The US Department of Labor filed notice that it is appealing a Texas federal judge’s order blocking the Biden administration from withdrawing a Trump-era rule that made it easier for businesses to classify workers as independent contractors, Bloomberg Law reported.
District Judge Marcia A. Crone reinstated the Trump-era rule in March, saying the department provided insufficient opportunity for public comment on its intension to delay the Trump rule. The DOL was also “arbitrary and capricious” in its withdrawal of the rule, the judge said.
The Trump rule was announced weeks before President Biden took office and was slated to take effect March 8, 2021. After first delaying the effective date, the Biden Administration on March 12, 2021, published a final rule rescinding the Trump independent contractor classification rule, with its original effective date.
The Trump independent contractor rule remains in effect and includes the following clarifications:
- Reaffirms an “economic reality” test to determine whether an individual is in business for him or herself (independent contractor) or is economically dependent on a potential employer for work (FLSA employee).
- Identifies and explains two “core factors” that are most probative to the question of whether a worker is economically dependent on someone else’s business or is in business for him or herself:
- The nature and degree of control over the work.
- The worker’s opportunity for profit or loss based on initiative and/or investment.
- Identifies three other factors that may serve as additional guideposts in the analysis, particularly when the two core factors do not point to the same classification. The factors are:
- The amount of skill required for the work.
- The degree of permanence of the working relationship between the worker and the potential employer.
- Whether the work is part of an integrated unit of production.
- The actual practice of the worker and the potential employer is more relevant than what may be contractually or theoretically possible.
- Provides six fact-specific examples applying the factors.
