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Federal Register / Vol. 86, No. 86 / Thursday, May 6, 2021 / Rules and Regulations dealing with disruptions caused by the ongoing COVID19 pandemic and resulting unemployment. The Department agrees that it is inappropriate to issue a rule during the pandemic that could increase the classification of workers as independent contractors, and therefore reduce the number of workers protected by the FLSA. Farmworker Justice likewise agreed that any disruption caused by withdrawal would be minimal, because no adjustments would need to be made by workers, employers, or courts. Instead, the regulated community would be free to continue applying the decades of case law built up around the FLSA. Texas RioGrande Legal Aid suggested that withdrawing the Rule before it went into effect would be far less disruptive than withdrawing it after it went into effect, because employers could simply refrain from reclassifying employees, whereas workers who were reclassified as a result of the Rule going into effect would be less likely to know if the Rule were later withdrawn and therefore less likely to insist on being reclassified again.
Some commenters disagreed with the Department, asserting that withdrawal of the Rule would be disruptive.
Multiple commenters argued that DOL
did not consider the costs of compliance preparation many individuals and businesses have already undertaken in anticipation of the Final Rule becoming effective as scheduled. However, none of these commenters presented evidence of such costs or even described what kind of costs they incurred, so the Department cannot assess the validity or significance of these claims, or quantify these possible costs. Moreover, the Department would expect any such costs to be minimal given that to the extent businesses had reason to incur costs in preparation for the Rules becoming effectiveeven though the Rule imposed no new requirements on businessesthe Department announced on February 5, 2021 that it was proposing to delay the effective date of the Rule in order to reconsider the Rule,179 putting businesses on notice that it was far from certain when the Rule would go into effect, or in what form. In addition, any costs of complying with the Independent Contractor Rule were created by the Rule and would not be increased by its withdrawal. The Rules withdrawal does not impose new compliance costs on the regulated community, because it imposes no new requirements.
Employers must continue to comply 179 See
86 FR 8326.

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with the currently governing interpretations of the FLSA.
Some commenters confused the onetime costs of coming into compliance with the withdrawal of the Rule with the ongoing costs of complying with the FLSA, which may be higher under the current interpretation of the FLSA than under the interpretation contained in the Independent Contractor Rule. For example, Capital Investment Companies stated that the Department should not be able to simply withdraw a rule that was developed after public notice and comment because the regulated community cannot be expected to be able to shift gears every two months. It argued that DOL did not consider the costs to the current properly-classified independent contractors who may face a loss of business opportunities in the face of the uncertainties resulting from the DOLs actions. The Mercatus Center likewise argued that the Departments belief that withdrawal would not be disruptive was inaccurate, because any valid analysis of the final rules withdrawal must be measured in reference to the anticipated cost and benefits of the previous rule.
These comments incorrectly assert that the Department is ignoring the costs and benefits of not implementing the Independent Contractor Rule. The Department has considered comments from the public, following the same procedures used to promulgate the Rule in the first instance. In doing so, the Department has measured the costs and benefits of retaining the current interpretation of the FLSA by withdrawing the Rule against the costs and benefits of enacting the Rule. The Departments determination that the Rules withdrawal will not be disruptive does not mean that there will not be costs imposed on some employers. By its nature, the FLSA imposes costs on employers in the form of minimum wage and overtime pay requirements.
However, the costs to come into compliance with the Departments decision to withdraw the Rule are minimal, because employers and businesses who engage independent contractors will only need to comply with the statutory interpretations that already apply. They will not need to shift gears or change anything about their business practices, so long as they are currently complying with the FLSA.
The Coalition to Promote Independent Entrepreneurs CPIE argued that the Rules withdrawal will cause confusion in future enforcement actions brought by the Department, because a company accused of misclassifying workers as independent contractors could respond by relying on DOLs own research
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findings that are published in the Federal Register. In other words, though the Independent Contractor Rule would not be in effect, the company could rely on the Departments reasoning behind the Rule. CPIE asked rhetorically, If this were to occur, would DOL dispute its own published research findings? Contrary to the implications of this comment, there should be no confusion about the Departments position. The Department is withdrawing the Rule because, as explained throughout this final rule, it believes that the Rules justifications were insufficient to support such a departure from courts well-established analysis and the Departments previous guidance. Accordingly, the Independent Contractor Rule does not reflect the Departments interpretation.
Finally, a few commenters argued that withdrawal would be disruptive if it occurred before the resolution of the pending lawsuit challenging the Departments delay of the Independent Contractor Rules original March 8, 2021
effective date.180 The Coalition for Workforce Innovation CWI, which brought that lawsuit, argued that the Department should avoid confusion by allowing that litigation to determine whether the delay of the Rules effective date was lawful. CWI argued that the Departments assumption that the Independent Contractor Rule is not currently in effect is faulty. Littler Mendelson argued that insofar as the Departments arguments in support of withdrawal of the Rule rests sic on its status as not yet in effect, they are at best premature, and at worst, incorrect as a matter of fact and law.
The Department does not agree with these comments. The Independent Contractor Rule is not currently in effect and is not currently applied by the Department, courts, or others. The Department maintains that its delay of the Rules original effective date was proper for the reasons explained in the final rule effectuating that delay,181 but declines to comment on the ongoing litigation. Regardless of the outcome of the lawsuit, the result of this withdrawal of the Rule is that longstanding prior guidance, such as Fact Sheet 13, remains in effect. Even if the Departments delay of the Rules effective date were vacated such that the Rule is deemed to have been in effect since March 8, 2021, any disruption caused by the short period in which the Rule was in effect would be outweighed by the reasons described in this final 180 See Coalition for Workforce Innovation v.
Secy of Labor No. 1:21cv00130 E.D. Tex..
181 See 86 FR 12535.

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