Until resolution of court challenges, Wage and Hour field operators will use the guidelines contained in a 2008 “fact sheet” that is considered more favorable to independent operators than the Biden-era rule. (kali9/Getty Images)
The Department of Labor has announced it is reviewing the Biden administration’s 2024 worker classification guidance, which directs employers on how to determine whether a worker is an employee or independent contractor. In the meantime, the agency will not be enforcing the previous guidance.
“A number of lawsuits are pending in federal courts challenging the legality of the rule,” Donald Harrison III, acting administrator for the DOL’s Wage and Hour Division, wrote in a May 1 message to WHD regional administrators and district directors. “Consistent with the department’s position on the 2024 rule expressed in the litigation, Wage and Hour Division will no longer apply the 2024 rule’s analysis when determining employee versus independent contractor status in [the] Fair Labor Standards Act.” The official title of the guidance is the Employee or Independent Contractor Classification under the Fair Labor Standards Act.
“The Department has taken the position in those lawsuits that it is reconsidering the 2024 rule, including whether to rescind the regulation,” Harrison added. “Specifically, WHD is currently reviewing and developing the appropriate standard for determining FLSA employee versus independent contractor status.”
American Trucking Associations President Chris Spear welcomed the development. ATA has long been critical of the independent contractor rule.
“This is a crucial first step toward returning to the common-sense standard set forth in President [Donald] Trump’s first term, which protected the freedom of individuals to choose work arrangements that best suit their needs and fulfill their ambitions,” Spear said in a statement. “The trucking industry has relied on independent contractors since the inception of interstate trucking, and court decisions over the last nine decades have continually reaffirmed the legitimate role independent contractors play in the economy.”
American Trucking Associations President Chris Spear welcomed the development. ATA has long been critical of the independent contractor rule. (John Sommers II for Transport Topics)
Spear added, “We look forward to further progress on this issue and will continue to advocate for the 350,000 truckers nationwide who choose to operate independently for the economic opportunity it creates and flexibility it provides.”
In adopting the 2024 rule, the Labor Department rescinded a 2021 rule and modified Wage and Hour Division regulations that it maintained are “more consistent with judicial precedent” under the Fair Labor Standards Act. The department at that time said the rule provided guidance on how six so-called economic reality factors should be considered. They include opportunity for profit or loss depending on managerial skill; investments by the worker and the potential employer; the degree of permanence of the work relationship; the nature and degree of control; the extent to which the work performed is an integral part of the potential employer’s business; and skill and initiative.
Now, until resolution of the court challenges, Wage and Hour field operators will use the guidelines contained in a 2008 “fact sheet” that is considered more favorable to independent operators than the Biden rule, said Greg Feary, president and managing partner at the trucking law firm of Scopelitis, Garvin, Light, Hanson & Feary.
A 2018 Trump rule, which only considers two of the six economic reality factors, would more likely be adopted by the new administration than other prior rules, according to Feary. The two factors retained are considered favorable to independent contractors.
“This is temporary,” Feary said of the move. “They don’t want to use the Biden rule. So they told the field investigators just use this 2008 guidance and opinion and apply the economic realities factor, which I think is going to be more favorable than the Biden rule, but probably a bit less favorable than the Trump rule.”
