Freelancers file lawsuit against new rules on independent contractors

*Por Christina Couch

A new rule issued by the Department of Labor earlier this year has some freelancers nervous, to the point that some are challenging it with lawsuits. The rule offers new guidance on how the agency will determine whether a worker is an employee or an independent contractor under the Fair Labor Standards Act. Companies rely on that guidance to make their own determinations.

The rule, which went into effect last March, changes an earlier classification measure issued in 2021 that identified five factors to differentiate employees from independent contractors but placed a much greater emphasis on two “key factors” — how much choice and control workers have over their work, and how much they stand to gain or lose from it.

The rule, which is not a law but influences how courts and companies interpret independent contractor classification, replaces that methodology with a rating system that includes six factors — the same five as the 2021 rule, along with the additional metric of whether the work is essential to the employer’s business. However, it does not give greater weight to any specific factor.

The new guidance aims to reduce misclassification, which can prevent workers from accessing minimum wages, overtime pay, unemployment insurance and other benefits and protections. While legal advocates say that for the most part, freelancers will not be affected by the newly issued rule, some lawsuits, led by freelance writers and media producers, claim that the new rule is vague, creates uncertainty and threatens their jobs.

“It really forces a lot of companies to try to lump people into the employee category just to make sure they’re covered.“says Wen Fa, an attorney and vice president of legal affairs at the Beacon Center of Tennessee, a nonprofit think tank that advocates for individual rights and free-market public policy.”Ultimately, we are fighting for the right to be a freelancer.“.

Fa is representing Margaret Littman and Jennifer Chesak — Nashville-based freelance writers and authors who have bylines for The Washington Post, Men’s Health, National Geographic, and Condé Nast Traveler. Littman and Chesak filed a lawsuit against the Department of Labor in February, before the new rule went into effect. The lawsuit argues that by not clearly identifying how employers should weigh and consider each factor, the new rule creates confusion about what constitutes an independent contractor and encourages employers to eliminate freelance work. Chesak claims that since the rule was announced, one of her clients has restricted her work hours. Another has required her to spend her unpaid time documenting assignments, and a third has required her to sign an agreement releasing the company from liability for misclassification.

“Being a freelance journalist allows me a lot of freedom, including deciding which stories I want to investigate and which I don’t. Depending on the contract, I own my research, drafts, and revisions. Plus, there’s the security of not being subject to dismissal.“Littman said in a statement emailed to his attorney.”I’m fighting the Department of Labor’s rule, not just for myself, but for all freelancers in Tennessee, because it threatens to destroy our livelihoods and right to earn a living as freelancers.”

A separate lawsuit filed in January by four freelance writers and editors in Georgia — all co-founders of the group Fight for Freelancers USA — makes similar arguments, claiming that the new rule “blurs the line between contractor and employee in an impenetrable fog” and is so deliberately vague that it allows the government to grant employee status to anyone who does any work for an outside company.

Like Littman/Chesak, it also argues that a provision in the new rule allowing consideration of “additional factors” that are “relevant to the general issue of economic dependence” adds to the confusion because it does not specify what factors are being addressed. Other lawsuits opposing the rule have also been filed by a family-owned transportation company in Louisiana and a coalition of business organizations that includes Uber, Lyft and the newspaper industry advocacy group America’s Newspapers. When asked about the organization’s position on the new rule and its relevance to the newspaper industry, America’s Newspapers CEO Dean Ridings sent a statement saying the group is “concerned about unintended consequences” that the rule would have for freelance writers, photographers, graphic artists and others. He added that “The newspaper industry faces significant revenue challenges and reclassifying freelancers as employees would likely lead to less use of these contractors as the industry is not in a position to increase its costs.”

The Department of Labor’s guidelines aren’t the only system for classifying independent contractors. In addition to federal guidelines, state statutes, such as California’s controversial Assembly Bill 5 and the so-called ABC tests, which are used in a wide variety of states, also determine classification status.

While critics argue that the new rule unduly broadens the definition of an employee, advocates say the 2021 guidance was too narrow and left many workers — often those in low-wage professions — without the pay and protections they are entitled to. While workers in fields like construction, transportation, janitorial, health care and housekeeping are the most likely to be misclassified, in recent years, journalists and content producers have launched misclassification lawsuits against Vox Media, which paid $4 million to settle three lawsuits in 2020, and Prometheus Global Media, which publishes The Hollywood Reporter and Billboard, among other titles, and paid $900,000 in a class-action settlement in 2017.

Fighting misclassification is difficult, says Sally Dworak-Fisher, a senior attorney at the National Employment Law Project who specializes in protecting and expanding workers’ rights.

“There are many forced arbitration clauses that prevent people from going to court to enforce them. [reivindicações de classificação incorreta]“, she says. “The Department of Labor has limited resources to pursue actors who are violating the Fair Labor Standards Act, and workers often have difficulty finding attorneys to take their cases.”

Dworak-Fisher, two other employment lawyers interviewed for this story, and the Labor Department say the new rule doesn’t actually change much for freelancers.

“It’s a restoration, not a revolution“, says Dworak-Fisher, noting that the new rule mirrors the rating guidance in effect prior to 2021. “If you’re running your own business, you really have nothing to worry about. It’s simply a reiteration of what the courts have been doing for decades, so I think ultimately these lawsuits will not succeed..”

Adam Pulver, an attorney at Public Citizen Litigation Group, a law firm specializing in administrative law and consumer and employee rights, agrees with Dworak-Fisher.

“I see no evidence that suddenly no freelancers will be hired to do reporting because companies will be afraid of having to provide benefits or overtime.“, he says. “There’s no reason to believe the Department of Labor will suddenly start targeting news organizations under this rule… if there wasn’t a problem before 2021, there’s no reason there should be one now..”

Pulver points out that the Department of Labor’s information specifically aimed at freelancers outlines scenarios in which media producers should be considered independent contractors versus employees. In one scenario, a science and technology journalist who pitches his own stories, writes for multiple publications, and negotiates his commission is classified as an independent contractor because he appears to “be in business for yourself“In another scenario, a graphic designer who gets all of his or her work from a single company, relies on that company’s equipment and software, and needs written permission to seek outside work, is classified as an employee.

Pulver adds that the new rule is not a law: Courts make legal decisions, not the Department of Labor, and while courts consider administrative guidance and interpretations of the law, they have the final say on how specific guidance and statutes apply to specific workers.

Based on previous cases that applied the pre-2021 rating method, Pulver believes the recent wave of lawsuits challenging the new rule are likely to fail, but says that “we’ll have to wait and see.”

Christina Couch is a freelance science and technology journalist and the assistant director of professional development for the MIT Graduate Program in Science Writing. She previously wrote for Nieman Lab about journalism, suicide rates, and burnout.

Christina Couch is a freelance science and technology journalist and the assistant director of professional development for the MIT Graduate Program in Science Writing. She previously wrote for Nieman Lab about journalism, suicide rates, and burnout.

Text translated by Ana Mião. Read the original in English.

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