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Proposed Rulemaking (“NPRM”), which subsequently withdrew the delayed Trump-era independent contractor rule, should be withdrawn.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.

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Proskauer’s Wage and Hour Group is comprised of seasoned litigators who regularly advise the world’s leading companies to help them avoid, minimize, and manage exposure to wage and hour-related risk.  Subscribe to our wage and hour blog to stay current on the latest developments, and check out the latest Biden administration developments impacting employers on Proskauer’s Law and the Workplace blog.

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Photo of Allan Bloom Allan Bloom

Allan Bloom is the co-chair of Proskauer’s Labor & Employment Law Department and a nationally recognized litigator and advisor who represents employers, business owners, and management in a broad range of employment and labor law matters. As a litigator, Allan has successfully defended…

Allan Bloom is the co-chair of Proskauer’s Labor & Employment Law Department and a nationally recognized litigator and advisor who represents employers, business owners, and management in a broad range of employment and labor law matters. As a litigator, Allan has successfully defended many of the world’s leading companies against claims for unpaid wages, employment discrimination, breach of contract and wrongful discharge, both at the trial and appellate court levels as well as in arbitration, before government agencies, and in private negotiations. He has secured complete defense verdicts for clients in front of juries, as well as injunctions to protect clients’ confidential information and assets.

As the leader of Proskauer’s Wage and Hour Practice Group, Allan has been a strategic partner to a number of Fortune 500 companies to help them avoid, minimize and manage exposure to wage and hour-related risk. Allan’s views on wage and hour issues have been featured in The New York Times, Reuters, Bloomberg and Fortune, among other leading publications. His class-action defense work for clients has saved billions of dollars in potential damages.

Allan is regularly called on to advise operating companies, management companies, fund sponsors, boards of directors and senior leadership on highly sensitive matters including executive and key person transitions, internal investigations and strategic workforce planning. He has particular expertise in the financial services industry, where he has litigated, arbitrated, and mediated disputes for more than 20 years.

A prolific author and speaker, Allan was the Editor of the New York State Bar Association’s Labor and Employment Law Journal from 2012 to 2017. He has served as an author, editor and contributor to a number of leading treatises in the field of employment law, including ADR in Employment Law (ABA/Bloomberg BNA), Employment Discrimination Law (ABA/Bloomberg BNA), Cutting Edge Advances in Resolving Workplace Disputes (Cornell University/CPR), The Employment Law Review (Law Business Research, U.S. Chapter Author), and The Complete Compliance and Ethics Manual (SCCE).

Allan has served as longtime pro bono counsel to Lincoln Center for the Performing Arts and The Public Theater, among other nonprofit organizations.  He is a past Vice Chair of Repair the World, a nonprofit organization that mobilizes volunteers and their communities to take action to pursue a just world, and a past recipient of the Lawyers Alliance Cornerstone Award for extraordinary contributions through pro bono legal services.

Allan is a Fellow of the College of Labor and Employment Lawyers and has been recognized as a leading practitioner by Chambers since 2011.