The Department of Labor filed an appeal on Friday after a Texas federal judge ruled that the agency violated the Administrative Procedure Act by postponing and later withdrawing a Trump-era rule that clarified when workers are considered independent contractors versus employees.
In early January 2021, the Trump administration issued a rule that sought to clarify the definition of “independent contractor” under the Fair Labor Standards Act. The rule was scheduled to take effect on March 8, 2021.
When President Biden took office at the end of January, the White House issued
a memorandum directing federal agencies to postpone the effective dates of rules that had been published in the Federal Register but had not yet taken effect.
After postponing the effective date of the independent contractor rule for 60 days until May 7, 2021, it was repealed by the DOL the day before it was scheduled to take effect.
A number of trade groups, including the Coalition for Workforce Innovation, Associated Builders and Contractors of Southeast Texas, and Associated Builders and Contractors, filed a lawsuit against the DOL in March 2021, and the Financial Services Institute joined in filing an amended complaint in May 2021.
“We are disappointed in the DOL’s decision to appeal the district court ruling,” said Dale Brown, president and chief executive officer of the Financial Services Institute. “The DOL’s independent contractor rule provides much-needed certainty to independent financial advisors who have chosen to be independent contractors so that they can operate their own business and better serve their clients within their communities. We plan to continue working to defend our members’ independent contractor status through the appeal process.”
The Financial Services Institute represents independent financial advisors and independent financial services firms.