Transportation Brief: DOL Independent Contractor Rule - And Now We Wait

by Shannon M. Cohen, Gregory M. Feary, Prasad Sharma

January 31, 2023

As most are aware, the Department of Labor (DOL) issued a proposed rule (the Proposed Rule) on worker status under the Fair Labor Standards Act (the FLSA) on October 13, 2022. In the Proposed Rule, the DOL (1) formally rescinds the prior rule promulgated in 2021 under the Trump Administration; and (2) replaces it with a multifactor economic realities test that tilts in favor of finding employee status under the FLSA when compared to the 2021 rule and even the legal status quo prior to the 2021 rule. The public comment period for the Proposed Rule closed on December 13, 2022. The real work for the DOL now begins.

Interest in the Proposed Rule is extremely high, with over 55,000 comments submitted. Among them were industry comments submitted by various entities, including Scopelitis (on behalf of several clients), American Trucking Associations, National Home Delivery Association, state trucking associations, REAL Women in Trucking, Western States Trucking Association, motor carriers, and independent contractor truck drivers writing in support of independent contractor status in the industry. Commenters opposing the proposal across industries argue that the Proposed Rule deviates from existing case law applying the FLSA, imposes greater costs than DOL calculated, and generally is improper under the law. Even the Small Business Administration’s Office of Advocacy, which held a roundtable with DOL officials and small businesses about the Proposed Rule, suggests the DOL should revisit the Proposed Rule due to the burdens the Proposed Rule would place on small businesses that contract with independent contractors and on independent contractors themselves.

There is no deadline for the DOL to publish a final rule. Any final rule will almost certainly be challenged by business groups as improperly promulgated. As a result, DOL is likely to take its time to review the comments and explain its consideration of them as part of the final rule. The final rule will likely take effect 60 days after publication in the Federal Register. Given that some courts have become more skeptical of deferring to agencies and considering the DOL’s change in views coincided with a political change, it is unclear to what extent courts will be influenced by any final rule that survives a legal challenge.
 

Scopelitis’ Transportation Brief® is intended as a report to our clients and friends on developments affecting the transportation industry. The published material does not constitute an exhaustive legal study and should not be regarded or relied upon as individual legal advice or opinion.

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