Tennessee free-market group sues over federal rule that tightens worker classification standards

Feb 21, 2024, 12:18 PM

NASHVILLE, Tenn. (AP) — 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 and that much depends on how the Labor Department decides to enforce it.

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. Additionally, the group argues that the rule increases the chances that freelancers like Littman and Chesak will be misclassified as employees instead of contractors.

In Chesak’s case, the lawsuit says one company has begun requiring her to spend unpaid hours documenting her tasks as a freelancer; another company has limited the hours she can work as a freelancer; and another has required her to sign an agreement that indemnifies the company if it were found liable for misclassifying her.

“I’ve chosen to be a freelance writer for nearly 30 years because of the flexibility, control, and opportunity it provides me,” Littman said in a news release. “I’m fighting back against the Labor Department’s rule because it threatens to destroy my livelihood and right to earn a living as a freelancer.”

The rule directs employers to consider six criteria for determining whether a worker is an employee or a contractor, without predetermining whether one outweighs the other. That’s a change from the Trump-era rule, which prioritized two criteria: how much control a company has over its workers and how much “entrepreneurial opportunity” the work provides.

It’s up to employers initially to decide how to weigh each criteria, which also include how much control the employer has over the worker, whether the work requires special skills, the nature and length of the work relationship of the relationship between worker and employer, and the investment a worker makes to do the work, such as car payments.

Major app-based platforms including Uber and Lyft have expressed confidence that the new rule would not force them to reclassify their gig drivers. The two companies are also listed as members of one of the business coalitions challenging the rule in court.

United States News

FILE - An Amazon worker delivers packages in Los Angeles on Oct. 1, 2020. July sales events have be...

Associated Press

Amazon Prime Day deals are almost here. Should you take advantage of them?

NEW YORK (AP) — It’s summertime, and the bargains seem easy at a time when many consumer prices are high. July sales events have become a seasonal revenue driver for the retail industry since Amazon launched its first Prime Day back in 2015. While consumers may be enticed by the advertised can’t-miss savings on some […]

2 hours ago

Associated Press

Shooting kills 3 people including a young child in a car on an Alabama street

Three people including a young child were killed when their car was targeted with multiple gunshots outside a residence in Birmingham, Alabama, on Saturday evening. The Birmingham Police Department said in a social media post that a triple homicide investigation was underway in the 3400 Block of 27th Street North. The police said officers responded […]

4 hours ago

Republican presidential candidate former President Donald Trump is covered by U.S. Secret Service a...

Associated Press

The Secret Service is investigating how a gunman who shot and injured Trump was able to get so close

The Secret Service is investigating how a gunman was able to get close enough to shoot at former President Donald Trump at a rally Saturday.

5 hours ago

Carlton Smith, left, and Justin Nimmo pose in from of the console of the Barton Opus 234 theater or...

Associated Press

Reviving Hollywood glamor of the silent movie era, experts piece together a century-old pipe organ

DETROIT (AP) — A massive pipe organ that underscored the drama and comedy of silent movies with live music in Detroit’s ornate Hollywood Theatre nearly a century ago was dismantled into thousands of pieces and stashed away. The Barton Opus, built in 1927, spent four decades stored in a garage, attic and basement in suburban […]

6 hours ago

FILE - Georgia Gov. Brian Kemp, left, and Centers for Medicare and Medicaid Services Administrator ...

Associated Press

Can a Medicaid plan that requires work succeed? First year of Georgia experiment is not promising

ATLANTA (AP) — By now, Georgia officials expected their new Medicaid plan, the only one in the nation with a work requirement, to provide health insurance to 25,000 low-income residents and possibly tens of thousands more. But a year since its launch, Pathways to Coverage has roughly 4,300 members, much lower than what state officials […]

7 hours ago

Catherine Ward, owner of One Acre Farms, a functioning educational farm to help special needs kids,...

Associated Press

After Beryl, Houston-area farmers pull together to face unique challenges

PORTER, Texas (AP) — Hurricanes cause trouble for everyone, but farmers have a whole other list of problems. Beryl has been no exception: Over the past week, the storm damaged crops, soaked rabbits and chickens, terrified goats, put horses at risk of developing colic and left cows without fences to keep them penned in. And […]

7 hours ago

Sponsored Articles


Sanderson Ford

3 new rides for 3 new road trips in Arizona

It's time for the Sanderson Ford Memorial Day sale with the Mighty Fine 69 Anniversary, as Sanderson Ford turned 69 years old in May.


Collins Comfort Masters

Here’s how to be worry-free when your A/C goes out in the middle of summer

PHOENIX -- As Arizona approaches another hot summer, Phoenix residents are likely to spend more time indoors.


Condor Airlines

Condor Airlines can get you smoothly from Phoenix to Frankfurt on new A330-900neo airplane

Adventure Awaits! And there's no better way to experience the vacation of your dreams than traveling with Condor Airlines.

Tennessee free-market group sues over federal rule that tightens worker classification standards