As expected, the U.S. Department of Labor (DOL) has repealed the Trump-era rule regarding classification of independent contractors.  As we discussed here, the Trump-era rule codified the “economic realities test” for use when analyzing whether a worker is an employee or an independent contractor under the Fair Labor Standards Act (FLSA).

Labor advocates criticized the rule as favoring classification of workers as independent contractors as opposed to employees; only employees are protected by most employment-related laws, including the FLSA.  Under the FLSA, employees – but not independent contractors – are entitled to minimum wage, overtime pay and other protections.  Instead, independent contractors have comparatively greater flexibility over how, when and where they perform their work as compared to employees, and can work for multiple companies.

In repealing the Trump-era rule, the Biden DOL stated that it “believes that the rule is inconsistent with the FLSA’s text and purpose and would have a confusing and disruptive effect on workers and businesses alike due to its departure from longstanding judicial precedent.”

It remains to be seen whether the DOL will propose a new independent contractor rule.  If it does, the rule may look like the “ABC” test that is used in some states such as California, Illinois, Massachusetts and New Jersey, and which is generally considered to be employee-friendly and hostile to independent contractors.  In short, the ABC test comes with a presumption that a worker is an employee and puts the burden on the employer to demonstrate the worker is free from its direction and control and is in fact an independent contractor.  President Biden has expressed support for the ABC test, but there are no indications yet that the DOL will propose a rule to codify it.  We will continue to monitor these developments.

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Photo of Adam Belzberg Adam Belzberg

Adam Belzberg represents and advises employers, from small businesses to international corporations, in all aspects of labor and employment law. He has particular experience representing employers in the agriculture, construction, and energy industries. Adam’s litigation experience includes class action and individual litigation arising…

Adam Belzberg represents and advises employers, from small businesses to international corporations, in all aspects of labor and employment law. He has particular experience representing employers in the agriculture, construction, and energy industries. Adam’s litigation experience includes class action and individual litigation arising under various state and federal employment laws. He also provides daily advice and counsel to employers on employment issues including employment policies, non-compete, non-solicitation, and trade secret issues and regularly represents management before the NLRB in cases involving union representation and unfair labor practices, negotiating collective bargaining agreements, and arbitrating labor and employment disputes.

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Photo of John Dudrey John Dudrey

John Dudrey is a partner in the firm’s Labor & Employment group. His practice focuses on wage and hour compliance, representation of employers with unionized workforces, and complex advice and counsel matters, in addition to general labor and employment practice.

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John Dudrey is a partner in the firm’s Labor & Employment group. His practice focuses on wage and hour compliance, representation of employers with unionized workforces, and complex advice and counsel matters, in addition to general labor and employment practice.

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Photo of Chris Wall Chris Wall

Chris Wall is a trial lawyer, managing all phases of litigation, including trials and appeals in state and federal courts as well as arbitrations and administrative proceedings. He uses insights from litigation to provide his clients with strategic advice on how to avoid…

Chris Wall is a trial lawyer, managing all phases of litigation, including trials and appeals in state and federal courts as well as arbitrations and administrative proceedings. He uses insights from litigation to provide his clients with strategic advice on how to avoid litigation before it starts and resolve disputes in the most cost-effective manner. He works with businesses to navigate a wide variety of matters including labor issues, wage & hour, wrongful termination, and discrimination claims. Chris draws on his experience as a judicial extern to the Honorable John Coughenour, as a law clerk for the Alaska Supreme Court, and in commercial and environmental litigation to meet the needs of his clients.

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Photo of Ryan Kunkel Ryan Kunkel

Ryan Kunkel, an associate in Stoel Rives’ Labor & Employment group, helps employers resolve employment-related disputes in litigation and counsels clients to help prevent those disputes in the first place. His practice also includes helping management resolve complex labor disputes, including organizing…

Ryan Kunkel, an associate in Stoel Rives’ Labor & Employment group, helps employers resolve employment-related disputes in litigation and counsels clients to help prevent those disputes in the first place. His practice also includes helping management resolve complex labor disputes, including organizing drives, NLRB proceedings, and work stoppages.

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