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Federal Register / Vol. 86, No. 86 / Thursday, May 6, 2021 / Rules and Regulations II. Comments and Decision
to the Rule, including its effect on workers.74
E. Proposal To Withdraw On March 12, 2021, the Department published a notice of proposed rulemaking NPRM proposing to withdraw the Independent Contractor Rule.75 The NPRM explained that the Department was considering withdrawing the Independent Contractor Rule for several reasons.
First, the Rules standard has never been used by any court or by WHD, and the Department questioned whether the Rule is fully aligned with the FLSAs text and purpose or case law describing and applying the economic realities test.
In particular, the NPRM noted that no court has, as a general and fixed rule, elevated a subset of certain economic realities factors above others, and there is no clear statutory basis for such a predetermined weighting of the factors.76 Moreover, the NPRM
expressed concern that the Rules emphasis on control and its recasting of other factors typically considered by courts would improperly narrow the facts to be considered in the application of the economic realities test, contrary to the FLSAs more expansive conception of the employment relationship contained in section 3g of the Acts definition of employ as including to suffer or permit to work. 77 As a matter of policy, the NPRM expressed concern that the Rules novel guidance would cause confusion or lead to inconsistent outcomes rather than provide clarity or certainty,78 and asserted that the Rule failed to fully consider the likely costs, transfers, and benefits that could result from the Rule, particularly for affected workers who might no longer receive the FLSAs wage and hour protections as an independent contractor.79 Finally, the NPRM stated that withdrawing the Independent Contractor Rule would not be disruptive because the Rule has not yet taken effect.80
The Department sought comment on its NPRM to withdraw the Independent Contractor Rule. The period for providing comment expired on April 12, 2021.

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74 Id.

On March 26, 2021, a lawsuit was filed alleging that the Departments final rule delaying the Independent Contractor Rules effective date did not comply with the Administrative Procedure Act.
See Coalition for Workforce Innovation v. Secy of Labor No. 1:21cv00130 E.D. Tex..
75 See 86 FR 14027.
76 See 86 FR 1403132.
77 See 86 FR 1403234.
78 See 86 FR 14034.
79 See 86 FR 1403435.
80 See 86 FR 14035.

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The Department received 1,010
comments in response to the NPRM.81
Numerous state officials, members of Congress, labor unions, social justice organizations, worker advocacy groups, and individual commenters wrote in support of the Departments proposal to withdraw the Independent Contractor Rule, including several hundred commenters who submitted comments with similar template language. These commenters expressed opposition to the Independent Contractor Rule predominantly on the basis that, in their view, the Rule would have facilitated the exploitation of workers reclassified or misclassified as independent contractors as a consequence of the Rule. They also raised numerous other legal and policy criticisms of the Rule, discussed in greater detail below.
Numerous companies, trade associations, business advocacy organizations, law firms, and individual commenters submitted comments opposing the Departments proposal to withdraw the Independent Contractor Rule, including several commenters who identified themselves as current or former independent contractors. These commenters generally supported the Independent Contractor Rule for, in their view, providing a clearer and preferable analysis for determining employee or independent contractor status, and they raised numerous other legal and policy arguments in defense of the Rule or in objection to the proposed withdrawal, discussed in greater detail below.
The Department received a number of comments addressing issues that are beyond the scope of this rulemaking to withdraw the Independent Contractor Rule. For example, several commenters expressed opinions related to the legal analysis for independent contractors under state laws or federal laws other than the FLSA, such as the ABC test generally used to evaluate independent contractor status under California state law,82 or the PRO Act bill that would establish a similar standard under 81 This figure includes a number of duplicate comments i.e., identical comments submitted by the same requester which appear to have been submitted by mistake. The Department received approximately 1,000 non-duplicative comments.
82 See Assembly Bill A.B. 5, Ch. 296, 2019
2020 Reg. Sess. Cal. 2019 codifying the ABC test for determining independent contractor status articulated in Dynamex Operations W., Inc. v.
Superior Court, 416 P.3d 1 Cal. 2018; A.B. 2257, Ch. 38, 20192020 Reg. Sess. Cal. 2020 exempting certain additional professions, occupations, and industries from the ABC test that A.B. 5 had codified.

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National Labor Relations Act.83 As noted in the NPRM, the Department did not propose regulatory guidance to replace the guidance that the Independent Contractor Rule would have introduced as Part 795, so commenter feedback addressing or suggesting such a replacement or otherwise requesting that the Department adopt any specific guidance if the Rule was withdrawn was considered outside the scope of this rulemaking.84 Similarly, the Department received dozens of comments addressing the merits of labor unions;
however, this rulemaking addresses whether to withdraw a rule that would have provided a new analysis for determining whether a worker is an employee or independent contractor for purposes of the FLSA, a wage and hour statute that has no direct effect on collective bargaining rights.
Having considered the comments submitted in response to the NPRM, the Department has decided to finalize the withdrawal of the Independent Contractor Rule. The Department believes that the Rule is inconsistent with the FLSAs text and purpose, and would have a confusing and disruptive effect on workers and businesses alike due to its departure from longstanding judicial precedent. The Departments response to commenter feedback on specific aspects of the proposed withdrawal is provided below.
A. The Rules Standard Has Never Been Used by Any Court or by WHD, and Is Not Supported by the Acts Text or Purpose or Judicial Precedent Upon further review and consideration of the Rule and having considered the public comments, the Department does not believe that the Independent Contractor Rule is fully aligned with the FLSAs text or purpose, or with decades of case law describing and applying the multifactor economic realities test. The Department fully describes below the rationale for its departure from the views expressed in the prior Rule.85
1. The Rules Elevation of Control and Opportunity for Profit or Loss as the Most Probative Core Factors in Determining Employee Status Under the FLSA
For decades, WHD, consistent with case law, has applied a multifactor 83 See Protecting the Right to Organize Act of 2021, H.R. 842, 117th Cong. 2021 introduced by Rep. Bobby Scott and S. 420, 117th Cong. 2021
introduced by Sen. Patty Murray.
84 86 FR 14035.
85 See FCC v. Fox Television Stations, Inc., 556
U.S. 502, 515 2009.

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