{"id":10614,"date":"2026-05-08T11:42:01","date_gmt":"2026-05-08T11:42:01","guid":{"rendered":"https:\/\/usatrustedlawyers.com\/blog\/department-of-labor-proposes-to-withdraw-trump-administration-worker-classification-rule\/"},"modified":"2026-05-08T11:42:01","modified_gmt":"2026-05-08T11:42:01","slug":"department-of-labor-proposes-to-withdraw-trump-administration-worker-classification-rule","status":"publish","type":"post","link":"https:\/\/usatrustedlawyers.com\/blog\/department-of-labor-proposes-to-withdraw-trump-administration-worker-classification-rule\/","title":{"rendered":"Department of Labor Proposes to Withdraw Trump Administration Worker-Classification Rule"},"content":{"rendered":"\n
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On March 12, 2021, the U.S. Department of Labor (the \u201cDepartment\u201d) published a notice of proposed rulemaking to withdraw the Trump administration\u2019s final rule (the \u201cRule\u201d) for classifying workers as employees or independent contractors under the Fair Labor Standards Act (the \u201cFLSA\u201d or the \u201cAct\u201d). The Rule had been published but had not yet gone into effect. We previously discussed the Rule here. Had it gone into effect, the Rule would have established a new worker-classification test focusing on two \u201ccore factors\u201d: (1)\u00a0\u201cthe nature and degree of control over the work\u201d; and (2) \u201cthe individual\u2019s opportunity for profit or loss.\u201d The definition of \u201cemployee\u201d is significant because the FLSA\u2019s minimum wage and overtime requirements apply only to nonexempt employees.<\/p>\n

The Rule would have been the first agency rule to define the term \u201cemployee\u201d under the FLSA. Since the Act was passed in 1938, courts have developed a multifactor \u201ceconomic reality\u201d test for classifying workers as employees or independent contractors. In 2015, the Department issued an Administrative Interpretation (the \u201cGuidance\u201d) providing the Department\u2019s views on six factors that courts typically use when applying the economic reality test. We previously discussed the Guidance here. The Trump administration\u2019s Rule, which created a new version of the economic reality test that focuses on two \u201ccore factors,\u201d was issued on January\u00a07, 2021, thirteen days before the end of former President Trump\u2019s term. After his inauguration on January\u00a020, President Biden issued a memorandum directing department and agency heads to impose a \u201cregulatory freeze\u201d on Trump-era rules that had not yet taken effect. At the time, the Rule was scheduled to take effect on March\u00a08, 2021. On March\u00a04, the Department delayed the Rule\u2019s effective date to May\u00a07.<\/p>\n

Explaining its proposal to withdraw the Rule, the Department argued that the Rule\u2019s selection of two core factors, which are usually dispositive when they both point toward the same classification, \u201cmay be inconsistent with the position, expressed by the Supreme Court and federal courts of appeals, that no single factor in the analysis is dispositive.\u201d The Department stated that \u201cthere is no clear statutory basis for such a predetermined weighting of the factors,\u201d that worker classification depends on \u201ceconomic reality\u201d rather than \u201ctechnical concepts,\u201d and that courts have looked to the \u201ctotality of the circumstances\u201d to determine whether workers are employees or independent contractors. The Department also argued that, in elevating \u201ccontrol\u201d as one of two \u201ccore factors\u201d that carry more weight than the other factors, the Rule undermines the statutory intent for the \u201cemployee\u201d classification to cover a broader range of workers than those who would be covered under the common law control test. As to the other factors, the Department stated that it \u201cproposes to withdraw the Rule in part because it eliminates from the economic realities test several facts and circumstances that have deep roots in both the courts\u2019 and the [Wage and Hour Division\u2019s] application of the analysis.\u201d Finally, the Department stated that it is \u201cconcerned, as a policy matter, that the Rule\u2019s narrowing of the analysis would result in more workers being classified as independent contractors not entitled to the FLSA\u2019s protections.\u201d<\/p>\n

The notice of proposed rulemaking states that withdrawal of the Rule \u201cwould allow [the Wage and Hour Division] an additional opportunity to consider legal and policy issues relating to the FLSA and independent contractors.\u201d However, the notice also states that the Department \u201cis not proposing any regulatory guidance to replace the guidance that the Independent Contractor Rule would have introduced as Part\u00a0795.\u201d Candidate Biden promised to establish \u201ca [worker-classification] standard modeled on the ABC test,\u201d which deems workers to be employees unless they satisfy each of three elements (the \u201cABCs\u201d), for \u201call labor, employment, and tax laws.\u201d But Biden\u2019s campaign website states that he will establish such a standard by \u201cwork[ing] with Congress.\u201d The website does not mention administrative rulemaking as a potential mechanism for enacting the ABC test. Additionally, several of the notice\u2019s reasons for withdrawing the Rule\u2014for example, that \u201cthe Rule\u2019s approach is inconsistent with the court-mandated totality-of-the-circumstances approach to determining whether a worker is an employee or an independent contractor\u201d\u2014suggest that the Department is disinclined to replace the multifactor economic realities test with the three-element ABC test through administrative rulemaking. Notably, on March\u00a09, 2021, the House of Representatives passed the Protecting the Right to Organize Act, which imports the ABC test into the National Labor Relations Act. That bill is now before the Senate, but the provision enacting the ABC test does not affect the Fair Labor Standards Act.<\/p>\n

Public comments on the Department\u2019s proposal to withdraw the Rule are due by April\u00a012.<\/p>\n<\/p><\/div>\n<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"

On March 12, 2021, the U.S. Department of Labor (the \u201cDepartment\u201d) published a notice of proposed rulemaking to withdraw the Trump administration\u2019s final rule (the \u201cRule\u201d) for classifying […]<\/p>\n","protected":false},"author":1,"featured_media":10615,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[2585,462,3276,1542,372,409,5083,7897],"class_list":["post-10614","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-lawyers","tag-administration","tag-department","tag-labor","tag-proposes","tag-rule","tag-trump","tag-withdraw","tag-workerclassification"],"_links":{"self":[{"href":"https:\/\/usatrustedlawyers.com\/blog\/wp-json\/wp\/v2\/posts\/10614","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/usatrustedlawyers.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/usatrustedlawyers.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/usatrustedlawyers.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/usatrustedlawyers.com\/blog\/wp-json\/wp\/v2\/comments?post=10614"}],"version-history":[{"count":0,"href":"https:\/\/usatrustedlawyers.com\/blog\/wp-json\/wp\/v2\/posts\/10614\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/usatrustedlawyers.com\/blog\/wp-json\/wp\/v2\/media\/10615"}],"wp:attachment":[{"href":"https:\/\/usatrustedlawyers.com\/blog\/wp-json\/wp\/v2\/media?parent=10614"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/usatrustedlawyers.com\/blog\/wp-json\/wp\/v2\/categories?post=10614"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/usatrustedlawyers.com\/blog\/wp-json\/wp\/v2\/tags?post=10614"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}