prepared statement, Su complained that “misclassifying employees as independent contractors is a serious issue that deprives workers of basic rights and protections.” She vowed that the “rule will help protect workers, especially those facing the greatest risk of exploitation, by making sure they are classified properly and that they receive the wages they’ve earned.”
The rule resembles California’s 2019 Assembly Bill 5 (AB 5) in that its objective is to eliminate gig work (independent contracting) and thereby give unions a fresh pool of prospective dues-payers. Su was a zealous enforcer of AB 5. She told CalMatters in 2019 that “investigations and audits” were coming “so that those who want to comply with the need to reclassify can do so and those who don’t will understand that’s not the kind of economy we want in California.”
Su’s statement demonstrated the hostile attitude toward worker freedom that played a significant role in the derailment of her confirmation. Many Californians, and Americans, do want this kind of economy. Neither in California nor nationally have gig workers broadly united to complain that they have been “misclassified” as independent contractors. Both AB 5 and the Labor Department rule are top-down initiatives, a clear case of doing the bidding of unions.
Gig workers are comfortable with their arrangements, which many had to work years, if not decades, to establish. According to the Bureau of Labor Statistics, independent contractors “overwhelmingly” favor their “alternative employment arrangement (79 percent) to a traditional one (9 percent).” Nearly all (86 percent) of independent contractors believe that the best days for freelancers “are yet to come,” with 48 percent of new gig workers viewing “freelancing as a long-term career choice,” says Velocity Global, a workforce-solutions company.
Gig workers prefer their independent-contractor status because it gives them the freedom to make their own hours, supplement their incomes, decide whom they work with, avoid long-term commitments in uncomfortable situations, and explore new fields. Freelancing also helps workers stay afloat between hired jobs, earn and save money for emergencies, pay off loans, and amass down payments for homes and automobiles.
Why are elected and unelected officials so eager to take away these advantages? “We are confident,” Su explained in a call with reporters, that the rule “will help create a level playing field for businesses.” Her statement reveals “the economic ignorance of the administration,” says Pacific Research Institute senior fellow Wayne Winegarden.
“The whole point of competition is to find better ways to serve customers,” Winegarden says. The new rule is “the exact opposite of the government creating level playing fields. Should Home Depot have been penalized for creating a better customer experience by un-leveling the playing field with other hardware stores? Of course not. Finding better ways to do things is the key to prosperity.”
The rule won’t go into effect without a fight, however. Louisiana senator Bill Cassidy plans to introduce a Congressional Review Act resolution to repeal the rule, which “jeopardizes the ability of 27 million Americans to work as independent contractors.” At least that many Americans—and more, including the owners and managers of firms whose businesses stand to fail without freelance workers—will pray that Cassidy’s effort prevails.