White House issues ‘regulatory freeze’ memo

As President Joe Biden was inaugurated as the 46th president of the United States on Wednesday, Jan. 20, the White House also issued a “regulatory freeze” memo to pause any new regulations from moving forward.

According to the presidential 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.”

According to multiple reports, Biden was expected to sign 17 executive actions Wednesday afternoon. Regulatory freezes are common when a new administration takes office.

In late December, incoming White House press secretary Jen Psaki hinted that the Department of Labor’s rule on worker classification would likely be a target.

The U.S. Department of Labor announced in September that it was proposing a worker classification rule to address a hot-button issue that has had ramifications on a variety of workers from truckers to gig economy drivers and freelance writers.

A final rule was published on Jan. 7 and was presumed to go into effect on March 8. 

“If it takes effect, that rule will make it easier to misclassify employees as independent contractors, costing workers more than $3.7 billion annually,” Psaki said in a Reuters article in late December. “The memo would potentially freeze this rule and not allow it to be implemented.”

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.”

Opinion letter

In a related move, the Department of Labor issued an opinion letter on Jan. 19 about whether or not 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 concludes that the safety measures do not constitute control for purposes of determining independent contractor status and that the owner-operators are likely independent contractors. LL