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Federal Register / Vol. 86, No. 4 / Thursday, January 7, 2021 / Rules and Regulations effects in California support the NPRMs conclusion that adopting an ABC test would have unacceptably disruptive economic effects. For instance, a selfemployed professional handyman with technical skills in furniture assembly and home repair stated that as a California resident, it has been concerning to watch the way AB5 has affected our state. I dont believe legislators should make decisions that make it harder for people like me to find work and earn a living the way we want to. A medical translator stated that ABC test simply doesnt work in my field and it is not a fair standard to measure my situation. The original AB5
law in California was destructive to the livelihood of many of my colleagues in that state. And as a final illustrative example, a freelance journalist in California characterized that states adoption of the ABC test as an attempt to legislate an entire class of entrepreneurs out of business. See also, e.g., People vs. AB5; Fight for Freelancers; NPPA; WPI.
Moreover, as commenters pointed out, the numerous exemptions initially and subsequently passed by the California legislature indicate the ABC tests inadequacy as a generally applicable standard, as well as its unpopularity with affected stakeholders. An owner of a small, one-woman business in California explained in her comment that the absurdity and overreach of AB5 is evidenced by the numerous attempts at clean-up bills in California SB 875, SB 1039, SB 900, AB 1850, AB
2257 . . . that clogged the CA
legislative landscape for months, culminating in the now adopted AB
2257, which lists too many exemptions to count. The recent passage of the high-profile Proposition 22 ballot initiative in California,257 which occurred shortly after the end of the comment period for this rulemaking and exempted numerous gig workers from the ABC test, is further evidence in this regard.
While California retains the ABC test for some industries but not others, the Department is required to apply the FLSA consistently for all covered industries absent explicit statutory authority to do otherwise. Thus, if the Department adopted the ABC test, that standard would apply to virtually all industries nationwide, including numerous industries that the Californian legislature and voters exempted because they would suffer 257 See Kate Conger, Uber and Lyft Drivers in California Will Remain Contractors, NY Times Nov. 4, 2020, https www.nytimes.com/2020/11/
04/technology/california-uber-lyft-prop-22.html.

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undue disruption under that standard.
NELA contended that adoption of the ABC test by Massachusetts has not led to the same type of disruption experienced in California, which is disputed by some commenters from Massachusetts. See e.g., New Jobs for Massachusetts; IFA; Fight for Freelancers. But even if NELA were correct, a nationwide ABC test would still disrupt California, the state with the largest population and economy, and likely many others. In the Departments view, the fact that a legal standard may be disruptive in only some states e.g., California but not others e.g., Massachusetts is not a persuasive reason for nationwide adoption.
Additionally, the Department continues to believe that it lacks legal authority to adopt the ABC test under the FLSA because that test is far too rigid and restrictive of independent contracting arrangements. As a threshold matter, each of the ABC tests three independently determinative factors would contradict binding Supreme Court precedent applying the economic reality test, where no one factor is controlling. Silk, 331 U.S. at 716. In particular, the tests B prong denying independent contractor status unless the contractor performs work that is outside the usual course of the hiring entitys businesswould contradict the Courts recognition in Silk that few businesses are so completely integrated that they can themselves produce the raw material, manufacture and distribute the finished product to the ultimate consumer without assistance from independent contractors. 331 U.S. at 714; see also Rutherford Food, 331 U.S. at 729
recognizing that there may be independent contractors who take part in the production or distribution of a hiring party. Indeed, application of Californias ABC test would result in different classification outcomes than those the Supreme Court arrived at applying the economic reality test in Silk, 331 U.S. at 719 ruling that truckers who were an integral part of the businesses of retailing coal or transporting freight were independent contractors, and Bartels, 332 U.S. at 130
concluding that musicians were independent contractors rather than employees of the music hall where they played. Absent revised guidance from the Supreme Court or Congressional legislation amending the FLSA statute, the Department continues to believe that it lacks the legal authority to implement a California-style ABC test through administrative rulemaking.

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NELA contended that an ABC test is more faithful to the broad, remedial purpose of the FLSA. According to NELA, at its core, the FLSA is a remedial statute and therefore, the Department should interpret the FLSAs standard of employment to be broader than economic dependence. However, the Supreme Court warned against relying on flawed premise that the FLSA pursues its remedial purpose at all costs when interpreting the Act.
Encino, 138 S. Ct. at 1142; see also Bristol, 935 F.3d 122 A fair reading of the FLSA, neither narrow nor broad, is what is called for. quoting Encino, 138 S. Ct. at 1142; Diaz, 751 F. Appx at, 758 rejecting request to interpret FLSA provisions to provide broad coverage because we must instead give the FLSA a fair interpretation..
Furthermore, even if remedial statutes should be liberally construed, the ABC
test still runs afoul of the Supreme Courts stated limits on the extent of the FLSAs definition of employment, as explained above. As such, the Department may not and no court has ever suggested that it could replace the economic reality test with the ABC test to be faithful to the FLSAs remedial purpose.
In sum, legal constraints and the disruptive economic effects of adopting the ABC test in the FLSA context. As we stated in the NPRM, the Department engaged in this rulemaking to clarify the existing standard, not to radically transform it.
H. Summary of Impacts In summary, the Department believes that this rule will increase clarity regarding whether a worker is classified as an employee or an independent contractor under the FLSA. This clarity could result in an increased use of independent contractors. The costs and benefits to a worker being classified as an independent contractor are discussed throughout this analysis, and are summarized below.
The Department believes that there are real benefits to the use of independent contractor status, for both workers and employers. Independent contractors generally have greater autonomy and more flexibility in their hours, providing them more control over the management of their time. The use of independent contracting for employers allows for a more flexible and dynamic workforce, where workers provide labor and skills where and when they are needed. Independent contractors may more easily work for multiple companies simultaneously, have more control over their laborleisure balance, and more explicitly
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