The Biden Administration’s Labor Department Releases Proposed Regulations on Independent Contractors

It’s bad enough that inflation is up 40%, food prices are sky high, diesel fuel is up, and there is hardly any truck parking but they continue to tyrannize the sole proprietor from making a living in the United States making it harder and harder to drive a truck. Yet, just about everything the public receives come by these same poor souls and their trucks.

Yesterday morning, the U.S. Department of Labor issued proposed regulations addressing whether a worker is an “employee” or an “independent contractor” under the Fair Labor Standards Act. We are reviewing the proposal now and will have a follow-up bulletin with the details soon.

The proposed regulations, which will be officially published Thursday in the Federal Register, will specify the factors that should be considered in determining a worker’s status and will lean toward finding that a worker is an “employee” rather than an independent contractor.

The Notice of Proposed Rulemaking (NPRM) jettisons the Trump regulation's emphasis on two core factors – nature and degree of control over the work and the worker’s opportunity for profit or loss – and proposes to weigh all six of its proposed factors more equally. 

The NPRM also eliminates the Trump regulation's emphasis on actual practice in favor of also weighing theoretical possibility.  And in a break from the weight of judicial precedent, the NPRM explains that all instances of control should be considered, even if deriving from contractual requirements, quality control or safety standards, or legal obligations

Here is a timeline in regards to Independent Contractor regulations over the last two years:

• On January 7, 2021, the Trump Administration published a Final Rule in which it set forth new standards for determining independent contractor status. Under the Final Rule, two of the five economic reality factors were designated as “core factors” which carried greater weight in the economic realty analysis. Those two factors were (1) the nature and degree of control over the work and (2) the worker’s opportunity for profit or loss.
• On February 5, 2021, two weeks after President Biden’s swearing-in as President, the US Dept of Labor (DOL) published a proposal to delay the effective date of the Trump rule 60 days after the original effective date.
• On May 6, 2021, the DOL issued final regulations withdrawing the Trump regulations effective immediately.
• In May 2021, a number of business groups sued the DOL, alleging that the withdrawal did not comply with the requirements of the Administrative Procedure Act.
• On March 14, 2022, a federal judge in Texas found that the DOL violated the Administrative Procedure Act and reinstated the Trump Administration regulations.
• Last May, the DOL appealed, but in June it asked the court to pause the appeal, saying that a new rulemaking was in the works. Also in June, DOL Solicitor Seema Nanda said that the agency was gathering input for new rulemaking on independent contractors, as did acting Wage and Hour Administrator Jessica Looman in a blog post.

We will do our best to keep everyone informed as we attempt to further analyze this lengthy proposal. 

Remember, only your vote in November can possibly make a change for the better.