The government's new rule reverses a Biden-era anti-contracting directive and returns to a more contractor-friendly posture. But will this tug of war ever end?

The debate over independent contractors is taking off again. In recent weeks, the Department of Labor issued its long-awaited independent contractor rule. The new directive reverses a Biden-era anti-contractor rule and thereby returns federal law to a more contractor-friendly posture. But as this federal regulatory seesaw plays out, state governments—and even Congress—provide the best hope for long-term change.

The debate over how to classify independent contractors dates far back in time. A 1947 U.S. Supreme Court case, Rutherford Food Corp. v. McComb, grappled with the issue of whether slaughterhouse workers were employees or contractors, and in the nearly 80 years since, the debate has never fully resolved. But in 2018, it received renewed attention in the aftermath of a decision by the California Supreme Court that created a new stringent three-part test that made it extremely difficult for workers to be classified as contractors.

This state court decision was eventually expanded through the now-notorious AB5 law in California, which was a thinly-veiled attempt to prevent gig companies from classifying their drivers and deliverers as independent contractors. The argument in favor of worker reclassification is that independent contractors lack employment benefits such as health insurance, paid sick time, and more. California voters rejected the effort to reclassify gig workers as full-scale employees in a 2020 ballot referendum, but by that point independent contractor reclassification had already become a cause célèbre for the modern political left, with numerous states seeking to follow California's lead.

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