The US Department of Labor today announced plans to rescind the independent contractor final rule issued on Jan. 7 and current regulation on joint employer relationships under the Fair Labor Standards Act. Both changes had come during the previous administration.
A notice of proposed rulemaking was released by the department to withdraw the independent contractor final rule from Jan. 7. The reasons for the withdrawal of the rule include:
- The rule adopted a new “economic reality” test to determine whether a worker is an employee or independent contractor under the Fair Labor Standards Act.
- Courts and the department have not used the new economic reality test, and FLSA text or longstanding case law does not support the test.
- The rule would narrow or minimize other factors considered by courts traditionally; making the economic test less likely to establish that a worker is an employee under the FLSA.
A second notice of proposed rulemaking aims to rescind current regulation on joint employer relationships under the FLSA. The department noted that 17 states and the District of Columbia had filed a lawsuit over the regulation arguing that it violated the Administrative Procedure Act.
Under the previous administration, the department had announced the joint-employer regulation on Jan. 12. It changed guidance for determining joint employer status when an employee performs work for one employer that simultaneously benefits another individual or entity. Its effective date was to be March 16.