Today the Department of Labor (DOL) announced its withdrawal of the January 7, 2021, final rule clarifying the standard for employee versus independent contractor under the Fair Labor Standards Act (FLSA). That original rule was promulgated by the DOL under the Trump Administration. The effective date of that final rule was March 8, 2021. We reported this final rule on January 7th: https://www.kempsmith.com/dol-announces-final-rule-on-independent-contractor-classification.

Now, with a new administration under President Biden, the DOL withdrew the final rule for three reasons. First, in the DOL’s view, the final rule was in tension with the FLSA’s text and purpose, as well as relevant judicial precedent. Second, the rule’s prioritization of two “core factors” 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. And finally, the rule would have narrowed the facts and considerations comprising the analysis whether a worker is an employee or an independent contractor, resulting in workers losing FLSA protections.

Seeking to strengthen workers’ rights, the DOL withdrew the final rule effective May 6, 2021. This will likely not be the last time the Biden Administration’s DOL changes or reverses something that the Trump Administration’s DOL issued. If you have any questions regarding the final rule withdrawal, please feel free to contact Kemp Smith’s Labor and Employment Department at 915-533-4424.