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DOL Extends Contractor Proposal Comment Period After Complaints

Oct. 25, 2022, 12:56 PM

The US Labor Department has extended by 15 days the comment period on its recent independent contractor proposal, after complaints from critics who said the initial time frame alloted for the rule was too short.

The decision comes after at least three different business groups and lawmakers have asked for more time to review the 184-page proposal released earlier this month, arguing that the potential impact of the regulation warrants more time for the public to digest the policy changes. The new deadline for public input is Dec. 13.

Tech, construction, and trucking industries that typically rely on independent contractors to operate their businesses have been following this worker classification issue closely. Companies have said they’ll face new legal liabilities if they’re required to classify their workers as employees.

The initial 46-day public comment period could have raised questions under the Administrative Procedure Act, a law that governs the agency rulemaking process and in part requires that agencies give the public a “meaningful” opportunity to provide feedback on the policy change, critics of the rulemaking say.

“In light of the complexity of these issues, and the far-reaching economic consequences revision of the rule will have for all stakeholders, an extension of the time in which to comment will ensure that all parties are given the opportunity to provide a thorough and robust analysis to the Department as it contemplates further action,” management-side law firm Littler Mendelson’s Workplace Policy Institute wrote to the agency on Oct. 14.

Opponents of regulations have successfully blocked those rules in court by arguing the rulemaking process wasn’t correctly followed. The Trump administration faced 26 court losses, according to one estimate, for failing to seek proper notice and comment on federal policy changes, like its H-1B specialty occupation visa rules, for example.

When announcing the extension Tuesday, DOL said it “takes seriously its obligation to consider any ‘written data, views, or arguments’ submitted by commenters and looks forward to reviewing all feedback received on the NPRM before the close of the comment period.”

APA Considerations

Courts have found that the APA doesn’t establish a minimum time period for agencies to accept public comments, but have generally viewed 30 days as the shortest timeframe for public input on a proposal.

Generally, the APA gives the public due process as regulations are promulgated, said Angela Cornell, director of the Labor Law Clinic at Cornell Law School.

“It ensures that there are opportunities for input into regulations. And if in fact the APA isn’t followed, that actually is grounds for setting aside the regulatory changes that were being proposed,” she said in a phone interview.

Last Legal Challenge

The DOL proposal released earlier this month would clarify when workers should be considered independent contractors who are in business for themselves, or employees who are afforded the full minimum wage, overtime, and other protections provided under the Fair Labor Standards Act.

The Biden proposal would also rescind a simpler classification test finalized during the Trump administration, which made it easier for workers to be classified as independent contractors.

The comment period extension also comes after DOL recently lost a legal challenge for failing to take enough time to seek public comment when releasing another independent contractor rule last year.

The agency issued a rule to delay implementation of the Trump independent contractor standard that had been finalized Jan. 6, 2021.

Business groups that supported the Trump test sued over the move, arguing in part that the 19-day notice-and-comment period it provided on the rule delay wasn’t enough time for the public to weigh in under the APA.

DOL in turn argued that the shortened comment period was allowed under the APA’s “good cause exception,” which permits agencies to skip the notice and comment requirements of the law if the agency determines that the regulation would be “impracticable, unnecessary, or contrary to the public interest.”

But a federal judge in Texas disagreed, finding in part that the DOL didn’t provide the public with a “meaningful” opportunity to comment because of the short comment period and reinstated the Trump rule. Because of that court loss and the Biden administration’s concerns about worker misclassification, the DOL started the rulemaking process again to replace the Trump test, resulting in its most recent worker classification proposal.

Latest Requests

Ahead of its decision to extend the comment period, the DOL had been peppered with requests for an extension from the National Retail Federation, management-side attorneys and Republican lawmakers.

The DOL said it estimated it would take parties 30 minutes on average to review the proposal. The new comment period would last for 61 days total.

But one former DOL official noted that the comment period may not be an issue.

Paul DeCamp, a Wage and Hour administrator during the George W. Bush administration, said he’s skeptical the comment period will be the legal question to trip up the rule in court.

“I’d be surprised if 45 versus 30 versus 60 or longer ends up being the main issue if this rule ends up in court,” said DeCamp, now an attorney at Epstein Becker & Green, P.C. “I do think it would be difficult for courts to strike this rule given that the rule largely mirrors the case law that existed before the Trump-era regulation.”

To contact the reporter on this story: Rebecca Rainey in Washington at rrainey@bloombergindustry.com

To contact the editor responsible for this story: Genevieve Douglas at gdouglas@bloomberglaw.com;
Rebekah Mintzer at rmintzer@bloombergindustry.com