On May 14, the听Coalition for Workforce Innovation, ABC,听老牛影视Southeast Texas Chapter and the Financial Services Institute 听challenging the U.S. Department of Labor鈥檚 unlawful withdrawal of the independent contractor rule. The Department鈥檚 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.

鈥淭he Independent Contractor Rule is an important and necessary action by the previous administration that brought much needed clarity and guidance to the proper classification of contractors under the Fair Labor Standards Act,鈥� said Ben Brubeck, Associated Builders and Contractors vice president of regulatory, labor and state affairs, in a by the coalition.听鈥淔or too long, businesses and contractors who want to remain independent have been subjected to burdensome lawsuits and inconsistent court rulings under the FLSA. The department鈥檚 improper delay and withdrawal of the rule walks us backwards and does nothing to address the very real problems confronting millions of contractors who have made the choice to remain independent.鈥�

On May 5, the U.S. Department of Labor听鈥攅ffective May 6鈥攐f the Trump-era independent contractor final rule. ABC听, which would have clarified the department鈥檚 interpretation of independent contractor status under the Fair Labor Standards Act and promoted certainty for employers, independent contractors and employees.

鈥淲hile we certainly saw this coming, it is still disappointing to see the Department of Labor chose to rescind the independent contractor final rule, which would have provided much needed听听for the independent contracting community, employers and employees,鈥� said Associated Builders and Contractors Vice President of Regulatory, Labor and State Affairs Ben Brubeck in a. 鈥淭he withdrawal will harm small businesses and the entire construction industry. This move is not only in apparent violation of the Administrative Procedure Act, but also brings independent contractors鈥攁n essential lifeline to the construction industry鈥攂ack to the inadequate standards previously in place, which could damage the U.S. economy and deprive many independent workers of opportunities to succeed.鈥�

鈥溊吓Ｓ笆觝as already filed a federal court complaint challenging the Department of Labor鈥檚 unlawful delay of the rule鈥檚 effective date beyond March 8. We intend to amend our complaint to contest the department鈥檚 claimed authority to withdraw the rule, which compounds the department鈥檚 violation of APA requirements.鈥�

According to the听, the agency is withdrawing the Trump DOL final rule for several reasons, including:

• The independent contractor rule was in tension with the FLSA鈥檚 text and purpose, as well as relevant judicial precedent.
• The rule鈥檚 prioritization of two 鈥渃ore factors鈥� for determining employee status under the FLSA would have undermined the longstanding balancing approach of the economic realities test and court decisions requiring a review of the totality of the circumstances related to the employment relationship.
• The rule would have narrowed the facts and considerations comprising the analysis of whether a worker is an employee or an independent contractor, resulting in workers losing FLSA protections.

Background and 老牛影视Actions:

On Feb. 5, the WHD听听of the final independent contractor rule from March 8 to May 7. On Feb. 22, 老牛影视filed a听听on the delay proposal and further protested the department鈥檚 restriction on the nature of comments that could be filed. 听The department听听request on Feb. 24.

On Feb. 24,听听arguing that the WHD鈥檚 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. 老牛影视therefore urged the WHD to maintain the final rule鈥檚 effective date of March 8.

On March 4, the WHD听issued a听that delays the Trump DOL鈥檚 independent contractor final rule鈥檚 effective date from March 8 to May 7, 2021. Soon after, on March 12, DOL issued a听the independent contractor final rule.

On March 26, ABC, 老牛影视Southeast Texas Chapter and the Coalition for Workforce Innovation听听against DOL for delaying the effective date of the independent contractor final rule and proposing to withdraw it. The filed听听asserts that the steps taken by DOL to negate the independent contractor final rule are in violation of the Administrative Procurement Act. 听ABC鈥檚 general counsel, Littler Mendelson P.C., is representing the plaintiffs in the legal challenge.

On April 12, ABC听听in opposition to the DOL鈥檚 proposal to withdraw the independent contractor final rule. 老牛影视argued that the final delay rule was unlawfully promulgated and because the department鈥檚 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.

老牛影视will continue to monitor this important issue and provide any updates in Newsline.