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DOL Appeals Decision Reviving Trump Independent Contractor Rule

May 13, 2022, 9:22 PM

The Labor Department 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.

The appeal notice filed Friday follows a March decision from Judge Marcia A. Crone of the US District Court for the Eastern District of Texas, who ordered that the Trump rule be reinstated. She sided with the Coalition for Workforce Innovation, a business group whose ranks include gig-economy companies such as Uber Technologies Inc. and Lyft Inc.

The business group sued the DOL, Secretary Marty Walsh, and another agency official on behalf of its members, whose business models largely depend on their ability to classify their workforce as contractors rather than employees entitled to certain wages and benefits. Three groups representing builders, contractors, and financial services firms later joined the lawsuit.

The Trump administration issued its independent contractor rule Jan. 6, 2021, and it was set to take effect that March. But after President Joe Biden took office Jan. 20, 2021, the DOL froze the Trump-era rule, issued its own rule postponing the effective date, and ultimately promulgated a final rule withdrawing it altogether.

Crone ruled that the Biden Labor Department didn’t provide the public with a “meaningful” opportunity to comment on the rule delaying the Trump regulation. It was also arbitrary and capricious to withdraw that regulation because the agency failed to consider alternatives to rescinding it, like making changes to the existing policy, the court said in granting summary judgment in favor of the challengers.

Littler Mendelson PC represents the Coalition and other groups. The Department of Justice represents the DOL and its officials.

The case is Coalition for Workforce Innovation v. Walsh, E.D. Tex., No. 1:21-cv-00130, notice of appeal 5/13/22.

To contact the reporter on this story: Erin Mulvaney in Washington at emulvaney@bloomberglaw.com

To contact the editors responsible for this story: Laura D. Francis at lfrancis@bloomberglaw.com; Andrew Harris at aharris@bloomberglaw.com