DOL announces withdrawal of Trump administration independent contractor rule

On May 5, 2021, the Department of Labor (DOL) confirmed it is withdrawing the rule promulgated under the Trump administration addressing how to determine whether a worker is an employee or independent contractor under the Fair Labor Standards Act (FLSA). The rule was previously slated to take effect March 8, 2021, but was delayed by the DOL after President Biden took office until May 7, 2021. Now, the withdrawal of the rule will be effective immediately upon publication in the Federal Register, or May 6, 2021.

In withdrawing the rule, the DOL stated that it believes the rule was inconsistent with the FLSA’s text and purpose and would have a disruptive effect due to a departure from judicial precedent. The DOL has not yet indicated whether it intends to further pursue standardizing the test for determining independent contractor status under the FLSA. For now, employers should continue complying with state and local laws regarding independent contractor classifications in the jurisdictions in which they have workers.