[Federal Register Volume 86, Number 23 (Friday, February 5, 2021)]
[Proposed Rules]
[Pages 8326-8327]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-02484]


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DEPARTMENT OF LABOR

Wage and Hour Division

29 CFR Parts 780, 788, and 795

RIN 1235-AA34


Independent Contractor Status Under the Fair Labor Standards Act: 
Delay of Effective Date

AGENCY: Wage and Hour Division, Department of Labor.

ACTION: Proposed delay of effective date.

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SUMMARY: In accordance with the Presidential directive as expressed in 
the memorandum of January 20, 2021 from the Assistant to the President 
and Chief of Staff, entitled ``Regulatory Freeze Pending Review,'' this 
action proposes to delay until May 7, 2021, the effective date of the 
rule entitled Independent Contractor Status Under the Fair Labor 
Standards Act (``Independent Contractor Rule''), published in the 
Federal Register on January 7, 2021. The rule's current effective date 
is March 8, 2021. The Wage and Hour Division seeks comments on this 
proposed delay, which would allow it additional opportunity for review 
and consideration of the new rule.

DATES: Submit written comments on or before February 24, 2021.

ADDRESSES: You may submit comments, identified by Regulatory 
Information Number (RIN) 1235-AA34, by either of the following methods: 
Electronic

[[Page 8327]]

Comments: Submit comments through the Federal eRulemaking Portal at 
http://www.regulations.gov. Follow the instructions for submitting 
comments. Mail: Address written submissions to Division of Regulations, 
Legislation, and Interpretation, Wage and Hour Division, U.S. 
Department of Labor, Room S-3502, 200 Constitution Avenue NW, 
Washington, DC 20210. Instructions: Please submit only one copy of your 
comments by only one method. Commenters submitting file attachments on 
www.regulations.gov are advised that uploading text-recognized 
documents--i.e., documents in a native file format or documents which 
have undergone optical character recognition (OCR)--enable staff at the 
Department to more easily search and retrieve specific content included 
in your comment for consideration. Anyone who submits a comment 
(including duplicate comments) should understand and expect that the 
comment will become a matter of public record and will be posted 
without change to https://www.regulations.gov, including any personal 
information provided. All comments must be received by 11:59 p.m. on 
February 24, 2021, for consideration in this proposed delay of 
effective date. The Department strongly recommends that commenters 
submit their comments electronically via http://www.regulations.gov to 
ensure timely receipt prior to the close of the comment period, as the 
Department continues to experience delays in the receipt of mail. 
Submit only one copy of your comments by only one method. Docket: For 
access to the docket to read background documents or comments, go to 
the Federal eRulemaking Portal at http://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Amy DeBisschop, Division of 
Regulations, Legislation, and Interpretation, Wage and Hour Division, 
U.S. Department of Labor, Room S-3502, 200 Constitution Avenue NW, 
Washington, DC 20210; telephone: (202) 693-0406 (this is not a toll-
free number). Copies of this proposal may be obtained in alternative 
formats (Large Print, Braille, Audio Tape or Disc), upon request, by 
calling (202) 693-0675 (this is not a toll-free number). TTY/TDD 
callers may dial toll-free 1-877-889-5627 to obtain information or 
request materials in alternative formats.

