Biden’s Delay of Trump Gig Contractor Rule Challenged in Court

Business groups are mounting a legal challenge to the Biden Labor Department’s decision to delay a Trump-era rule that would make it easier for businesses to classify workers as independent contractors.

In a complaint filed Friday in the U.S. District Court for the Eastern District of Texas, Beaumont Division, the Coalition for Workforce Innovation alleged the agency’s decision to punt implementation of the Trump rule violates the Administrative Procedure Act.

The U.S. Labor Department didn’t provide a meaningful comment period or substantive justification for its decision to delay that rule, which was finalized two weeks before former President Donald Trump left office but has yet to take effect, the coalition alleges.

• The Trump administration’s final rule, issued Jan. 6, would have made it easier for businesses to classify workers as independent contractors rather than employees who must earn minimum wages and overtime.
• The lawsuit seeks a permanent injunction against the delay and a declaration that the Trump-era rule went into effect March 8.
• President Joe Biden’s Labor Department proposed eliminating the rule in early March, and is now collecting public input on that proposal.
• The agency’s proposal to withdraw the rule relied on the improper delay in stating the rule hadn’t yet gone into effect, and is therefore invalid, the complaint alleges.
• Biden-appointed leaders at DOL cited concerns that the prior rulemaking was inconsistent with U.S. Supreme Court precedent and the purpose of the Fair Labor Standards Act. It did not, however, announce plans for an affirmative policy of its own on how to interpret worker status for purposes of the FLSA.
• The Department of Labor didn’t immediately respond to Bloomberg Law’s request for comment Friday afternoon.
• Littler Mendelson PC represents the business groups.

The case is Coalition For Workforce Innovation vs. U.S. Department of Labor, E.D. Tex., No. 1:21-cv-00130, 3/26/21