February 8, 2024

The Pelican Institute Center for Justice and the Liberty Justice Center Challenge Biden Administration Rule that Could Put Independent Workers out of Business

New Orleans, LA—On February 8, the Pelican Institute and the Liberty Justice Center jointly filed a lawsuit challenging a Biden Administration rule that threatens the livelihoods of millions of American workers by arbitrarily reclassifying independent contractors as employees.

In January 2024, the U.S. Department of Labor announced a new rule that would reinterpret the distinction between employees and independent contractors under the Fair Labor Standards Act. The new rule, which is scheduled to take effect on March 11, would adopt a vague and open-ended test to distinguish between employees and contractors—leaving workers’ legal status unclear and destroying independent contractors’ business model by removing their ability to control the hours they work, the products they offer, and the companies they partner with.

The Pelican Institute and Liberty Justice Center argue that 2024 rule should be set aside because it oversteps the Department of Labor’s statutory authority and is therefore invalid. “The 2024 rule risks turning independent contractors into unwilling employees, threatening their freedom and livelihood. This one-size-fits-all approach undermines the essence of entrepreneurship opportunity, putting Cully’s American dream in jeopardy,” said James Baehr, Special Counsel at the Pelican Institute’s Center for Justice.

The Pelican Institute and Liberty Justice Center represent Cully Frisard, CEO of Frisard’s Transportation, a family-owned trucking business that has operated in Louisiana since 2014. Frisard’s Transportation employs over thirty independent contractors as owner-operators who own their own trucks, decide which loads to carry, and are paid a flat percentage for each load. By contrast, through another company Cully employs in-house drivers who drive company-owned trucks, work set hours and carry loads as assigned, and are typically paid on a salary or hourly wage basis. Cully’s practice of classifying independent contractors and employees based on the control the workers have over their work and their opportunity for profit or loss is aligned with legal precedent.

Employing independent contractors at Frisard’s Transportation enables Cully to operate more efficiently and thereby reduce costs. Similarly, by managing their own businesses as independent contractors, these owner-operators increase their autonomy and the opportunity to derive greater profit from their work. If the 2024 rule change takes effect, however, employers and independent contractors will no longer be able to do business with the freedom and certainty they have historically enjoyed and to which they are legally entitled.

“By attempting to implement a rule with no basis in law, the Department of Labor is overstepping the bounds of the limited rulemaking authority Congress gave it,” said Buck Dougherty, Senior Counsel at the Liberty Justice Center. “We ask that the Court set aside the Biden Administration’s arbitrary rule change and reinstate the rules that employers, independent contractors, and courts have relied on for decades.” “Trying to make everyone fit the same job description ignores the different goals and skills that independent contractors bring to the table—and, ultimately, it ignores what makes the trucking industry successful,” said plaintiff Cully Frisard. “To me, these drivers are part of the family. I’m committed to fighting for their right to keep the flexibility and control over their work that they’re seeking as independent contractors, and I’m proud that the Liberty Justice Center and Pelican Institute are standing up for workers in this fight.”

Complaint attached here.