Last Thursday, the U.S. Department of Labor (DOL) announced it will no longer enforce the rule on independent contractor classification under the Fair Labor Standards Act (FLSA). The rule rescinded a 2021 rule published in the final days of the first Trump administration, and imposed a more stringent standard for classifying workers as independent contractors under the FLSA, resulting in more workers being classified as employees rather than independent contractors.
Although the rule has not been formally rescinded, the DOL plans to reconsider and likely replace it. The DOL is now reverting to prior guidance, specifically the 2008 Fact Sheet #13 and a 2019 Opinion Letter focused on virtual marketplace platforms. Employers should adjust accordingly, while complying with varying and evolving contractor classification standards under state and local laws.
Also, Last Tuesday, the U.S. Court of Appeals for the Fifth Circuit agreed to pause the appeal regarding the overtime rule, following an unopposed motion from the U.S. Department of Labor. In November 2024, the U.S. District Court for the Eastern District of Texas struck down the rule, ruling that each aspect of it was unlawful because it exceeded the DOL’s statutory authority, and therefore invalidated the rule across the country. The case will remain on hold for 120 days, with the Department required to submit status reports every 60 days during this period.