From JDSupra, Richard Reibstein discusses the back and forth over independent contractor regulations and notes that the different regulations do nothing more than argue over the interpretation of court cases. Richard writes:
Few federal regulations over the past five years have produced more needless concern by stakeholders than the independent contractor rules under the federal Fair Labor Standards Act (FLSA) issued by the different administrations. One administration’s Labor Department issues regulations and the next administration changes them; and the new Trump Administration is likely to change them once again. None of these rules change the law itself. They simply offer alternative interpretations of decisions rendered by the courts over the past several decades. This type of administrative ping-pong match is little more than “white noise.” It should not distract businesses from taking the types of steps noted below to enhance their IC compliance, which will minimize the likelihood of being sued and better position themselves to survive any legal challenge to their IC business model.
Among the legal developments we summarize below, the one that received the most attention in January arose from an appeal to the U.S. Court of Appeals for the Fifth Circuit. That court recently granted the Trump Administration’s request to pause for 60 days its consideration of an appeal filed by a number of private litigants who had sued the Labor Department during the Biden Administration, seeking to strike down the Biden rule governing IC status. A federal district court had previously denied the challenge. In its request for short stay of the appeal, the Trump Administration did not state it was withdrawing the Biden regulation, but did note that the new Labor Department leadership needed 60 days to familiarize itself with the issues and decide how to proceed. It is widely anticipated that the new administration soon will announce that it plans to withdraw the Biden Administration’s IC regulations, thereby rendering moot the Fifth Circuit’s appellate review.
As we have stated in prior blog posts, the Labor Department has absolutely no power to find that a company or a worker has been classified or misclassified as an IC. Only the courts can do so. To that point, no federal court has ever relied upon or even cited to either the prior Trump or current Biden regulation on IC status to decide if a single worker has or has not been properly classified as an IC. Courts do not need administrative agencies to interpret judicial decisions; they are perfectly adept at applying their own judicial decisions and affording parties an opportunity to brief the issues and relevant cases. The competing regulations do little more than “argue” about the meaning of court cases, much like parties do in their legal briefs to the courts.
Rather than wondering which administration’s IC regulation ultimately will be given effect at any particular time, businesses would be wise to simply disregard the “noise” and focus on enhancing their compliance with all applicable federal and state laws and all competing regulations, regardless of which administration occupies the White House. Many companies have sought to do so by use of a process such as IC Diagnostics (TM), which is designed to maximize IC compliance in a customized and sustainable manner under a host of applicable federal and state laws. Many state law tests for IC status not only vary considerably from both the Biden and Trump Administration regulations under the FLSA, but the test for IC status under the FLSA even varies from the tests under other federal laws — as noted in the first legal development summarized below.
