Department of Labor delays independent contractor rule until May 7

The Department of Labor has officially delayed its final rule on worker classification until May 7.

Notice of the delay is scheduled to publish in the Federal Register on Thursday, March 4.

“This action finalizes the Department of Labor’s proposal to delay until May 7, the effective date of the rule titled ‘Independent Contractor Status Under the Fair Labor Standards Act’ … to allow the Department to review issues of law, policy, and fact raised by the rule before it takes effect,” the notice stated.

Before the delay, the rule was set to take effect on March 8.

The final rule, which was proposed under the Trump administration, attempted to tackle worker classification by proposing an “economic reality” test to determine whether a worker is an employee or an independent contractor under the Fair Labor Standards Act.

Shortly after the Labor Department’s test became a final rule, President Joe Biden was inaugurated and issued a memo on Jan. 20 “to give the incoming administration an opportunity to review any regulations that the Trump administration tried to finalize in its final days.”

The Labor Department then published in the Federal Register a proposal to delay the effective date of the final rule until May 7.

The Labor Department received more than 1,500 comments on the proposed delay.

“Many workers and representatives of workers supported delaying the effective date of the independent contractor rule, stating that the delay would allow the department to further consider whether the independent contractor rule was inconsistent with the intent of the Fair Labor Standards Act, as well as relevant case law, and evaluate the extent to which (the rule) may not have fully considered additional costs to workers,” the department wrote.

Many businesses, trade associations, and individuals who identified themselves as freelancers or independent contractors opposed the delay, “because they believe the new standard created … will provide clarity.”

OOIDA submitted comments on Feb. 24, saying it had concerns about specific provisions in the final rule.

“We encourage DOL to reexamine these stipulations regarding the misclassification of certain types of professional truck drivers,” OOIDA wrote. “However, we ask that the department only delay implementation of the rule if it intends to fix these issues, and we would oppose any delay if the goal is an eventual rollback of the entire final rule.”

Worker classification has been a hot topic in recent years with much of the controversy surrounding California’s adoption of the restrictive ABC test. OOIDA stressed the diversity of the trucking industry and mentioned that the owner-operator model in trucking predates recent developments in app-based work opportunities.

“We believe that the department’s approach in the final rule is more practical than proposals like the ABC test,” OOIDA wrote.

OOIDA acknowledged that worker classification can be a difficult needle to thread in the trucking industry but said the rules should protect misclassified truckers without destroying the entire owner-operator model.

“Trucking is a challenging career, and there are many changes that should be made to improve compensation and working conditions for drivers,” OOIDA wrote. “The department must recognize that some truck drivers are certainly misclassified and support efforts to combat this. Addressing these issues can be accomplished with adjustments to the final rule instead of a wholesale rejection of the leased owner-operator model.” LL