The U.S. Department of Labor (DOL) unlawfully delayed and then withdrew the Independent Contractor (IC) Final Rule, published in the waning days of the Trump Administration, a federal court in Texas has held. Coalition for Workforce Innovation et al. v. Walsh, No. 1:21-cv-00130-MAC (E.D. Tex. Mar. 14, 2022). As a result of the court’s ruling, the withdrawal of the IC Final Rule is invalid, and the IC Final Rule goes into effect immediately – at least for now.
The Final Rule, which never took effect prior to its withdrawal in May 2021 by the current administration, established a uniform standard for determining a worker’s status as an “independent contractor” under the Fair Labor Standards Act (FLSA).
The FLSA guarantees a minimum wage for all hours worked and overtime for any hours worked over 40 per week for all covered, non-exempt employees. As the U.S. Supreme Court first noted more than 70 years ago, individuals who perform services for a company as an independent contractor are not afforded the FLSA’s minimum wage and overtime protections because they are not “employees.” The FLSA, however, says little about how to distinguish an employee from an independent contractor.
Over the years, both the courts and the DOL had developed similar, yet somewhat varying, standards for determining whether an individual is an employee or an independent contractor, most of which focused on the “economic reality” of the relationship between the employer and the individual....
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