In Yet Another Inflation Creating Mandate, Biden Proposes New Independent Contractor Rules

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New Independent Contractor Rules

Please note Labor Department Proposes Changes to Independent Contractor Rules

The Labor Department said it would revisit rules that designate whether workers are classified as employees or independent contractors, a move that could affect millions of gig and contract workers in healthcare, restaurants, ride-share transportation, and many other industries.

The department released a rule proposal on Tuesday that would change how labor laws define independent contractors. The new rule, if approved, would rely on a “multifactor economic reality test” to determine whether a worker is truly in business by themselves and controls aspects of their employment like whether they perform managerial duties, how they are supervised and whether they are able to set prices.

Biden administration officials said that workers will still be able to work as much or as little as they want under their proposed rule. Trump administration officials had said their rule made it easier for Americans to be self-employed and set their own hours, and some corporate opponents of a more stringent standard have argued that it is unrealistic to extend employee-like benefits to workers who were on the clock for just a few hours a week.

Can You?

Biden says “You can work as many hours as you want”. 

Can you? This reminds me of Obama’s promise “You can keep your doctor.”

Will it make sense for Uber to keep as employees people who only want to work a few extra hours a week? 

Even if so, at what cost to the consumer?

Vague Nonsense 

The Department of Labor Proposed Rule does not explicitly define “independent contractor”. Instead it uses language that can mean whatever the administration wants.

The document is 184 pages long, not a light read.

 The FLSA does not define the term “independent contractor.” While it is clear that section 3(g)’s “suffer or permit” language contemplates a broader coverage of workers compared to what exists under the common law, “there is in the [FLSA] no definition that solves problems as to the limits of the employer-employee relationship under the Act.”23 Therefore, in articulating the distinction between FLSA-covered employees and independent contractors, courts rely on a broad, multifactor “economic reality” analysis derived from judicial precedent.  

The Administration proposes scrapping “core factors” and instead returning to a “totality-of-the-circumstances” which will of course mean whatever the administration wants.

The proposed change also considers whether the work is integral to the employer’s business rather than whether it is exclusively part of an “integrated unit of production.”

The Biden Administration considers driving an integral part of the Uber, Lyft, and Door Dash model so automatically they become employees whether or not the employees can set set their own hours and work at will. 

The change does not stop there. The Administration also proposes language regarding whether an “individual has an opportunity to earn profits or incur losses based on his or her exercise of initiative (such as managerial skill or business acumen or judgment) or management of his or her investment in or capital expenditure on, for example, helpers or equipment or material to further his or her work.”

The proposal specifically excludes one’s car as a capital investment.

Also consider this sentence: “Finally, the provision provides that “[t]his factor weighs towards the individual being an employee to the extent the individual is unable to affect his or her earnings or is only able to do so by working more hours or faster.”

This broad language seemingly applies to everybody including contract programmers. I stopped reading at page 78 of 184, confident that the changes are meant to apply to nearly every business imaginable. 

Want to Work for Yourself? 

Perhaps you will not be able to. 

California has gone after independent truckers and no doubt these changes are an attempt to impose California rules on everyone.

The next step will be to unionize everybody. Add this to Biden’s push for more inflation.

Inflationary Proposals 

Add new independent contractor rules to the list of Biden’s mandates and legislation that will increase inflation. 

De-globalization and decarbonization are also very inflationary.

The Fed has its work cut out for them.

This post originated at MishTalk.Com

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David Olson
David Olson
22 days ago

My impression is that this does not meet Milton Friedman’s definition of inflation. It is strongly redistributive, and is intended to be strongly redistributive, benefiting the lower working classes at the expense of the bourgeois (=middle class and up). Philosophical-economic question = “Is that a good thing?”

If / when they can also enroll all the ‘uber drivers’ into a union, then “the powers that be” will be happy. The labor chiefs get some unearned income, and the politicians (Democrats) get “campaign donation” payback.

whirlaway
whirlaway
1 year ago
It is amusing to see all the hand-wringing by the corporatists here about inflation, unionization and on and on. Those things may well happen in the future. But the DONORcrat Party is not going to do any of that. Even these proposed changes to rules re: independent contractors etc., is just an election stunt. You can expect that to fade away after the elections are over.

Always remember that Biden is the guy who promised the oligarchs that nothing will fundamentally change. And that is what it will be.

