Punching In: Trump Independent Contractor Rule Making a Comeback

Monday morning musings for workplace watchers

Trump’s DOL to Run Back Original IC Rule | Pushback on the EEOC

Parker Purifoy: The Labor Department’s proposed rule to guide employers on which workers should be classified as independent contractors or employees is likely going to look very familiar for those who’ve been watching the issue closely.

The rule is currently undergoing White House review, and attorneys say it should mirror the first Trump administration’s rule which gave businesses a clearer path to classify workers as independent contractors.

The legal back-and-forth has been closely watched by nearly every industry, but especially among construction, trucking, and gig economy companies like Uber Technologies Inc. and Lyft Inc., which largely rely on business models that pay people as contractors instead of hiring them as employees.

Biden’s version of the classification rule—which made it harder to treat workers as contractors—was heavily litigated. The Trump DOL last year directed its staff not to enforce the regulation.

There are currently five pending lawsuits against the DOL’s 2024 rule, but all have been paused while the department sorts out its next iteration of the regulation. Workers who are considered employees are owed minimum wage, overtime pay, and other protections under the law, while independent contractors are not.

“ABC is pleased to see that the DOL appears to be moving forward in its effort to revisit the independent contractor rule as it indicated to the court it would,” said Kristen Swearingen, vice president of government affairs for the Associated Builders and Contractors. “Many construction employers depend on legitimate independent contractors to provide specialized skills, entrepreneurial opportunities and stability during fluctuations of work common to the industry.”

The Trump-era rule considers five factors to determine whether a worker is economically dependent on an employer, but prioritizes two: 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.

The Biden-era rule expanded the factors that could indicate employee status to DOL’s wage and hour investigators, a change that created more legal liability for companies that use independent contractors.

But Noah Finkel, a management-side attorney with Seyfarth Shaw LLP, said circuit court precedents are more controlling in this area because wage and hour litigation in federal court is more risky for employers.

The DOL’s interpretation of the law could “provide some guidance” to a court, he said, “but ultimately that district judge is going to prioritize the standard that the circuit court has set forth.”

Civil rights advocates gather outside the Equal Employment Opportunity Commission building on Jan. 22

Rebecca Klar/Bloomberg Law

Rebecca Klar: Advocacy groups and Democrats critical of the EEOC for rescinding anti-harassment guidance that included protections for transgender workers are calling out the agency for revoking the guidance without time for the public to weigh in.

The Equal Employment Opportunity Commission’s 2-1 party line vote revoked the Biden-era document which said misgendering workers or denying them access to bathrooms that match their gender identity violates Title VII of the 1964 Civil Rights Act.

Dozens of civil rights advocates, including former agency officials, gathered outside of EEOC headquarters ahead of the vote, holding signs and cheering for speakers discussing the potential impacts of rescinding the guidance. One participant’s sign read, “keep your orange paws off our harassment laws.”

In a letter sent Jan. 23 to EEOC Chair Andrea Lucas, House Committee on Education and the Workforce Ranking Member Bobby Scott (D-Va.) called the move to rescind the guidance without public input a “stain on the Commission’s storied legacy and contrary to EEOC’s very existence.”

An EEOC spokesperson said the agency received and is reviewing the letter, adding it is “committed to working with Congress to ensure the vigorous enforcement of the federal laws that protect equal employment opportunity in America’s workplaces.”

The guidance included protections for transgender and gender nonbinary workers, citing the US Supreme Court’s Bostock v. Clayton County decision. The ruling said Title VII barred discrimination on the basis of gender identity and sexual orientation.

President Donald Trump’s “two sexes” executive order, however, said the Biden administration misinterpreted the meaning of the ruling and directly called for the EEOC to rescind the guidance or parts of it.

Democratic Commissioner Kalpana Kotagal, who voted against the rescission, called out the decision to revoke it entirely during the meeting, noting that even Trump’s order said it could be done in part and that a Texas federal court already struck portions dealing with transgender employees.

Although the document outlined protections for transgender workers, it was expansive and included examples based on case law on potential harassment of other groups of workers.

Lucas and Commissioner Brittany Panuccio said the rescission doesn’t mean the EEOC won’t enforce the law against harassment, but rather that the guidance isn’t a necessary document to have in place to do so.

In a LinkedIn post, Lucas highlighted an amicus brief the commission filed that argued a sexual harassment case should be heard in court.

“Contrary to some commentators, the Commission’s commitment to protecting employees from harassment remains alive and well,” she wrote. “My fellow Commissioners and I were pleased to unanimously approve this amicus brief.”

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