First Shot Fired Across Bow Of New Independent Contractor Rule

Vinson & Elkins LLP

Vinson & Elkins LLP

The Trump administration’s Department of Labor, Wage and Hour Division (the “WHD”) published its final independent contractor rule on January 7, 2021, with a related effective date of March 8.

As we discussed in more depth here, the WHD drafted this rule to provide employers with specific factors to consider when determining whether to classify workers as independent contractors.  On January 19, only a day before President Biden’s inauguration, the Trump WHD issued two separate opinion letters to interpret and bolster its fledgling rule.

Less than a week later, the Biden administration withdrew both of those opinion letters.  As a result, employers may not rely on them as official statements of DOL policy, or as part of any “good faith” defense to an alleged violation of the Fair Labor Standards Act.

More importantly, the withdrawals are a clear signal that the new administration is unlikely to embrace the new independent contractor rule going forward.  In fact, the Biden WHD may intend to submit the rule for near-immediate reconsideration under last week’s regulatory freeze.  That freeze allows federal agencies to postpone the effective dates of any recently published final regulatory rules for up to 60 days.  During that time, agencies may either open new 30-day comment periods on any frozen rules, or they may consider any pending petitions for reconsideration.  White House press secretary Jen Psaki had previously indicated that the independent contractor rule may be reconsidered by the new administration.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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