Department of Labor rescinds worker classification opinion letter
January 26, 2021
The U.S. Department of Labor has withdrawn an opinion letter about worker classification only one week after it was issued.
On Tuesday, Jan. 19 – one day before President Joe Biden was inaugurated – the Department of Labor’s Wage and Hour Division issued an opinion letter about whether or not the requiring tractor-trailer truck drivers to implement safety measures required by law constitutes control by the motor carrier for purposes of their status as employees or independent contractors under the Fair Labor Standards Act.
Considered guidance, the Department of Labor concluded last week that the safety measures do not constitute control for purposes of determining independent contractor status and that the owner-operators are likely independent contractors.
On Tuesday, Jan. 26, the Department of Labor announced that it was withdrawing the opinion letter. The DOL also rescinded two additional opinion letters involving the Fair Labor Standards Act.
“These letters were issued prematurely because they are based on rules that have not gone into effect,” the Wage and Hour Division wrote in a news release. “This withdrawal is an official ruling of the Wage and Hour Division for purposes of the Portal-to-Portal Act, and these letters may not be relied upon as statements of agency policy as of the date of withdrawal.”
When Biden was inaugurated as the 46th president of the United States, he issued a regulatory freeze memo to pause any new regulations from going forward. According to the memorandum, the action was taken to “give the incoming administration an opportunity to review any regulations that the Trump administration tried to finalize in its final days.”
Those pending regulations included the Department of Labor’s final rule on worker classification that was published Jan. 7 and was presumed to go into effect on March 8.
A focus of the rule would be the adoption of an “economic reality” test to determine a worker’s status.
“The final rule explains that independent contractors are workers who, as a matter of economic reality, are in business for themselves as opposed to being economically dependent on the potential employer for work,” the notice stated. “The final rule also explains that the inquiry into economic dependence is conducted by applying several factors, with no one factor being dispositive, and that actual practices are entitled to greater weight than what may be contractually or theoretically possible.” LL