Ron Cataldi
Ron Cataldi
1 year ago
I don’t really see any evidence or argument presented here to support the claim that these rules are inflationary. And so far they have been strongly disinflationary… knocking out a huge amount of value from these related stocks.
A Dose of Reality 5
A Dose of Reality 5
1 year ago
Cost to the end user will increase. More inflation.
I like this company overseas.
Taxi as foreigner 200% of normal.
Taxi 100% of normal.
Uber 60% of taxi. Advantage. Takes credit cards.
InDriver. Name your price. Usually someone will accept it. 20% to 33% cost of taxi. Have to have cash. Know abit about the locals. Free economy. Individuals decide.
Cant wait for the cell signal from the government telling my ecpensive smart green electric car that I cant charge it until the all clear is given without a pirate software mod.
dtj
dtj
1 year ago
Real life example of employer taking advantage of “contract drivers”: link to westernmass.craigslist.org
Assuming a 40 hour work week, $550 works out to $13.75 an hour, which is less than the minimum wage in the state ($14.25). Cost of living in wealthy Great Barrington is comparable to Boston.
The employer saves by not having to pay FICA taxes, unemployment taxes and workman’s comp taxes.
This particular employer is paying $100 per week as compensation for the use of a car. Says 50-100 miles per day so let’s assume 75 miles which is 375 miles per week. IRS mileage rate of .625 would equal $234.38. The driver is losing money on this because $100 doesn’t cover gas, depreciation, repairs, commercial drivers insurance, etc. etc.
It’s debatable whether an auto parts driver can be considered a contractor as he’s under the constant direction of the employer working set hours. I say no.
Should this be legal? Just leave it up to drivers to figure out they’re getting hosed?
shamrock
shamrock
1 year ago
Reply to  dtj
Should this be legal? Just leave it up to drivers to figure out they’re getting hosed?
Yes
MarkraD
MarkraD
1 year ago
Reply to  dtj
No.
That ad is both hilarious and tragic at once, “National Company” can’t even post it’s real name, and, if you google the phone number, the poster is using multiple first names on different sites.
TheWindowCleaner
TheWindowCleaner
1 year ago
Anything that increases business costs is folly. Anyone who refuses to affirm direct cost reduction to the individual while simultaneously hugely increasing the demand for virtually every enterprise’s goods and services and hence their profitability may be the most erdudite person on the planet but is equally a fool.
Libertarians want deflation. Wonderful! Now all they have to do is find a way to make it not just painless, but pleasurably profitable!!!!!
And that is accomplished by a 50% Discount/Rebate policy at retail sale.
Look at it. Keep looking at it. Aaah! Keep looking. And if you’re an individual or a businessman begin to smile.
MarkraD
MarkraD
1 year ago
You misspelled erudite.
TheWindowCleaner
TheWindowCleaner
1 year ago
Reply to  MarkraD
I hope you’re not being sarcastic. Obsessive editors are almost as dumb as economic pundits.
MarkraD
MarkraD
1 year ago
You do realize that you were engaging in economic punditry…
TheWindowCleaner
TheWindowCleaner
1 year ago
Reply to  MarkraD
Punditry is several mental levels below Wisdom because it is almost always caught up in duality. Wisdom is the intellectually integrative mindset. In other words it integrates dualistic thinking to the point where a thirdness greater oneness of truth(s), applicabilities and the highest ethical consideration is the result. Punditry is orthodoxy. Wisdom being a thirdness-greater onessis the undoing of orthodoxy. It’s why I’m considered a troll both here and on liberal sites.
xbizo
xbizo
1 year ago
Business doesn’t want this. Outside contractors don’t want this. Politicians want this. It is a power and payroll tax grab to put more people under government rule. You can’t mold a globalist society unless you do it through corporations.
On top of that, they are forcing work rules that are vintage 1950s, not twenty-first century remote work, give-employees-more-freedom rules.
MarkraD
MarkraD
1 year ago
Reply to  xbizo
As a small business competing against corporations, I want it.
Corporations subvert my industry by attempting to hire cheap, lower grade competitors at the wages I cannot afford while paying my insurances, taxes and overhead.
I am not in the transport industry, the Uber situation is similar to my own.
shamrock
shamrock
1 year ago
What UBER drivers are clamoring for the government to meddle? Is there a lobby pushing this like taxi drivers or something?
This is a “we’re from the government and here to help” initiative.
Doug78
Doug78
1 year ago
I wonder if we could use Nasa’s DART Mission to change Putin’s trajectory?
Pontius
Pontius
1 year ago

Do not have the time to read the 184 pages this afternoon. Are real estate agents considered employees now?

