Washington – The U.S. Department of Labor has announced plans to rescind two Trump-era rules that weakened wage theft protections under the Fair Labor Standards Act.
The first proposed rule change is to the Independent Contractor Final Rule issued by the Trump DOL on issued on Jan. 7, 2021. The DOL said it was rescinding the rule for several reasons, including the following:
- The rule adopted a new “economic reality” test to determine whether a worker is an employee or an independent contractor under the Fair Labor Standards Act (FLSA).
- Courts and the department have not used the new economic reality test, and FLSA text or longstanding case law does not support the test.
- The rule would narrow or minimize other factors considered by courts traditionally; making the economic test less likely to establish that a worker is an employee under the FLSA.
Among its provisions, the FLSA requires covered employers to pay employees at least the federal minimum wage for every hour worked and overtime premium pay of at least one and one-half times their regular rate of pay for every hour worked over 40 in a workweek. An independent contractor has no FLSA protections.
The second proposed change would rescind a current regulation on joint employer relationships under the FLSA that took effect on March 16, 2020.
In February 2020, 17 states and the District of Columbia filed a lawsuit in the U.S. District Court for the Southern District of New York against the DOL, arguing that the Joint Employer Rule violated the Administrative Procedure Act. The court vacated the majority of the Joint Employer Rule on Sept. 8, 2020, stating that the rule was contrary to the FLSA and was “arbitrary and capricious” due to its failure to explain why the department had deviated from all prior guidance or consider the effect of the rule on workers.
“While legitimate independent contractors are an important part of our economy, the misclassification of employees as independent contractors denies workers access to critical benefits and protections the law provides,” said said Jessica Looman, principal deputy administrator of the DOL’s Wage and Hour Division. Removing the unduly narrow joint employer standard, she said, “would protect more workers’ wages and improve their well-being and economic security.”
SEEKING PUBLIC COMMENT
The DOL is inviting comments from the public on both proposed rules. You can leave a comment before April 12 at www.regulations.gov.
Comment, including any personal information provided, will become part of a public record, and will be posted, along with any personal information provided, at www.regulations.gov.