Trump's DOL Pick
President Trump has announced his new choice to lead the Department of Labor (DOL) as Lori Chavez-DeRemer, a congresswoman from Oregon. The DOL pick has important implications for both the standards governing independent contractor status and investment advice fiduciary status. Both sets of rules have been revamped under the Biden administration's DOL, yet are facing significant legal challenges in federal court.
We asked two professors and authors of ALM's Tax Facts with opposing political viewpoints to share their opinions about Trump's pick to head the DOL.
Below is a summary of the debate that ensued between the two professors.
Their Votes
Their Reasons:
Byrnes: Lori Chavez-DeRemer is a strong pick to lead the DOL. She has stated priorities that would significantly improve life for independent contractors and more fully reflect the reality of today's workforce—a key component of the DOL's role in the federal government. Gig and freelance positions are becoming more and more mainstream. This new DOL will have priorities that reflect that reality.
Bloink: We all know that Trump's pick to head the DOL is likely going to strip away the significant protections offered by the robust fiduciary standard developed under the Obama and Biden administrations. How does that offer progress for anyone? We're currently relying on a standard for fiduciary status that was developed in 1975 and completely ignores the realities of the modern retirement investment arena.
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Byrnes: Trump's DOL has committed to focusing on improving access to retirement savings options and health benefits for independent contractors--and making those benefits much more affordable for ordinary Americans. A lack of meaningful retirement and health benefits is one reason many would-be independent contractors shy away from going off on their own and succeeding--and instead decide to rely on an employer's antiquated system. That lack of progress is downright wasteful and ends up costing everyone more in the long run.
Bloink: The retirement investment market has changed in significant ways since the 1975 standard was developed, and the DOL should not be run by someone who is willing to ignore that fact. Stripping retirement investors of valuable fiduciary protections may accomplish Trump's goals of minimizing regulation, but it does absolutely nothing for the ordinary investor who deserves to rely on the strong protections offered under the Biden and Obama-era rules.
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Byrnes: This labor pick is committed to ensuring that independent contractors are able to keep the flexibility they need to contribute to the economy in meaningful ways. Biden-era tests for determining independent contractor status were much too rigid, attempting to impose a one-size-fits all standard that did nothing to help American workers. This new DOL is committed to offering the flexibility that Americans need and, in fact, have come to expect in the modern workforce.
Bloink: Sure, the Trump pick may do much to support gig workers in important ways, but at what cost? It's also highly likely that we'll return to the Trump-era standard for determining independent contractor status under his new DOL pick. That means it will become significantly easier for businesses to misclassify employees as independent contractors and strip them of important benefits and legal protections afforded to common law employees.