Biden’s Labor Department Moves to Increase Taxes on U.S. Labor

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

The Department of Labor and the National Labor Relations Board (NLRB) recently proposed new rules that would raise taxes and threaten the 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 high generational 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 carry out 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 hours, determine their workload, and can put food on the table without the need for a boss.

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

The proposed rule ignores that fewer than 1 in 10 independent contractors want to be reclassified as a traditional employee, according to the nonpartisan Bureau of Labor Statistics. Labor initially gave the public only 46 days to comment on the new rule before pushing back the deadline for another 15 days, signaling that the agency is not interested in hearing from the tens of millions of people who would be forced to reclassify according to the new standard.

The rule also imposes a tax increase on reclassified workers. A recent study by the Tholos Foundation showed that a massive reclassification of independent contractors would raise taxes for about 33 million Americans. More than 96% of relocated workers earn less than $400,000 a year, breaking President Biden’s campaign pledge not to raise taxes on workers earning less than $400,000.

Another Biden agency — the NLRB — has announced a proposed rule that would dramatically expand the joint employer standard under state labor relations law. Under current law, an entity is considered a joint employer if it has “direct and immediate” control over the terms of employment. The new rule expands the joint employer standard to include “potential indirect” or “non-exercised control,” exposing companies to greater legal liability over the activities of their suppliers or subcontractors than under the current law.

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

Why would the Biden administration propose new rules that would make it harder for Americans to earn a living during an economic downturn? Answer: to increase the rate of unionization, which has been falling for decades. The work targets independent contractors because union bosses cannot force freelancers to unionize. Expanding the joint employer standard would allow union bosses to target parent companies for unionization rather than individual franchises.

It’s not hard to see why the Biden administration wants to bail out the unions — they’re a major driver of campaign money into the Democratic Party’s coffers. Unions 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 unions spent on the 2020 federal election went to Democrats.

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

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

Michael A. Bynum