On April 12, ABC submitted comments in opposition to proposals from the U.S. Department of Labor’s Wage and Hour Division to rescind the Trump-era independent contractor and joint employer final rules.
DOL Independent Contractor Final Rule
ABC is on record as strongly supporting the Trump DOL’s January 2021 independent contractor final rule, which clarifies the WHD’s interpretation of independent contractor status under the Fair Labor Standards Act and promotes certainty for employers, independent contractors and employees.
On Feb. 5, the WHD proposed to delay the effective date of the final independent contractor rule from March 8 to May 7. On Feb. 22, ABC filed a request for extension of time to file comments on the delay proposal and further protested the department’s restriction on the nature of comments that could be filed. The department denied the extension request on Feb. 24.
On Feb. 24, ABC submitted comments arguing that the WHD’s hasty and unsupported attempt to delay the effective date of the independent contractor final rule was arbitrary, capricious and in violation of the Administrative Procedure Act. ABC therefore urged the WHD to maintain the final rule’s effective date of March 8.
On March 4, the WHD issued a final rule that delays the Trump DOL’s independent contractor final rule’s effective date from March 8 to May 7, 2021. Soon after, on March 12, DOL issued a proposal to withdraw the independent contractor final rule.
On March 26, ABC, ABC Southeast Texas Chapter and the Coalition for Workforce Innovation filed suit against DOL for delaying the effective date of the independent contractor final rule and proposing to withdraw it. The filed complaint asserts that the steps taken by DOL to negate the independent contractor final rule are in violation of the Administrative Procurement Act.
On April 12, ABC submitted comments in opposition to the DOL’s proposal to withdraw the independent contractor final rule. ABC argued that the final delay rule was unlawfully promulgated and because the department’s subsequent proposal to withdraw the independent contractor final rule relied on the unlawfully promulgated rule for the assertion that the independent contractor final rule had not already gone into effect, the subsequent proposal itself must be ordered withdrawn.
DOL Joint Employer Final Rule
ABC applauded the Trump administration for issuing the 2020 DOL joint employer final rule, which promised to make the joint employment test more narrow and focused.
On Feb. 26, 2020, 18 states sued the department in federal court to strike down its final rule (see State of New York v. Scalia, 1:20-cv-01689 (S.D. N.Y. Feb. 26, 2020). A business coalition that includes ABC intervened in the case, in part to defend the construction industry against unwarranted attacks on the industry’s long-established methods of doing business by the state plaintiffs.
On Sept. 8, a U.S. District Court for the Southern District of New York judge ruled that parts of the department’s joint employer final rule are illegal. ABC believes the judge got it wrong on both procedural and substantive grounds and filed a notice of appeal on Nov. 6. On Jan. 15, 2021, ABC joined in the brief of intervenor-appellant filed by the trade associations that filed the joint appeal. The department filed its own brief to the appeals court, criticizing the district court decision.
On March 12, the department published a proposed rule to rescind the joint employer final rule. On March 31, the department filed a motion asking the federal appellate court to hold the appeal in abeyance for six months, until Oct. 18, 2021, in order to allow the department time to review and analyze the comments and make a final determination regarding rescission of the joint employer final rule. On April 8, the second circuit denied the department’s motion to hold the appeal in abeyance.
On April 12, ABC submitted comments opposing the department’s proposal to rescind the Trump-era joint employer rule final rule. ABC argued the current rule clarifies the department’s interpretation of joint employer status under the FLSA and promotes certainty for employers and employees. The department’s proposed rule to rescind the final rule is arbitrary and capricious, particularly in its primary reliance on the district court decision, which the department itself has criticized as wrongly decided in the pending appeal.
ABC will continue to provide updates in Newsline on both the independent contractor and joint employer rules.