App-based firms: Worker-classification regulation should wait on confirmed Labor secretary 

A trade group representing app-based tech firms is urging President Biden to not finalize worker-classification regulation until a permanent Labor secretary is confirmed.

The group, Flex, has opposed Acting Labor Secretary Julie Su’s nomination to the permanent role. Flex argued in a letter to Biden that Senate’s “lack of support” for Su is due to concerns about her position on gig workers.

“Simply put, by declining to act on Ms. Su’s nomination, the Senate is advising against the policies she has espoused and declining to consent to her leadership,” Flex CEO Kristin Sharp wrote in the letter.

“As a result, any action taken to finalize the proposed worker classification regulation under Ms. Su’s current leadership as Acting Secretary would circumvent the Senate’s constitutional role of providing advice and consent on nominees.”

Biden has voiced support for the PRO Act, which amends the National Labor Relations Act to redefine who qualifies as independent contractors and makes it more difficult for companies to classify workers as independent contractors instead of employees eligible for benefits.

Though the Labor Department’s new proposal was unveiled last year, the rule has yet to officially go into effect.

Flex represents app-based companies including DoorDash, Grubhub, Instacart, Lyft and Uber.

House GOP lawmakers sa proposed changes favored by Biden would be similar to California’s AB5 law, which Su was in charge of enforcing as California Gov. Gavin Newsom’s (D) secretary of labor until 2021.

AB5 entitles independent contractors, or self-employed workers, to be classified as employees with labor protections such as minimum wage, compensation and benefits.

When asked about California’s AB5 rule at a budget hearing last month, Su reiterated that she was not a member of the state Legislature that approved the rule but said it was beneficial to many employees.

Biden announced Su’s nomination for Labor secretary in February, after former Labor Secretary Marty Walsh left the administration to lead the National Hockey League Players’ Association. Since then, her nomination has been stalled in the Senate, where Democrats hold a slim majority. 

Sen. Joe Manchin (D-W.Va.) has said he would oppose her nomination, leading other senators to speculate that the nomination is unlikely to go forward, since Manchin is probably not alone among moderate Democrats.

Sharp wrote that Flex is concerned Su’s role as potential Labor secretary could result in “upheaval that is national in scope,” adding that there should not be a change to worker classification before a permanent secretary is confirmed.

“It is clear that the Senate lacks confidence in her ability to support app-based workers, who prefer by wide margins to operate as independent entrepreneurs who make their own decisions about whether, when, and where to work,” she wrote.

“Given these stakes and the potential for any negatively revised final rule to have far-reaching impacts on workers and consumers at a time of economic uncertainty, the Department should not finalize its worker classification proposal before having a permanent Secretary who has been confirmed by the United States Senate,” she added.

The Hill has reached out to the White House and Labor Department for comment.

The letter was first reported by Politico.