By Chuck White, Vice President of Regulatory Affairs
The Biden-Harris Administration continues to roll back regulations enacted during the previous administration. Two proposed rulemakings that withdraw rules have been released for public comment. In the newly released proposed rules, the withdrawal of the Independent Contractor Final Rule is based on several reasons:
- The rule adopted a new “economic reality” test to determine whether a worker is an employee or an independent contractor under the Fair Labor Standards Act (FLSA).
- Courts and the Department of Labor have not used the new economic reality test, and FLSA text or longstanding case law does not support the test.
- The rule would narrow or minimize other factors considered by courts traditionally; making the economic test less likely to establish that a worker is an employee under the FLSA.
The second seeks to rescind a current regulation on joint employer relationships under the Fair Labor Standards Act. 17 states and the District of Columbia filed a lawsuit in the U.S. District Court for the Southern District of New York against the Department of Labor, arguing that the Joint Employer Rule violated the Administrative Procedure Act. The court vacated the majority of the Joint Employer Rule on Sept. 8, 2020, stating that the rule was contrary to the FLSA and was “arbitrary and capricious” due to its failure to explain why the department had deviated from all prior guidance or consider the effect of the rule on workers.
