On January 6, 2021, the Department of Labor (Department) announced a rule addressing the distinction between employees and independent contractors under the Fair Labor Standards Act (FLSA). The rule was published in the Federal Register on January 7, 2021, and was initially scheduled to take effect on March 8, 2021. See 86 FR 1168 (Independent Contractor Rule).
On February 5, 2021, the Department published a proposal to delay the Independent Contractor Rule’s effective date until May 7, 2021, 60 days after the original effective date. See 86 FR 8326. On March 4, 2021, after considering approximately 1,500 comments received in response to that proposal, the Department published a final rule delaying the effective date of the Independent Contractor Rule to May 7, 2021, as proposed. See 86 FR 12535.
On March 12, 2021, the Department published a notice of proposed rulemaking (NPRM) proposing to withdraw the Independent Contractor Rule. See 86 FR 14027. On May 5, 2021, after reviewing approximately 1,000 comments submitted in response to the NPRM, the Department announced a final rule withdrawing the Independent Contractor Rule. This withdrawal took effect immediately upon the final rule’s publication in the Federal Register on May 6, 2021.
On March 14, 2022 a district court in the Eastern District of Texas vacated the Department’s Delay Rule, Independent Contractor Status Under the Fair Labor Standards Act (FLSA): Delay of Effective Date, 86 FR 12535 (Mar. 4, 2021), and the Withdrawal Rule, Independent Contractor Status Under the Fair Labor Standards Act (FLSA): Withdrawal, 86 FR 24303 (May 6, 2021). The district court further stated that the Independent Contractor Rule, Independent Contractor Status Under the Fair Labor Standards Act, 86 FR 1168 (Jan. 7, 2021), became effective as of March 8, 2021, the rule’s original effective date, and remains in effect. On May 13, 2022, the Department filed a notice of appeal in this matter.
On June 3, 2022, the Department announced that it is developing a proposed rule on determining employee or independent contractor status under the FLSA. The Department will hold forums in June to hear diverse perspectives from those who may be affected by employee or independent contractor classification. The Department anticipates submitting a draft Notice of Proposed Rulemaking for interagency review this summer.