SUPPLEMENTARY INFORMATION: On January 7, 2021, the Department of 
Labor's Wage and Hour Division (``WHD'') published the Independent 
Contractor Rule in the Federal Register with an effective date of March 
8, 2021. See 86 FR 1168. The Independent Contractor Rule would, among 
other actions, introduce into title 29 of the Code of Federal 
Regulations a new part (part 795) entitled ``Employee or Independent 
Contractor Classification under the Fair Labor Standards Act.'' See id.
    In a memorandum dated January 20, 2021 and entitled ``Regulatory 
Freeze Pending Review,'' published in the Federal Register on January 
28, 2021 (86 FR 7424) (``Regulatory Freeze Memorandum''), the Assistant 
to the President and Chief of Staff, on behalf of the President, 
directed the heads of Executive Departments and Agencies to review and 
consider delaying the effective dates of all regulations that had been 
published in the Federal Register but had not yet taken effect until 60 
days following the date of the memorandum or beyond. The Independent 
Contractor Rule falls within this category. The Regulatory Freeze 
Memorandum states that the purpose of such delays is for agencies to 
review any questions of fact, law, and policy that the rules may raise. 
The memorandum notes certain exceptions that do not apply here. On 
January 20, 2021, the Office of Management and Budget (OMB) also 
published OMB Memorandum M-21-14, Implementation of Memorandum 
Concerning Regulatory Freeze Pending Review, which provides guidance 
regarding the Regulatory Freeze Memorandum. See M-21-14, Implementation 
of Memorandum Concerning Regulatory Freeze Pending Review, https://www.whitehouse.gov/wp-content/uploads/2021/01/M-21-14-Regulatory-Review.pdf (last visited Jan. 26, 2021). OMB Memorandum M-21-14 
explains that pursuant to the Regulatory Freeze Memorandum, agencies 
``should consider postponing the effective dates for 60 days and 
reopening the rulemaking process'' for ``rules that have not yet taken 
effect and about which questions involving law, fact, or policy have 
been raised.'' Id. In accordance with the Regulatory Freeze Memorandum 
and OMB Memorandum M-21-14, WHD proposes to delay the effective date of 
the Independent Contractor Rule to May 7, 2021, which would be 60 days 
beyond its original effective date.
    The delay of the Independent Contractor Rule's effective date would 
give WHD additional opportunity to review and consider the rule as the 
Regulatory Freeze Memorandum and OMB Memorandum M-21-14 contemplate. 
The rule, which would be WHD's first generally applicable regulation 
addressing the question of who is an independent contractor and, thus, 
not an employee under the FLSA, would adopt a new legal standard for 
determining employee and independent contractor status under the FLSA. 
In light of the significance of this change, WHD is proposing to allow 
itself more time to further review and consider, among other important 
issues, the legal, policy, and/or enforcement implications of adopting 
that standard, such as: Whether the rule effectuates the FLSA's 
purpose, recognized repeatedly by the Supreme Court, to broadly cover 
workers as employees; \1\ the costs and benefits attributed to the 
rule, including the assertion that workers as whole will benefit from 
the rule; \2\ and/or whether the rule's explanation of the standard 
provides clarity for stakeholders and for the purposes of WHD 
enforcement, as was intended.
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    \1\ See, e.g., Rutherford Food Corp. v. McComb, 331 U.S. 722, 
728 (1947) (``The [FLSA] definition of `employ' is broad.''); United 
States v. Rosenwasser, 323 U.S. 360, 362-63 (1945) (``A broader or 
more comprehensive coverage of employees [than that of the FLSA] . . 
. would be difficult to frame.'').
    \2\ See 86 FR 1209, 1223.
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    In addition, WHD believes that the proposed delay is reasonable and 
would not be disruptive. The Independent Contractor Rule is not yet 
effective, and WHD has not implemented the rule. For example, WHD's 
public guidance, including its longstanding Fact Sheet #13, entitled 
``Employment Relationship under the Fair Labor Standards Act (FLSA),'' 
does not contain the rule's standard for determining whether a worker 
is an employee or independent contractor and will continue to be 
available to all. Moreover, Federal courts across the country have 
developed and applied legal analyses for determining employee and 
independent contractor status under the FLSA. In sum, employers and 
workers are already familiar with the standard that WHD and courts will 
apply when determining a worker's status under the FLSA during any 
delay of the rule's effective date.
    WHD seeks comment on its proposal to delay the Independent 
Contractor Rule's effective date to May 7, 2021 in order to further 
review and consider the rule. WHD will consider only comments about its 
proposal to delay the rule's effective date.

Milton A. Stewart,
Acting Secretary of Labor.
[FR Doc. 2021-02484 Filed 2-3-21; 11:15 am]
BILLING CODE 4510-27-P