A federal judge has reinstated a more employer-friendly DOL independent contractor rule that was nixed shortly after President Biden took office. The rule, which clarifies which workers should be classified as independent contractors under federal wage and hour laws, is now in effect.
The Trump administration’s final independent contractor rule clarified the proper standard for determining independent contractor status under the Fair Labor Standards Act based on the degree of control actually exercised by either party over the worker’s opportunity for profit or loss. The Biden administration subsequently delayed and then rescinded the rule in May 2021 without replacement. HR Policy provided comments largely supporting the Trump-era rule and urging the Biden administration not to rescind it.
A coalition of business groups sued the Biden DOL for its rescission of the Trump rule. Texas Eastern District Judge Marcia A. Crone subsequently found that the DOL violated the Administrative Procedure Act by delaying and then nixing the Trump rule without sufficient opportunity for public comment.
Outlook: The decision makes the Trump rule effective immediately, retroactive to its original effective date of March 8, 2021. The ruling may be appealed by the DOL, which alternatively could issue a new rulemaking process. Regardless, the decision is a welcome surprise for the employer community as the Trump rule provides needed clarification to determining independent contractor status under federal wage and hour law and does not unnecessarily restrict the scope of such status.
