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Federal Register / Vol. 86, No. 86 / Thursday, May 6, 2021 / Rules and Regulations
already properly classified as an independent contractor will retain that status because, with this withdrawal, the economic realities test the Department uses to determine who is an employee under the FLSA is not changing. Moreover, flexible work schedules can be made available to employees as well as independent contractors, so any determination of or shift in worker classification need not affect flexibility in scheduling.
Some other commenters stated that the Department seems to take the position that independent contractors only exist to the extent that they are simply misclassified employees. They further stated that the proposal fails to recognize that independent contractors exist separate and apart from employees who are misclassified as independent contractors by some employers.
Similarly, a self-described freelance writer and editor commented that the proposal appears to be part of a larger effort to significantly restrict or even eliminate the ability for employers to classify individuals as independent contractors. Some of these commenters worried that withdrawal would mean adopting a test similar to the ABC
Test that generally applies under California state wage laws. These comments do not accurately characterize the proposal or the withdrawal of the Independent Contractor Rule. The Department recognizes, and has always recognized, that there are bona fide independent contractors that do not fall under the FLSA. In fact, soon after the FLSA was enacted, the Supreme Court stated that the Act was not intended to stamp all persons as employees 169 and recognized that independent contractors are not employees within the Acts broad scope of coverage.170 The Department is withdrawing the Rule for the reasons described throughout this final rule, and is not creating a new test, but is instead leaving in place the current economic realities test which allows for determinations that some workers are independent contractors.
Commenters also assert that many independent contractors would prefer independent contracting arrangements.
Fundamentally, however, the purposes of the FLSA require that it be applied even to those who would decline its protections, as allowing workers who otherwise qualify as FLSA-covered employees to waive their rights would affect many more people than those workers directly at issue . . . and would be likely to exert a general downward 169 Portland 170 See
Terminal, 330 U.S. at 152.
Rutherford Food, 331 U.S. at 729.

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pressure on wages in competing businesses. 171 The Department also believes that this preference does not hold for a significant proportion of independent contractors. A survey cited by CWI found that in May 2020, 45
percent of workers preferred being an independent contractor to being fully employed. This is by no means a majoritythe same survey finds that 53
percent of workers prefer being a fulltime employee with benefits.172 This surveywhich was limited to users and potential users of one jobs platform found a significant increase in workers who preferred being an independent contractor compared to the prior year, and also found that a lack of childcare was workers largest obstacle to fulltime employment.173 These findings suggest that even this minority of workers who prefer being an independent contractor to full-time employment are motivated in part by temporary pressures created by the COVID19 pandemic. The survey did not ask whether workers would prefer a flexible schedule combined with employee status. As this rule notes elsewhere, flexibility and FLSA
employment are not mutually exclusive.
Other commenters suggested that the Independent Contractor Rule would harm workers in ways beyond the effects of a workers classification on their individual compensation. The AFLCIO commented that all workers benefit from the FLSAs minimum wage requirements, even if those requirements do not apply to them directly, because the FLSA establishes a wage floor that prevents wages in general from being dragged downward.
The NWLC commented that the FLSAs definition of employ governs other worker protections, including the provision of lactation breaks and spaces for breastfeeding mothers as well as anti-discrimination protections. The Department agrees that the Independent Contractor Rule failed to consider these issues.
D. Whether Withdrawing the Independent Contractor Rule Is Disruptive The Department explained in the NPRM that, because the Independent Contractor Rule had yet to take effect, 171 Tony
& Susan Alamo Found., 471 U.S. at 302.
COVID19 economic fallout weighs heavily on blue collar gig workers, 2020. https
go.wonolo.com/rs/052-CZJ-953/images/Data-reportThe-rise-of-blue-collar-gig-workers.pdf.
173 Id. finding that workers preferred full-time employment to independent contractor status by a ratio of 71-to-29 percent in 2019, and that workers concerned about a lack of childcare increased from 12 percent to 23 percent.
172 Wonolo,
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withdrawing it would not be disruptive.
The NPRM pointed out that, as remains the case, courts have not applied the Rule in deciding cases, and WHD has not implemented the Rule. For example, WHDs Fact Sheet 13, titled Employment Relationship Under the Fair Labor Standards Act FLSA and dated July 2008, does not contain the Rules analysis for determining whether a worker is an employee or independent contractor.174 WHDs Field Operations Handbook addresses independent contractor status by simply crossreferencing Fact Sheet 13 and likewise does not contain the Rules new economic realities test.175 WHDs elaws Advisor compliance-assistance information regarding independent contractors likewise does not contain the Rules analysis.176 On January 26, 2021, WHD withdrew two opinion letters issued on January 19, 2021
applying the Rules analysis to several factual scenarios.177 WHD explained that the letters were issued prematurely because they are based on a Rule that has not gone into effect. 178 Accordingly, the NPRM
asserted that the regulated community has been functioning under the current state of the law and the Department does not believe that it would be negatively affected by continuing to do so were the Rule to be withdrawn.
Several commenters agreed that withdrawing the Rule would not be disruptive. The State Officials agreed that, because the Rule has not taken effect, it has not required the substantial expenditure of compliance resources from the regulated community and has not engendered substantial reliance interests. The State Officials explained that, to the contrary, failing to withdraw the Rule would be disruptive, as they believed the Rule would have led employers to reclassify many employees as independent contractors overnight. The State Officials argued that such reclassification and misclassification would have disruptive consequences for workers and states who are already 174 Fact
Sheet 13 July 2008, supra note 37.
10 of Wage and Hours Field Operations Handbook, FLSA Coverage:
Employment Relationship, Statutory Exclusions, Geographical Limits, is available at https
www.dol.gov/sites/dolgov/files/WHD/legacy/files/
FOH_Ch10.pdf last visited April 28, 2021. The relevant provision, section 10b05 Test of the employment relationship, is on page 6.
176 See https webapps.dol.gov/elaws/whd/flsa/
scope/ee14.asp last visited April 28, 2021.
177 See https www.dol.gov/agencies/whd/
opinion-letters/search?FLSA last visited April 28, 2021, noting the withdrawal of Opinion Letters FLSA20218 and FLSA20219.
178 Id.
175 Chapter
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