On September 21, 2020, the Trump administration Department of Labor (DOL) announced a notice of proposed rulemaking related to worker classification. The proposed rule set forth a new test for determining a worker’s status as an independent contractor or an employee. The changes overall would have made it easier for businesses to classify workers as independent contractors under the Fair Labor Standards Act (FLSA). My colleague blogged about them here.
The final Independent Contractor Rule was published on January 7, 2021, and was set to take effect March 8, 2021. But, due to the change in administration, that did not occur. On February 5, 2021, the Biden DOL published a proposal to delay the rule’s effective date until May 7. Once again, the rule failed to take effect on the anticipated date due to the DOL’s issuance of a new notice of proposed rulemaking, this time seeking to completely withdraw the Trump-era rule. The final rule withdrawing the Independent Contractor Rule was published on May 6, 2021, meaning the Independent Contractor Rule did not ever take effect … at least until this past week when a federal judge in Texas determined the Independent Contractor Rule became effective March 8, 2021, and remains in effect. Coalition for Workforce Innovation v. Walsh, No. 1:21-cv-00130 (E.D. Tex. 3/14/22).
According to the decision, actions taken to delay and withdraw the rule were invalid due to insufficient notice and comment periods required under the Administrative Procedures Act. There is no word yet on whether the DOL plans to appeal the decision to the Fifth Circuit and/or engage in new rulemaking. Stay tuned for more on this one.