Independent Contractors

Status

In January 2021, the Trump-era DOL issued an independent contractor final rule under the Fair Labor Standards Act, which ABC strongly supported. The 2021 final rule placed emphasis on two “core” factors—a worker’s control over their work and their opportunity for profit or loss, both of which are paramount in making an independent contractor determination.

Soon after the 2021 final rule was issued, the DOL froze and then rescinded the Trump rule over the opposition of ABC and other industry associations. On March 26, 2021, ABC, the ABC Southeast Texas chapter and the Coalition for Workforce Innovation filed suit against the DOL. On March 15, 2022, the U.S. District Court for the Eastern District of Texas dealt a blow to the Biden administration’s efforts to delay and rescind the Trump administration’s 2021 independent contractor final rule in that case. Under a decision applauded by ABC, the ABC supported rule went into effect as scheduled on March 8, 2021, and remains in effect today.

The DOL filed an appeal to the Fifth Circuit Court of Appeals, which remains pending. But on Oct. 11, 2022, the DOL announced a new proposed rule to rescind and replace the ABC-supported 2021 final rule on independent contractors. The appeal is now in abeyance awaiting the DOL’s final rule.  

On Dec. 13, ABC submitted comments opposing the DOL’s new proposed rule. In the comments, ABC argued that the proposal creates an ambiguous and difficult-to-interpret standard under which employers will be forced to guess which factors will be more important in the determination and how to analyze the facts of their contractual relationships under multiple factors. This confusion will lead to more litigation, as employers and workers alike will not understand who qualifies as independent contractors.

On Sept. 28, OSHA sent its final rule to OMB’s OIRA for review. The text has not yet been made public.

Desired Outcome

Independent contractors are an essential lifeline to the construction industry, and any effort by the DOL to undermine that status will likely be challenged by the coalition of which ABC is a part.