Deborah Tam
The U.S. Court of Appeals for the Fifth Circuit recently granted a 120-day delay on further proceedings related to an appeal filed by the U.S. Department of Labor (DOL) in response to a federal district court ruling back in March 2022 that reinstated a Trump-era independent contractor rule (see Payroll Update, 3/18/2022).
Quick recap.
- 2021 Final Rule. Under the Trump administration, the DOL issued a final rule (2021 Final Rule) that would determine independent contractor status based on two core factors: who exercises substantial control over the performance of the work and (2) whether the worker has an opportunity to earn profits or incur losses based on their own judgment. Three additional factors would be considered if the core factors were non-determinative. The 2021 Final Rule was scheduled to take effect March 8, 2021.
- Delay and withdrawal of 2021 Final Rule. In February 2021, under the Biden Administration, the DOL first sought to delay implementation of the 2021 Final Rule then withdrew the 2021 Final Rule, arguing that the 2021 Final Rule was inconsistent with prior court rulings on the matter. Immediately, the Coalition for Workforce Innovation, Associated Builders and Contractors of Southeast Texas, and Associated Builders and Contractors Inc. (the Coalition) filed a complaint (see Payroll Update, 3/31/2021).
- 2021 Final Rule reinstated by court. On March 14, 2022, a federal district court reinstated the 2021 Final Rule (see Payroll Update, 03/18/2022).
- DOL proposes independent contractor rule. On October 11, 2022, the DOL proposed independent contractor rules that would return to the historically used multi-factor approach for worker classification determinations (see Payroll Update, 12/16/2022). The proposed rule was largely opposed by business groups rules while supported by worker advocacy groups. The Fall Regulatory Agenda (see Payroll Update, 01/10/2023) noted the DOL scheduled the release of the final regulations May 2023.
Final rule coming no later than October.
The DOL filed an appeal of the federal district court ruling and since that time, proceedings have been delayed so that the DOL can complete its rulemaking. In the DOL’s filed Status Report on June 9, 2023, the DOL cited that it continues to review the more than 54,000 comments it received on the proposed rule. The DOL requested to postpone proceedings for 120 days in order to complete its rulemaking processes. This would signal that the DOL anticipates that the final independent contractor rule to be released in October 2023 since the DOL noted it did not need a 180-day postponement. However, the recently released Spring Regulatory Agenda, notes an anticipated release in August 2023. Either way, the final rule is heading our way.
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