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Law Alert: DOL Opinion Letters on Gig Economy Workers and Compensability of Sleeper Berth Time Withdrawn

by Shannon M. Cohen, Christopher J. Eckhart, Gregory M. Feary, James H. Hanson, E. Ashley Paynter, Prasad Sharma, Adam C. Smedstad

February 19, 2021

Today, the U.S. Department of Labor’s Wage and Hour Division (WHD) withdrew an Opinion Letter issued in 2019 deeming gig economy workers engaging through a virtual marketplace platform to be independent contractors under the Fair Labor Standards Act’s economic realities test (FLSA-2019-6). WHD proffered that the Opinion Letter addressed the same issue covered by the recently finalized, and now delayed, regulation on “Independent Contractor Status Under the Fair Labor Standards Act,” so it was withdrawing as it reviewed and considered the regulation.

The Opinion Letter emphasized economic dependence as the touchstone. It further viewed gig service providers as working for consumers through the virtual marketplace and not for the virtual marketplace. In so doing, the Opinion Letter relied on court decisions and prior WHD Opinion Letters but did not rely on the regulation, which was proposed over a year later. Therefore, the withdrawal suggests a more sweeping, employee-centric approach that goes beyond the favorable changes set forth in the new regulation. Although the broad legal impact is limited, because Opinion Letters are not binding on courts, it is a bellwether for the WHD’s approach to independent contractor issues.

WHD also withdrew an Opinion Letter issued in 2019 that deemed time during which drivers are relieved of all duties and permitted to sleep in the sleeper berth is presumptively non-compensable (FLSA-2019-10). Concurrent with the withdrawal, WHD reinstated two prior Opinion Letters that the 2019 Opinion Letter withdrew. The earlier letters opined on the existence of limits related to when and how much sleeper berth time can be non-compensable. The extent to Thich sleeper berth time is compensable remains a frequently litigated issue in federal courts all over the country. Careful attention to the details of hours of work policies can help to strengthen a carrier’s defense to claims related to the compensability of sleeper berth time.

For additional information on the IC rule, please contact Greg FearyShannon Cohen, or Prasad Sharma. For additional information on questions related to the compensability of sleeper berth time, please contact James HansonAdam SmedstadChristopher Eckhart, or Ashley Paynter.