Tony Bennett
Tony Bennett
1 year ago
“Government Spending Reduces Debt”
Peace is War … oh, wait … War is Peace? … oh, forget about it …
MarkraD
MarkraD
1 year ago
I suspect the issue is large corporations taking advantage of the name brand or market dominance to hire employees without those pesky workman comp, liability insurance or healthcare expenses.
I’m self employed 16 years now, early on, and again during the ’08 crash, I looked into subcontracting to larger corporations and found they paid barely more than I’d make as an employee, while requiring me to pay all my own business insurances and healthcare.
Even when times were bad in ’08, I never resorted to it.
Doug78
Doug78
1 year ago
The independent contractor model for businesses sucks for most types of businesses. Some independent contractors prefer it but many do not but they have no choice in the matter most of the time.
radar
radar
1 year ago

I read this here a few years ago…

26
USC § 3401(c) Employee – For purposes of this chapter, the term “employee” includes an officer, employee, or elected official of
the United States, a State, or any political subdivision thereof, or the
District of Columbia, or any agency or instrumentality of any one or more of
the foregoing. The term
“employee” also includes an officer of a corporation.

26
USC § 7701) (26) Trade or business – The term ”trade or business” includes
the performance of the functions of a public office.

26
USC §7701(c):(c) Includes and including – The terms “includes” and “including”
when used in a definition contained in this title shall not be deemed to
exclude other things otherwise within the meaning of the term defined.

Under
this rule, the term “includes” provides for what courts have described as a
“calculated indefiniteness”. This is the expand-ability of the meaning of a
statutory term to things not listed in the definition (indefiniteness), but to only
things of the same character as those listed
(calculated)
.

IE,
if you’re flipping burgers, your job doesn’t have the same character as an
officer, employee, or elected official of the United States, a State, or any
political subdivision thereof, or the District of Columbia, or any agency or
instrumentality of any one or more of the foregoing, therefore you are not an
employee by definition even though a W-2 is an affidavit stating you are. A W-2 should not be issued for flipping burgers.

Also,
if you own a facility not dealing in government contracts (Joe’s Burgers), or
if you offer a service (dentist) you don’t owe taxes since the character of
your job is not the functions of a public office.

The IRS instructions for a 1099 MISC states, ‘personal
payments are not reportable
.’

KidHorn
KidHorn
1 year ago
Worst administration ever. They focus on meaningless issues like Jan 6, transgender rights, and whether or not Uber drivers should be employees while ignoring important things like our southern border and finding a diplomatic solution in Ukraine. They give money to college graduates. The least needy segment of society. Partially paid for by those who need the money far more.
Fish1
Fish1
1 year ago
Reply to  KidHorn
An attempted insurrection and assault on our democratic institutions meaningless? We live in interesting times most certainly.
RonJ
RonJ
1 year ago
Reply to  Fish1
The democratic institutions are assaulting themselves. “We have to impeach Trump because the people might vote the wrong way.”
Ron Cataldi
Ron Cataldi
1 year ago
Reply to  KidHorn
Why should I worry about the southern border when you Russian snakes are already here?
TexasTim65
TexasTim65
1 year ago
This is just going to increase the underground economy.
Instead of Uber or Lyft, there will be a local one off guy who will drive you that you’ll find on AngiesList or some other website. Preferably for cash of course. The same goes for many other gig type jobs where you’ll have to get them on AngiesList or some other place instead of a broader ‘company’ like Uber.
This makes everyone a loser (the consumer looking for a cheap reliable alternative, the gig worker who wants to be easily found by customers and be verified as reputable and finally the government when things are paid in cash to avoid taxes).
Matt3
Matt3
1 year ago
Reply to  TexasTim65
Correct and that is why the elimination of cash comes next. With a digital dollar, comes the ability to track and tax. Also the ability to take your money and freeze your ability to pay for things. Additionally, your movement will be restricted via your car. Can be “turned off” for your own good or in case of an environmental emergency – like if the special need more fuel for private jet travel.
It’s a brave new world.
Matt3
Matt3
1 year ago
And people think that prices are going to drop and everything is going to get cheaper if they wait.
Good luck with that!
hhabana
hhabana
1 year ago
Reply to  Matt3
The things I buy: health insurance, utilities, food, property insurance, pet food & litter, car insurance, etc is not going down. I had to raise rent on my tenants again (water utilities going up) end of this year and beginning of next.
Believe it or not, there are investment guru’s on internet telling me that prices are stabilizing. SURE.

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