From JDSupra, Denise Keyser and Cecilia Nieto discuss the possibility that the Trump administration’s Department of Labor may not defend a challenge to the Biden administration’s independent contractor rule. Denise and Cecilia write:
In the ongoing battle over labor policy, the Trump administration has signaled plans to abandon or at least revise its defense of two Biden-Era lawsuits and their underlying initiatives.
The DOL’s Independent Contractor Rule
On January 24, 2025, the U.S. Court of Appeals for the Fifth Circuit granted the U.S. Department of Labor’s (DOL) request to delay oral arguments set for early February in a lawsuit challenging the Biden administration’s 2024 rule on classifying workers as independent contractors or employees under the Fair Labor Standards Act (FLSA). The rule requires the weighing of six factors and is designed to make it more difficult for employers to classify workers as independent contractors, who are afforded limited benefits and protections under federal labor laws compared to those workers classified as employees.
While the DOL’s filing did not indicate whether it plans to rescind President Biden’s independent contractor rule, which would mean a return to the 2021 rule issued during the first Trump administration, the agency requested a 60-day extension to allow the new DOL leadership to determine how they wish to proceed. The Trump administration’s standard for evaluating independent contractor status is a simpler and more employer-friendly test, which focuses on two main factors—the nature and degree of the worker’s control over the work and the worker’s opportunity for profit or loss. Under this rule, employers face a lower burden to demonstrate that their workers are truly independent contractors.
The DOL’s treatment of independent contractor status has far-reaching implications for workers in nearly all industries, especially those operating in the “gig” economy. Employers found to have misclassified employees as independent contractors could face potential liability for unpaid minimum wage and overtime premiums, unpaid Medicare, social security, unemployment compensation, and retirement plan contributions, medical benefits, stock options, and related liquidated damages, penalties and interest.
While neither the 2021 nor the 2024 rule alter the independent contractor classification analyses under state laws utilizing other tests, the DOL’s actions—or inaction—in the coming months will reveal whether the shift in leadership will lead to substantial changes in the way independent contractors are treated under federal law.
Read the full article at Trump Administration Retreats from Defense of Two Biden-Era Lawsuits | Ballard Spahr LLP – JDSupra
