The U.S. Department of Labor’s Wage and Hour Division’s proposed rule on independent contractors under the Fair Labor Standards Act is currently under review at the Office of Information and Regulatory Affairs at the Office of Management and Budget and the content of the proposal has not been made public. The review at OIRA is usually the final step in the process before a rule is officially published in the Federal Register.

On July 29, ABC met with OMB and DOL staff to discuss its concerns with the new proposed rule. ABC explained that independent contractors are an essential lifeline for the construction industry. They provide specialized skills, entrepreneurial opportunities and stability during fluctuations of work common to construction. Any effort by the DOL to undermine that status in this rulemaking will likely be legally challenged by ABC.

Background:

In January 2021, the DOL under President Trump issued an independent contractor final rule, which ABC strongly supported. Soon after, the DOL under President Biden issued a proposed rule to withdraw the final rule and ABC submitted comments opposing it. On March 26, ABC, the ABC Southeast Texas Chapter and the Coalition for Workforce Innovation filed suit against the DOL. In May, the DOL rescinded the final rule.

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.

On June 3, the DOL stated that it planned to engage in rulemaking on determining employee or independent contractor status under the FLSA. Once a proposed rule is published in the Federal Register, there will be a notice and comment period allowing the public to review the proposal and provide formal written comments.  

ABC will be commenting on and closely monitoring the DOL’s latest rulemaking to ensure compliance with the district court’s order, which remains in effect.