Background
On May 1, 2025, ABC applauded the DOL’s announcement that it will pause enforcement of the Biden administration’s 2024 Employee or Independent Contractor Classification Under the Fair Labor Standards Act final rule in current enforcement matters while the agency reviews this regulation. ABC, its Southeast Texas chapter, the Coalition for Workforce Innovation and five other organizations are currently challenging the 2024 final rule in federal court, arguing that the 2024 final rule is unlawful and a violation of the Administrative Procedure Act. The final rule went into effect on March 11, 2024.
The 2024 final rule creates an ambiguous and difficult-to-interpret standard for determining independent contractor status. Under the rule’s multifactor test, employers are forced to guess which factors should be given the greatest weight in making the determination. Instead of promoting much-needed economic growth and protecting legitimate independent contractors, the final rule results in more confusion and expensive, time-consuming, unnecessary and often frivolous litigation, as both employers and workers will not understand who qualifies as an independent contractor.
Regrettably, the confusion and uncertainty resulting from the final rule causes workers who have long been properly classified as independent contractors in the construction industry to lose opportunities for work. Legitimate independent contractors are a vital part of the construction industry, providing specialized skills, entrepreneurial opportunities and stability during fluctuations of work common to the industry. They play an important role for large and small contractors, delivering construction projects safely, on time and on budget for their government and private customers.
ABC continues to support the Trump administration’s 2021 final rule, which simplified and clarified the factors for determining when a worker is an independent contractor versus an employee under the FLSA. The Biden-era DOL froze and then rescinded the 2021 rule over the opposition of ABC and other industry associations. In 2022, the U.S. Court for the Eastern District of Texas found that the DOL violated the APA when it first attempted to delay and later withdraw the 2021 final rule.
Desired Outcome:
Replacing the commonsense 2021 final rule was the wrong move by the Biden-era DOL. The 2024 final 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 standard strips independent contractors of basic freedoms and rights to choose how they work.
Following the completion of the litigation, regardless of which way the courts decide, ABC urges the DOL to rescind the Biden administration’s independent contractor final rule and reinstate the 2021 Trump independent contractor final rule.