Punching In: New Biden Worker Classification Test Implemented

Monday morning musings for workplace watchers.

IC Rule Goes Into Effect|OSHA Turns Up Enforcement

Rebecca Rainey: The US Department of Labor’s closely watched independent contractor rule goes into effect today, but don’t expect too much of a change from the DOL’s current enforcement position.

Up until today, the Trump-era independent contractor standard was the regulation on the books governing the DOL’s approach to determining whether a worker should be classified as an employee or independent contractor for purposes of the Fair Labor Standards Act.

Businesses have preferred the Trump test because it outlined five factors in the working relationship that agency enforcement officials were to consider when determining a worker’s status, a simpler approach than the new rule, which generally allowed companies to maintain their current independent contractor relationships.

The now-effective Biden administration independent contractor rule replaces that test with a stricter six-factor approach, which the agency says is more aligned with case law and is needed to help prevent worker misclassification. But management-side attorneys have complained that the DOL was already looking at more than the five Trump factors when bringing worker misclassification enforcement actions before the most recent rule was finalized.

Bloomberg Law reported last year on how the agency hadn’t updated its guidance on how to comply with the Trump standard, despite the rule being in effect for over a year, and how at least one management-side attorney said DOL investigators didn’t follow the Trump rule in her interactions with the agency on behalf of clients.

“We’ve seen anecdotally elsewhere, they’re already applying the standard,” said Alexander MacDonald of Littler Mendelson, the firm representing a coalition of business groups in one of the legal challenges against the Biden DOL rule. “The underlying rationale, at least from the Department of Labor standpoint, is that this rule doesn’t change anything, it’s just implementing the way that our courts have read the FLSA all along.”

Marissa Mastroianni, a member of the management-side law firm Cole Schotz, said that while the effective date is an “official starting point” for the rule, she agreed that the DOL “has de facto been reviewing cases” through a totality of the circumstances “lens,” the same broader approach outlined in the new regulation.

“I don’t believe there’s going to be some sea change in a lot of jurisdictions, per se,” she said. Mastroianni added that she’s advising clients to comply with the rule, despite the potential for it to be blocked as part of one of four pending legal challenges.

A DOL spokesperson said in a statement that the rule is based “upon decades of judicial precedent” and “aligns the Department’s guidance with longstanding case law, which will help address the misclassification of workers as independent contractors, ensuring they receive the benefits and protections they deserve.”

The agency also noted in its rulemaking that the economic realities approach cemented in its latest rule is a test that’s been used by the courts and the department since the 1940s.

The DOL has been working to cancel the Trump rule since Biden took office. The agency issued a rule in May 2021 to delay and cancel the Trump independent contractor test. However, a federal court reinstated the rule in March 2022, finding that the Biden administration improperly rescinded the Trump standard.

In response, the DOL restarted the rulemaking process, issuing a final rule to cancel the Trump test and replace it with a broader six-factor economic realities test.

READ MORE:

• Businesses Cry Foul on DOL Messaging for Trump Gig Worker Rule
• Challenges to DOL’s Contractor Rule: Mounting Lawsuits Explained

Doug Parker, assistant secretary of labor for occupational safety and health, speaks during a Senate hearing on May 27, 2021.

Photographer: Stefani Reynolds/Bloomberg via Getty Images

Bruce Rolfsen: When OSHA administrator Doug Parker spoke to a hotel ballroom filled with more than 170 employer-side attorneys last week, he offered friendly advice for their clients: “Embrace health and safety as a core value.”

And then a warning—the Occupational Safety and Health Administration is “turning up the dial on enforcement.”

For fiscal 2024, the agency’s goal is to conduct 34,346 inspections, the most since 2015, and it’s likely to meet that goal given the agency made 34,229 inspections in fiscal 2023, OSHA data show.

In addition to more inspections, the agency is looking to make more use of recent policy changes, such as allowing inspectors dealing with employers that have long records of past violations to issue citations for individual violations instead of grouping the violations into fewer citations, Parker said.

That policy update means instead of one citation and a $16,131 fine covering four serious violations, OSHA could issue four citations, each for a single serious violation, and seek a $64,525 fine.

The policy focuses on serious and repeat violations of rules for machinery lockout/tagout, machine guarding, permit-required confined space, respiratory protection, falls, and trenching.

The “instance-by-instance” policy has been invoked 25 times since it was issued in March 2023.

The largest fine sought under that new policy was a $1.8 million penalty proposed in November for Minnesota-based Wagner Construction Inc., for one serious and 16 repeat alleged violations. It was the fourth time OSHA had cited Wagner since 2019 for endangering workers in trenches.

At an American Bar Association conference in San Juan, Puerto Rico, Parker also offered support for OSHA’s compliance assistance efforts, including the Voluntary Protection Programs that encourage companies to adopt safety and health programs and alliances with trade groups that encourage safe practices.

We’re punching out. Daily Labor Report subscribers, please check in for updates during the week, and feel free to reach out to us.