DOL Proposes Delay of Independent Contractor Rule Effective Date

U.S. Labor Department (DOL) has proposed extending the effective date of the Independent Contractor (IC) Rule finalized on January 7 under the Trump administration. This would allow DOL to have more time to review the rule. The final regulation reaffirmed the “economic reality” test when determining whether a worker is an independent contractor or an employee under the Fair Labor Standards Act (FLSA).

The proposal published by the DOL’s Wage and Hour Division on February 5 would extend the rule’s effective date by 60 days, in line with President Joe Biden’s regulatory freeze memo. The IC rule would have taken effect on March 8 but is now proposed to be delayed until May 7, 2021. The DOL is accepting comments on the proposed effective date change as a matter of technical formality.

The IC rule is eligible for rescission (cancellation) under the Congressional Review Act (CRA). If Congress does not act, the Biden administration will likely repeal the rule altogether by advancing its own independent contractor proposal.

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