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DOL Cements 60-Day Delay of Business-Friendly Gig-Worker Rule

March 2, 2021, 9:50 PM

The U.S. Labor Department has delayed implementation of the Trump administration’s late-term rule making it easier for companies to classify workers as independent contractors, paving a path to adopt a less employer-friendly policy.

Adhering to President Joe Biden’s Inauguration Day directive to freeze all pending regulations, DOL finalized its decision Tuesday—initially proposed Feb. 3—to stall the high-profile independent contractor rule’s effective date by 60 days until May 7.

The rule—which got strong backing from businesses and Republicans for embracing a shorter, simpler standard to determine when workers are exempt from minimum wage and overtime protections—originally was slated to take effect March 8 when it was released in Trump’s final days in office.

DOL’s Wage and Hour Administration said the delay is necessary to consider the legality of the independent contractor test. The agency could re-open the rulemaking process with a different standard.

Employer representatives submitted written comments opposing the proposed delay, arguing that a truncated window for public comment violated the Administrative Procedure Act. Management attorneys have been preparing to file a lawsuit against the delay, industry lobbyists told Bloomberg Law.

Meanwhile, worker advocates and Democratic state attorneys general urged the department to delay and rescind the rule, restoring a legal interpretation that makes it more difficult for businesses to treat their workforce as independent contractors who, unlike employees, aren’t subject to wage laws.

The Trump DOL’s final rule considers five factors to determine whether a worker is economically dependent on an employer, and therefore an employee—not a contractor.

Formulating an updated economic reality test, DOL gives greatest weight to two core factors: the nature and degree of the worker’s control over the work, and the worker’s opportunity for profit or loss based on personal initiative or investment.

To contact the reporter on this story: Ben Penn in Washington at bpenn@bloomberglaw.com

To contact the editors responsible for this story: Martha Mueller Neff at mmuellerneff@bloomberglaw.com; Andrew Harris at aharris@bloomberglaw.com

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