AGC Challenges DOL Independent Contractor Rule

This rule would revise standards for analyzing who is an employee or independent contractor under the Fair Labor Standards Act.

On April 26, AGC of America, and other business groups, jointly filed a friend-of-the-court amicus brief urging a Texas federal district court to declare unlawful a significant U.S. Department of Labor (DOL) final rule (2024) revising the standards for analyzing who is an employee or independent contractor under the Fair Labor Standards Act (FLSA). This final rule took effect March 11, 2024, and rescinded the Trump administration final rule (2021), replacing it with a more complex analysis for determining employee or independent contractor status.

The fate of the rule is uncertain. Recently filed lawsuits claim the DOL rulemaking is arbitrary and capricious, an abuse of discretion, and exceeds the agency’s statutory authority under the FLSA.

In support of the legal challenges to the rule, the AGC-supported coalition brief explains why the regulation fails to provide “fair notice” of the conduct necessary to avoid liability, including civil monetary penalties.  The brief also explains why the 2024 rule does not derive from a reasoned analysis of statutory text and legislative intent.

In addition to the lawsuits, Congress introduced AGC-supported resolutions to overturn the independent contractor final rule. The legislative effort is meant to complement the legal challenges which is the strongest effort to block the rule.

AGC has long called for federal clarification of the independent contractor status and preservation of legitimate independent contractor relationships, such as those that have historically existed in the construction industry. AGC previously submitted comments on the U.S. Department of Labor (DOL) Wage and Hour Division’s (WHD) proposed rule opposing the creation of this new standard for independent contractor classification and urged the DOL to withdraw the proposal.  AGC supported the Trump administration’s rule that adopted a consistent, clear and common-sense standard for determining independent contractor status under the FLSA and filed comments opposing the DOL move to withdraw the rule.

AGC’s involvement in this case was made possible thanks to your contributions to the Construction Advocacy Fund.  AGC will keep you updated on all lawsuits and congressional action related to this rule.

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