Independent Contractors

Status

On March 5, ABC, its Southeast Texas chapter, the Coalition for Workforce Innovation, the Financial Services Institute, the American Trucking Associations, the U.S. Chamber of Commerce, the National Retail Federation and the National Federation of Independent Business filed an amended complaint in the U.S. District Court for the Eastern District of Texas arguing that the U.S. Department of Labor’s Employee or Independent Contractor Classification Under the Fair Labor Standards Act final rule is unlawful and a violation of the Administrative Procedure Act. The district court will review the complaint and response from the U.S. Department of Justice. The final rule is effective March 11. 

The 2024 final independent contractor rule is confusing, vague and unworkable, and will harm construction workers classified as independent contractors because they will lose crucial opportunities for work. Further, the difficult-to-interpret standards in this final rule strip independent contractors of basic freedoms and rights to choose how they work. Replacing the commonsense 2021 final rule was the wrong move by the U.S. Department of Labor and has created an ambiguous standard for determining employee or independent contractor status under the Fair Labor Standards Act,” said Ben Brubeck, ABC vice president of regulatory, labor and state affairs. Read the business coalition’s statement.

Separately, on March 6, ABC sent a letter to Congress urging members to pass a Congressional Review Act resolution to nullify the independent contractor final rule.

On Jan. 9, the U.S. Department of Labor’s Wage and Hour Division announced the final rule on Employee or Independent Contractor Classification Under the Fair Labor Standards Act, which rescinds the ABC-supported 2021 final rule and replaces it with a confusing multifactor analysis to determine whether a worker is an employee or an independent contractor.

Immediately following the release of the 2024 final rule, ABC issued a statement opposing it, saying "it will cause workers who have long been properly classified as independent contractors in the construction industry to lose opportunities for work."

On Jan. 10, ABC, its Southeast Texas chapter, the Coalition for Workforce Innovation and the Financial Services Institute filed a motion in the U.S. Court of Appeals for the 5h Circuit requesting that it lift the stay of appeal and remand the case to the U.S. District Court for the Eastern District of Texas, Beaumont Division so that the district court may consider whether the 2024 final rule complies with the Administrative Procedure Act in its attempt to rescind and replace the current 2021 final rule. In 2022, the district court found that the DOL violated the APA when it first attempted to delay, and latter attempted to withdraw the 2021 final rule; the court vacated these efforts.

“The Biden administration cannot be allowed to undermine flexible work opportunities for millions of Americans who choose to work independently,” said Ben Burbeck, ABC vice president of regulatory, labor and state affairs. Read the business coalition’s statement.

Learn more about the 2024 final rule. Also, watch the ABC-members only archived webinar in the Academy, "Learn What the DOL's Final Independent Contractor Rule Means for ABC Members."

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.