Department of Labor Withdraws Trump-Era Independent Contractor Rule

The latest Department of Labor (DOL) move, in keeping with the policy goals of the Biden administration, is withdrawal of the January 2021 rule that determined whether a worker was classified as an independent contractor under the Fair Labor Standards Act (FLSA). The withdrawn rule allowed employers to classify workers as independent contractors more easily and thus avoid paying minimum wage, overtime pay, and other benefits required for employees.

In its announcement, the DOL stated that the rule would have resulted in employees losing FLSA protections. “The department believes that the rule is inconsistent with the FLSA’s text and purpose and would have a confusing and disruptive effect on workers and businesses alike due to its departure from longstanding judicial precedent.”

Secretary of Labor Marty Walsh added that withdrawal of the rule will “preserve essential worker rights and stop the erosion of worker protections that would have occurred had the rule gone into effect.” Walsh said previouslythat he believes many gig workers in the United States should be classified as employees and deserve benefits.

The DOL currently has no plans to issue a new independent contractor rule, so employers will be guided by the test previously used by the DOL to classify workers or by the state in which the business operates. But employers should keep an eye on developments that may result in changes to the standard, given the commitment of the Biden administration to protect employee rights. Look to your employment attorney to keep you informed. We are, as always, happy to help.

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