Coalition for Workforce Innovation v. Su

This Amicus Curiae Brief, submitted by Dr. Liya Palagashvili, addresses critical legal and economic issues regarding the US Department of Labor's (DOL) new rule affecting the classification of workers under the Fair Labor Standards Act (FLSA). Dr. Palagashvili, a Senior Research Fellow at the Mercatus Center at George Mason University, critiques the DOL's methodology in assuming zero job losses from the regulation that narrows the definition of "independent contractor," contending that the regulation will lead to significant adverse effects on the workforce, particularly among independent contractors. 

The brief argues that the DOL's regulatory impact analysis lacks a reasoned cost–benefit assessment as required by the Administrative Procedure Act and erroneously predicts no job losses from the new rule. By presenting a scenario where the regulation is expected to merely convert independent contractors into employees without considering the realistic possibility of job terminations, the DOL overlooks the substantial negative impacts highlighted by empirical evidence. Dr. Palagashvili references her own research and other studies, including California's Assembly Bill 5 (AB5), to demonstrate that similar legislative changes have historically led to a decline in both self–employment and overall employment in affected sectors.

Moreover, the brief emphasizes the failure of the DOL to consider the broader economic and social consequences of such stringent regulations, including reduced income opportunities for individuals facing unemployment, loss of flexibility for workers who prefer independent contracting, potential gender disparities by disadvantaging women who may seek flexible work arrangements due to caregiving responsibilities, and the negative impact on individuals with criminal records who find opportunities in the gig economy.

In conclusion, Dr. Palagashvili urges that the court should vacate the DOL’s rule based on the flawed assumptions and inadequate consideration of empirical data, which suggest that the rule's costs likely outweigh its benefits, and may have adverse effects for workers and the broader economy.