Independent Contractor Status Under the Fair Labor Standards Act (FLSA): Delay of Effective Date, 29 CFR Parts 780, 788, and 795, 86 Fed. Reg. 12535 (March 4, 2021)
The DOL has decided to delay to May 7, 2021, the effective date of final regulations under the Fair Labor Standards Act (FLSA) to determine whether a worker is an employee or an independent contractor (Independent Contractor Regulations). The Independent Contractor Regulations were to take effect on March 8, 2021 (see our Checkpoint article). However, the Biden administration issued a regulatory freeze memorandum instructing agency heads to consider postponing the effective date of regulations that were published but not yet effective as of January 20, 2021 (such as the Independent Contractor Regulations), and to possibly allow an additional comment period. On February 5, 2021, the DOL issued a notice proposing to delay the effective date of the Independent Contractor Regulations. That proposal has now been adopted.
The DOL notes that it received over 1,500 comments in response to the proposed delay of the Independent Contractor Regulations and summarizes the arguments of the proponents and opponents of the delay. Ultimately, the DOL decided to adopt the delay to allow “additional time to review the multiple issues of law, policy, and fact” that warrant additional consideration in accordance with the regulatory freeze memorandum.
EBIA Comment: Interested parties should keep an eye out for further developments in light of the regulatory delay, keeping in mind that the FLSA has limited direct applicability to employee benefit plans. The large number of comments on the proposed delay underscores the importance of these issues to diverse groups of stakeholders. For more information, see EBIA’s Health Care Reform manual at Section XXI.E.3.a (“Exchange Notice: Who Is an Employee for FLSA Purposes?”). See also EBIA’s ERISA Compliance manual at Section IX.I (“Eligibility Issues Involving Independent Contractors, Leased Employees, and Others”); EBIA’s Cafeteria Plans manual at Section IX (“Who Can Participate in a Cafeteria Plan?”); EBIA’s Self-Insured Health Plans manual at Section XIV.C (“Which Employees and Other Workers Will Be Allowed to Participate?”); and EBIA’s 401(k) Plans manual at Section VII.B (“Eligibility Condition #1: Participation Limited to Common-Law Employees, Partners and Sole Proprietors, Some Leased and Statutory Employees”).
Contributing Editors: EBIA Staff.