The Department of Labor is officially withdrawing the prior administration’s independent contractor rule, which would have made it easier for businesses to classify workers as independent contractors rather than as employees.
The DOL announced Wednesday that it is nullifying the rule, completed in early January that sought to clarify the standard for when a worker should be deemed an employee versus an independent contract under the Fair Labor Standards Act.
The FLSA includes provisions that require covered employers to pay employees at least the federal minimum wage for every hour they work and overtime compensation at not less than one-and-one-half times their regular rate of pay for every hour they work over 40 in a work week. FLSA protections do not apply to independent contractors.
The rule was set to be implemented Friday.
The DOL said it was withdrawing the rule because it was in tension with the FLSA’s text and purpose, as well as relevant judicial precedent. The department also noted that the rule would have narrowed the facts and considerations comprising the analysis of whether a worker is an employee or an independent contractor, resulting in workers losing FLSA protections.
“By withdrawing the Independent Contractor Rule, we will help preserve essential worker rights and stop the erosion of worker protections that would have occurred had the rule gone into effect,” U.S. Secretary of Labor Marty Walsh said in a statement. “Legitimate business owners play an important role in our economy but, too often, workers lose important wage and related protections when employers misclassify them as independent contractors. We remain committed to ensuring that employees are recognized clearly and correctly when they are, in fact, employees so that they receive the protections the Fair Labor Standards Act provides.”