The U.S. Labor Department has extended by 15 days the comment period on its recent independent contractor proposal, after complaints from critics who said the initial time frame for comments was too short.
The Proposal
The Notice of Proposed Rulemaking (NPRM) released Oct. 11 would modify Wage and Hour Division regulations to revise its analysis for determining whether a person should be classified as an employee or independent contractor under the Fair Labor Standards Act (FLSA). According to the DOL, the department’s approach seeks to be more consistent with the courts’ FLSA interpretation and the Act’s text and purpose, contending that the proposal would “preserve essential worker rights and provide consistency for regulated entities.”
It also would rescind and replace the existing 2021 test used to determine worker classification as either an independent contractor or an employee that was finalized under the then-Trump administration.
The decision to extend the comment period follows push back from a number of business groups and lawmakers looking for more time to review the 184-page proposal. The Labor Department notes that, following publication of the NPRM, “the Department received requests to extend the NPRM’s comment period. After consideration of the extension requests, the Department has decided to extend the period for submitting public comment for 15 additional days (i.e., until December 13, 2022), lengthening the comment period to 61 days total.”
The notice comments that “the Department takes seriously its obligation to consider any ‘written data, views, or arguments’ submitted by commenters and looks forward to reviewing all feedback received on the NPRM before the close of the comment period.”
Some Background
The DOL had previously tried to delay and rescind the Trump-era rule on independent contractors, but a March 2022 ruling by the U.S. District Court for the Eastern District of Texas ordered the reinstatement of the 2021 rule, holding that the Biden-led DOL failed to properly follow the Administrative Procedure Act when it withdrew the rule.
Co-plaintiffs that had challenged the DOL’s delay and withdrawal of the rule included the Financial Services Institute (FSI); the Associated Builders and Contractors; the Associated Builders and Contractors of Southeast Texas; and the Coalition for Workforce Innovation.
The existing 2021 rule, which applies to financial advisors operating as independent contractors, had clarified the “economic reality test” to determine whether a worker is an employee or independent contractor under the FLSA by addressing the distinction of whether a worker is dependent on a particular individual, business or organization for work or is in business for him- or herself and, thus, is an independent contractor. The rule had sharpened this inquiry into five distinct factors, instead of the five or more overlapping factors used by most courts and previously the DOL.
Once again, the new deadline for public input is Dec. 13.
