ALEXANDRIA, Va.—On Tuesday, NACS filed comments with the Department of Labor (DOL) on its proposal to replace the existing regulations surrounding the classification of certain workers as independent contractors. The DOL issued its proposal back in September in an effort to make it easier to classify gig workers as formal employees under the Fair Labor Standards Act.

While the regulation is aimed at services such as Uber and Door Dash, it is written so broadly that it could have potentially far-reaching effects, including impacts on the convenience and fuel retailing industry.

In the comments, NACS General Counsel Doug Kantor writes: “NACS is concerned that the proposed rule changes legal standards for the determination of whether or not a worker is a contractor or an employee in ways that will disadvantage small businesses, create legal uncertainty, harm beneficial contracting relationships, and undermine compliance with other laws.” 

The comments point out that the existing rule has only been in place since 2021, and there has not been sufficient time to evaluate how the rule is being applied in the marketplace nor for any court to apply its terms. NACS supports the DOL’s current language, which narrows the focus of the factors that determine contractor versus employee status to the economic realities of the arrangement. The existing regulations represent a fair evaluation of the economic benefits to both parties, and NACS believes they should be left in place.

Kantor also expressed NACS-specific concerns with the proposal, including the nature and degree of control exhibited by a business over a purported contractor. Much like the National Labor Relations Board has proposed in its Joint Employer proposal, the DOL has suggested that one business simply possessing an unexercised right to control certain factors of a worker’s actions may prove a bona fide employment relationship rather than a contractor relationship. This overly broad interpretation of contractual terms is unreasonably broad and runs afoul of previous federal court decisions. 

NACS argues that the proposed regulation would likely have negative consequences on small businesses, both in the convenience and fuel retailing industry and for those on the independent contractor side.  The proposal’s interpretation of the level of investment a contractor has, how integral to the overall business their work is and the degree of permanence of the business relationship all advantage large businesses at the expense of smaller entities’ ability to find contractors or get contracts depending on which side of the equation they are on. 

In the comments, NACS points out that the DOL’s economic impact analysis on small business is also woefully inadequate. It significantly underestimates the amount of time and resources it would take businesses to review, interpret and comply with the new proposal. This concern is articulated in NACS comments and also by U.S. Small Business Administration in comments it filed on Monday. 

The DOL must now take the time to review and consider all of the more than 50,000 comments that were filed on the agency’s proposal as regulators continue to work toward issuing a final rule. 

NACS will keep the convenience and fuel retailing industry up to date on any further developments.

Jon Taets is NACS director of government relations. He can be reached at jtaets@convenience.org.