Biden’s Labor Department moves to raise taxes on the American workforce

OPINION:

The Biden administration is continuing to push policies that would force American workers to join a union whether they want to or not. 

The Department of Labor and National Labor Relations Board (NLRB) have recently proposed new rules that would raise taxes and threaten business models that tens of millions of Americans rely on to put food on the table. The Biden administration should withdraw these proposed rules and focus on policies that will help families recover from generation-high inflation.

The Labor Department’s proposed rule would force Americans who don’t want a boss to have a boss. Under current law, independent contractors perform a task or execute a project and present the result to an individual or business for payment. Unlike traditional employees, independent contractors have the freedom to set their own schedules, determine their workload, and can put food on the table without needing a boss.

Labor’s new proposed rule would force independent contractors to reclassify as W-2 employees if the worker is “economically dependent” on the entity that is paying him or her. Freelancers come in all shapes in sizes — plumbers, translators, cartoonists, rodeo clowns, Uber drivers, programmers, wedding band performers, magicians and mall Santas are just a few of the countless professions made possible by the independent contractor classification.

The proposed rule ignores that fewer than 1 in 10 independent contractors want to reclassify as traditional employees, according to the nonpartisan Bureau of Labor Statistics. Labor initially gave the public just 46 days to comment on the new rule before pushing the deadline 15 more days, signaling that the agency is uninterested in hearing from the tens of millions of individuals that would be forced to reclassify under the new standard.

The rule also imposes a tax increase on reclassified workers. A recent study from the Tholos Foundation showed that mass reclassification of independent contractors would raise taxes on approximately 33 million Americans. More than 96% of reclassified workers make under $400,000 per year, breaking President Biden’s campaign pledge not to raise taxes on workers that make less than $400,000.

Another Biden agency — the NLRB — has announced a proposed rule that would radically expand the joint employer standard under the National Labor Relations Act. Under current law, an entity is considered a joint employer if it exercises “direct and immediate” control over the terms and conditions of employment. The new rule broadens out the joint employer standard to include “indirect” or “unexercised potential control,” exposing businesses to greater legal liability over the activities of their vendors or subcontractors than under current law.

Expanding the joint employer would especially jeopardize franchising, a business model that supports more than 8 million American jobs. If franchisors face increased legal risk for the business practices of franchisees, they will be forced to clamp down on franchisees that currently operate as largely independent small businesses. Increased corporate control over small business risks job loss and stifled entrepreneurship.

Why would the Biden administration propose new rules that would make it harder for Americans to make a living during an economic downturn? Answer: to drive up union membership, which has been falling for decades. Labor is targeting independent contractors because labor bosses cannot force freelancers into a union. Expanding the joint employer standard would allow union bosses to target parent companies for unionization as opposed to individual franchises.

It is not difficult to figure out why the Biden administration wants to bail out unions — they are one of the biggest drivers of campaign cash to Democratic Party coffers. Organized labor spent $1.8 billion on politics and lobbying in 2020, $1.4 billion of which came directly from worker dues. Nearly 90% of the $260 million that labor unions spent on federal elections in 2020 went to Democrats.

Now is not the time for Democrats to play politics with small businesses and the economy. The Biden administration should withdraw these rules.

• Tom Hebert is federal affairs manager at Americans for Tax Reform and executive director of the Open Competition Center.