October 23, 2021

Volume XI, Number 296

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Business Groups Challenge Biden Administration’s Delay of Trump-era Independent Contractor Rule

In a complaint filed on March 26, 2021, business groups challenged a U.S. Department of Labor March 4, 2021 final rule to delay the effective date of the Trump-era regulation on independent contractor classification.  As we previously reported, that Trump-era rule, which was finalized two weeks before President Biden took office, was initially scheduled to take effect on March 8, 2021 but was then delayed until May 7, 2021.

The business groups argue that the DOL, in violation of the Administrative Procedure Act’s notice and comment rulemaking requirements, failed to provide a meaningful comment period before enacting the March 4, 2021 final rule to delay the rule’s effective date.  The business groups also allege that the DOL failed to offer substantive justification in enacting the final rule to delay and acted arbitrarily and capriciously.  The lawsuit seeks a declaratory judgment declaring the March 4, 2021 final rule to delay invalid, a permanent injunction against the final rule to delay, and a declaration that the rule went into effect on March 8, 2021.

The business groups further argue that the DOL Wage and Hour Division’s March 11, 2021 Notice of Proposed Rulemaking (“NPRM”), which subsequently withdrew the delayed Trump-era independent contractor rule, should be withdrawn.  The business groups assert that because the NPRM seeking to withdraw the independent contractor rule relies upon the improper March 4, 2021 final rule to delay, the NPRM itself is invalid.

It’s certainly not uncommon for an incoming Presidential administration to freeze lame-duck regulatory activity initiated by an outgoing administration from another political party; for an incoming administration to revoke and revise legacy rulemaking; and for stakeholders to challenge rulemaking through litigation.  We’ll continue to monitor the activity around the federal independent contractor rule, which many businesses across the country are following with keen interest.

© 2021 Proskauer Rose LLP. National Law Review, Volume XI, Number 90
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About this Author

Allan Bloom, Litigation Attorney, Proskauer Rose Law Firm
Partner

Allan Bloom is an experienced trial lawyer who represents management in a broad range of employment and labor law matters. He has successfully defended a number of the world’s leading financial services, investment management, technology, consumer products, telecommunications, publishing, insurance, construction, and lodging companies, as well as global law firms and cultural institutions, against claims for unpaid wages, employment discrimination, breach of contract, and wrongful discharge, both at the trial and appellate court levels.

212.969.3880
Eric D. Novak Labor & Employment Proskauer Rose New Orleans, LA
Associate

Eric Novak is an associate in the Labor & Employment Law Department and a member of the Employment Litigation & Arbitration Group.

Eric received his J.D. from Tulane Law School, where he was a recipient of the Jackson-Ryan Pro Bono Advocate Award and a member of the American Inn of Court, Tulane Law Chapter. While in law school, he served as a judicial extern to the Honorable James L. Dennis at the United States Court of Appeals for the Fifth Circuit and the Honorable Sarah S. Vance and the Honorable Nannette Jolivette Brown, both at the United States District Court for the...

504.310.2072
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