Comment from Henry H. Perritt, Jr.

I am a retired law professor and member of the bars of Virginia, Pennsylvania, District of Columbia, Maryland, Illinois, and the Supreme Court of the United States. I served the Ford Administration as Deputy Under Secretary of Labor and as a member of the White House Staff. I also served as Secretary of the Labor and Employment Section of the American Bar Association, and have written 20 books and more than a hundred law review articles on labor and employment law and technology and law, including analysis of new “gig” labor markets. I have briefly worked as an Uber and as a Lyft driver, incident to writing an article on gig work.

I support the proposed rule and urge the Department to promulgate it without material change.

The current employee/independent-contractor distinction, as expressed in many judicial decisions and, prominently, in California’s A.B. 5, is an obsolete artifact of an American economy in which labor markets were defined primarily by factories and traditional trades. Legal categories of work must evolve to reflect how new technologies have changed the way workers interact with those that pay for their services. Uber, Lyft, and other “gig” platforms permit individuals functioning as entrepreneurs to form ad-hoc economic relationships with other individuals who want them to perform specific tasks. The resulting labor market is not at all like the one that exists in a traditional industrial plant or office environment, and the law should not treat it as such.

Forcing gig workers into a traditional “employee” mold imposes unnecessary costs on society and deprives thousands of opportunities to construct their own work environments.

In the long run, it may be appropriate to define an entirely new category of worker, distinct from “employee” and “independent contractor.” For now, however, the principal statutes assign rights and duties based on status as a statutory “employee,” and it is desirable to interpret the term to accommodate reality.

The proposed rule does that. Its definition of independent contractors as workers who, as a matter of economic reality, are in business for themselves as opposed to being economically dependent on the potential employer for work is sound. Even more important is the proposed rule’s elevation of two factors—the nature and degree of the worker’s control over the work and the worker’s opportunity for profit or loss—as especially probative of the question of economic dependence or lack thereof. Affording those factors greater weight in the analysis than any others is appropriate.

The Department’s discussion in section III(A)(4) of the preamble to the proposal: “The Shortcomings and Misconceptions That This Proposal Seeks To Remedy Are More Apparent in the Modern Economy,“ is particularly insightful and should be retained and expanded in the preamble to any final rule.

Comment ID: WHD-2020-0007-0216 | 21-Oct-20

Categorized under Independence

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