US: Biden Administration Freezes Proposed Regulations on Worker Classification

While the US Department of Labor (DOL) issued its Final Rule, delineating independent contractors from employees under the Fair Labor Standards Act, the newly appointed Biden Administration put a halt on its March 8 effective date, as well as the advancement of other rules that had yet to be published in the Federal Register. The January 20 order gives leaders time to review pending rules from the prior Administration. A Biden-designated agency head will now need to approve the rule before it can move forward. This process and delay are typical in a Presidential transition.

The DOL’s Final Rule had aimed to remove prior ambiguity companies face around worker classification by “sharpening the test to determine who is an independent contractor … while recognizing and respecting the entrepreneurial spirit of workers who choose to pursue the freedom associated with being an independent contractor,” according to US Labor Secretary Eugene Scalia in a DOL January 6 statement.

(Relatedly, the California Supreme Court acted on January 14, 2021, to uphold its ruling that the stringent ABC test to determine worker classification applies retroactively.)

Takeaway: The Biden Administration’s order suggests a 60-day waiting period during which agencies should postpone rules’ effective dates, followed by a 30-day public comment period. In the meantime, companies should continue to prepare for any costs and impacts on hiring that could come from any failure to comply with the pending rule. Further, companies should look for expertise from a workforce partner that can help them quickly classify workers they engage and review those already functioning as flexible or permanent staff to ensure accurate classification.

US: Biden Administration Freezes Proposed Regulations on Worker Classification

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