DOL Rescinds Trump’s Independent Contractor Rule

May 6, 2021 the Department of Labor (DOL) withdrew the Independent Contractor Rule put into place by the Trump administration on January 7, 2021. The rule was withdrawn before ever going into effect and shortly after a public comment period closed last month.

The department gave several reasons for withdrawal, including:

The independent contractor rule was in tension with the Fair Labor Standards Act (FLSA), as well as relevant judicial precedent.

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.

The rule would have narrowed the facts and considerations comprising the analysis of whether a worker is an employee or an independent contractor, resulting in workers losing FLSA protections.

The new regulation does not set forth an updated standard for evaluating independent contractor status, though the DOL is expected to weigh in on that matter at some point in the future.

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