The U.S. Chamber of Commerce, alongside other business groups, has initiated legal action against the Department of Labor’s (DOL) latest regulation concerning the classification of workers as either employees or independent contractors. Filed on March 5 in the U.S. District Court for the Eastern District of Texas, the lawsuit challenges the rule that took effect on March 11, which revises the criteria used by the Wage and Hour Division to distinguish between employees and independent contractors under the Fair Labor Standards Act of 1938. This new rule is a departure from the definitions set by the 2021 final rule.

As discussed here, the contentious rule introduces a six-factor test for determining a worker’s status, focusing on aspects such as the worker’s chances for profit or loss, the permanency of the worker-employer relationship, and the degree of control exerted by the employer over the worker, among others.

Acting Labor Secretary Julie Su contends that this rule is intended to safeguard workers, particularly those most vulnerable to exploitation, by ensuring accurate classification. However, the U.S. Chamber of Commerce argues that this new rule muddies the waters, creating “confusion and uncertainty” in the classification process and potentially limiting the freedom of individuals to operate as independent contractors—a choice many make for the sake of flexibility, autonomy, and the chance to be their own boss.

On March 21, a resolution (H.J. Res. 116) to overturn the rule received approval from the House Education and the Workforce Committee and is currently up for review by the entire House. However the resolution is expected to face challenges in the Senate, which is under Democratic control.