WHD Delays Final Rule Defining Independent Contractor Status under the FLSA

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Earlier this month, the Wage and Hour Division (WHD) announced they would delay the final rule entitled “Independent Contractor Status under the Fair Labor Standards Act” to allow WHD additional opportunity for review.

The final rule was published on January 7, 2021. It had revised the interpretation of independent contractor status under the FLSA to help guide companies struggling with FLSA compliance and how to define an employee vs. an independent contractor. This rule was to take effect on March 8, 2021. However, as expected, the incoming Biden administration challenged this final rule instituting the President’s “Regulatory Freeze Pending Review,” an action that proposes to delay the rule until May 7, 2021.

The WHD also announced it had withdrawn two opinion letters about policies under the Fair Labor Standards Act (FLSA), FLSA2019-6 and FLSA 2019-10, both of which address essential aspects of the final rule.

The FLSA2019-6 opinion letter addressed the same issue under consideration by the WHD; independent contractor status under the FLSA. Therefore, the WHD is removing this opinion letter consistent with its proposed delay of the final rule. The FLSA2019-10 opinion letter has also been withdrawn. Several Courts have declined using this letter noting it was inconsistent with WHD’s regulations and because the letter did not adequately explain WHD’s change in position. Instead, these courts continued to follow WHD’s longstanding prior position.

These withdrawals are official rulings of the WHD, and these letters may not be relied upon as a statement of agency policy as of the dates of withdrawal.