The U.S. Department of Labor (DOL) violated the Administrative Procedure Act (APA) when it withdrew a Trump-era Independent Contractor Final Rule (ICFR), a Texas federal court has held. Coalition for Workforce Innovation et al. v. Walsh, No. 1:21-cv-00130-MAC (E.D. Tex. Mar. 14, 2022).
During the Trump Administration, the DOL promulgated a rule, titled “Independent Contractor Status Under the [FLSA]” (the “Independent Contractor Rule”), which sought to clarify the definition of “independent contractor” under the Fair Labor Standards Act (FLSA). Because independent contractors provide specialized skills and often are used in the construction industry, where short-term and fluctuating needs are common, the ICFR is meaningful clarification for the industry.
The status of independent contractor under the FLSA has been a point of scrutiny because the FLSA guarantees a minimum wage for all hours worked and overtime for any hours worked over 40 hours per week only for covered, non-exempt employees. The same guarantee does not apply to an independent contractor. In fact, the FLSA is largely silent on how best to determine an employee from an independent contractor.
The ICFR’s primary purpose was to provide clarity to the “economic realities test,” the multi-factor test used by the courts to “determine whether, as a matter of economic reality, an individual is in business for himself or herself as an independent contractor or is an employee of another.”
The “economic...
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