Written by Todd H. Lebowitz from BakerHostetler on November 21, 2024
Contingent Workforce Newsletter Series – November 2024
The laws and tests related to independent contractors and joint employment are constantly changing. It’s hard to keep track, let alone stay compliant! In each edition of this newsletter, we’ll pick a new topic that’s undergoing change and let you know where things stand. This week we examine the NLRB’s new joint employer rule.
The DOL’s New Independent Contractor Rule: What’s the Status?
What’s the new rule? In January 2024, the DOL issued a new rule (the 2024 rule) that updates the test for determining whether someone is an employee or an independent contractor under the Fair Labor Standards Act (FLSA). The new test is a multifactor balancing test. The test uses familiar looking factors but makes it harder to support contractor status under each factor. You can read more here.
What’s the status of the rule? The 2024 rule is in effect. But there are pending court challenges.
What is the status of each court challenge? The challenge receiving the most attention was brought by a coalition of business groups that is seeking an order invalidating the new rule. Their case is pending in the Eastern District of Texas. The case has a 2021 filing date because the dispute began with a challenge to earlier DOL activity. The effort to invalidate the 2024 rule, though, is described in a Second Amended Complaint, filed in March. The case is being actively litigated and cross-motions for summary judgment have been filed. Coalition for Workforce Innovation v. Su, Case No. 1:21-CV-130 (E.D. Tex.).
A lawsuit brought by freelancers in the Northern District of Georgia was dismissed in October for lack of standing. The case is now on appeal before the 11th U.S. Circuit Court of Appeals. Warren et al. v. Su, 2:24-CV-0007 (N.D. Ga.); Case No. 24-13505-D (11th Cir.).
A challenge brought by truckers in the Eastern District of Louisiana is now pending before the Fifth Circuit. The trial court denied a motion for a temporary restraining order and the plaintiffs appealed. Briefs are being filed with the Fifth Circuit. Frisard’s Transp., LLC v. DOL, 2:24-CV-347 (E.D. La.); Case No. 24-30223 (5th Cir.).
A fourth case is pending in the Middle District of Tennessee, where two freelance writers are challenging the rule on the grounds that its enactment violates the Administrative Procedure Act. Several motions are pending and awaiting ruling, including the plaintiffs’ motions for preliminary injunction and summary judgment and the DOL’s motion to dismiss. Littman and Chesak v. DOL, 3:24-CV-194 (M.D. Tenn.).
What’s the scope of the test? The DOL’s 2024 rule describes only how the DOL will determine independent contractor status under the FLSA. It does not apply to any other laws. It is unclear whether any courts will apply the new test, since courts already have decades of experience interpreting classification disputes under the FLSA. The FLSA has not changed; the only thing that has changed is how the DOL says it will interpret this law, which was enacted in 1938.
