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March 23, 2022
On March 15, the U.S. District Court for the Eastern District of Texas dealt a blow to the Biden administration’s efforts to delay and rescind the Trump administration’s 2021 independent contractor final rule. Under a decision applauded by ABC, which had sued to block those actions, the ABC-supported rule went into effect as scheduled on March 8, 2021, and remains in effect today.
“The independent contractor final rule brings much-needed clarity and guidance to the proper classification of contractors under the Fair Labor Standards Act,” said Ben Brubeck, ABC vice president of regulatory, labor and state affairs, in a statement. “For too long, businesses and contractors who want to remain independent have been subjected to burdensome lawsuits and inconsistent court rulings under the FLSA. The U.S. Department of Labor’s improper delay and withdrawal of the independent contractor rule did nothing to address the very real problems confronting millions of contractors who have made the choice to remain independent.
“This decision will provide much-needed clarity for small businesses and the entire construction industry,” said Brubeck. “Independent contractors are an essential lifeline to the construction industry, and the Trump-era independent contractor rule will ensure these workers and their clients can continue to thrive and play an important role in economic growth.”
ABC’s general counsel, Littler Mendelson P.C., is representing the plaintiffs in the legal challenge. Read Littler’s analysis of the decision for more details.
Background and ABC Actions:
On Feb. 5, 2021, the DOL’s Wage and Hour Division proposed to delay the effective date of the ABC-supported and Trump-era final independent contractor rule from March 8 to May 7.
On Feb. 24, ABC submitted comments arguing that the WHD’s hasty and unsupported attempt to delay the effective date of the independent contractor final rule was arbitrary, capricious and in violation of the Administrative Procedure Act. ABC therefore urged the WHD to maintain the final rule’s effective date of March 8.
On March 4, the WHD issued a final rule that delays the Trump DOL’s independent contractor final rule effective date from March 8 to May 7, 2021. Soon after, on March 12, DOL issued a proposal to withdraw the independent contractor final rule.
On March 26, ABC, ABC’s Southeast Texas Chapter and the Coalition for Workforce Innovation filed suit against the DOL for delaying the effective date of the independent contractor final rule and proposing to withdraw it. The filed complaint asserted that the steps taken by the DOL to negate the independent contractor final rule are in violation of the Administrative Procurement Act. ABC’s general counsel, Littler Mendelson P.C., represented the plaintiffs in the legal challenge.
On April 12, ABC submitted comments in opposition to the DOL’s proposal to withdraw the independent contractor final rule. ABC argued that the final delay rule was unlawfully promulgated and because the department’s subsequent proposal to withdraw the independent contractor final rule relied on the unlawfully promulgated rule for the assertion that the independent contractor final rule had not already gone into effect, the subsequent proposal itself must be ordered withdrawn.
On May 14, ABC, ABC’s Southeast Texas Chapter, the Coalition for Workforce Innovation and the Financial Services Institute filed an amended complaint challenging the DOL’s unlawful withdrawal of the independent contractor rule. The complaint said that the department’s hasty and unjustified action violates the Administrative Procedure Act, compounding a violation that began when the department improperly delayed the effective date of the rule in March.
On May 5, the DOL announced the withdrawal—effective May 6—of the Trump-era independent contractor final rule. Read ABC’s statement.
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