New Independent Contractor Rules? Not So Fast

During the Trump Administration, the Wage and Hour Division (“WHD”) of the United States Department of Labor (“DOL”) resumed the practice of issuing formal Opinion Letters that shed light on how the agency would interpret and enforce wage and hour laws and regulations.  The Obama administration generally elected to provide more general guidance, as opposed to answers to situation- or employer-specific inquiries, like those found in Opinion Letters.

The WHD published dozens of Opinion Letters during Trump’s presidency, spanning topics from paying employees overtime under the fluctuating workweek method to classifying workers as independent contractors.

One of these Opinion Letters—FLSA2019-6 issued on April 29, 2019—addressed whether service providers in virtual marketplace platforms were independent contractors or employees of the company running the platforms.  In this letter, the WHD indicated these types of service providers would be independent contractors.  This was favorable guidance for companies in the gig economy.

However, on February 19, 2021, the WHD withdrew this letter, meaning employers cannot legally rely on it for purposes of establishing good faith compliance with the Fair Labor Standards Act (“FLSA”).  This is undoubtedly yet another move by the Biden administration to claw back guidance issued by the DOL under the Trump administration and to strengthen employee protections.

In its withdrawal notice, the WHD stated: “[a]s WHD announced on February 5, 2021, the agency has proposed to delay the effective date of its final rule entitled ‘Independent Contractor Status Under the Fair Labor Standards Act’ to allow WHD additional opportunity for review and consideration of the rule.  This [Opinion Letter FLSA2019-6] addressed the same issue under consideration by the [DOL]—independent contractor status under the FLSA.”  We previously covered the new final rule promulgated under the Trump Administration here.

What legal or regulatory changes will follow remains to be seen, but employers and employees alike can expect changes in the near future, changes which will likely be more employee friendly. See also Potential Changes to Wage and Hour Laws under the Biden Administration.  Continue to check back here for more news and updates on this front.