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Federal Register / Vol. 86, No. 86 / Thursday, May 6, 2021 / Rules and Regulations
rule to withdraw the Independent Contractor Rule. In other words, the Department would withdraw the Independent Contractor Rule even if it were currently in effect. Therefore, businesses can, as of publication of this withdrawal of the Rule, continue to rely upon the prior, familiar guidance even if the delay is later vacated and the Rule is retroactively deemed to have been in effect from March 8 until the issuance of this final rule. The disruption caused by the withdrawal would accordingly remain limited.
After carefully considering commenter feedback, the Department maintains its belief that withdrawing the Independent Contractor Rule will not result in significant disruption to the regulated community. In particular, any businesses currently engaging workers properly classified as independent contractors or individuals who now correctly consider themselves to be independent contractors will be able to continue to operate without any effect brought about by the absence of new regulations. Businesses that had taken steps in preparation for the Rule taking effect will not be precluded from adjusting their relationships with workers or paying for new services from workers, and can rely on past court decisions and WHD guidance to determine whether those workers are employees under the FLSA or independent contractors.

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E. Timing and Effect of Withdrawal 1. Effective Date of Final Rule Section 553d of the Administrative Procedure Act provides that substantive rules should take effect not less than 30
days after the date they are published in the Federal Register unless otherwise provided by the agency for good cause found. 5 U.S.C. 553d3. The Department finds that it has good cause to make this rule effective immediately upon publication. Allowing for a 30-day delay between publication and the effective date of this rulemaking would result in the Independent Contractor Rule taking effect for a short period before its withdrawal, which would cause confusion for regulated entities.
The Regulatory Freeze Pending Review Memorandum described in section ID above, which directed the review that led the Department to propose withdrawing the Independent Contractor Rule, was issued on January 20, 2021. Even after delaying the Rules original effective date of March 8, 2021
to May 7, 2021, the Department had less than 4 months to consider the significant and complex issues raised by the Independent Contractor Rule as
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directed by the Memorandum and subsequent guidance from the Office of Management and Budget 182 and to conduct notice-and-comment rulemaking based on that consideration as well as input from commenters.
Withdrawing the Rule immediately ends employers and workers uncertainty about whether the Rule would go into effect at all following the Memorandum and the delay of the Rules effective date. At least since the Memorandum, businesses have been unsure whether to expect to apply the Rules analysis to their employment practices. Ending this uncertainty immediately benefits employers and workers alike. To delay the withdrawal by 30 days would mean that the Rule would be in effect from May 7, 2021, until the effective date approximately one month later. To require businesses to apply the Rules analysis only to have them reassess the analysis when the Rule is withdrawn would impose unnecessary costs with no benefits.
And, as pointed out by Texas RioGrande Legal Aid, it could have negative effects on workersin particular, low-wage workerswhose employment status could be changed upon the Rules taking effect, and would be unlikely to know that they were again entitled to FLSA
protections. Because withdrawing the Rule will merely retain the status quo rather than impose any new requirements, immediate withdrawal will not require any reassessments of employment status. The regulated community does not require time to adjust to new requirements, because there are none imposed by withdrawal of the Rule. Because a delay of this rules effective date would be impracticable and unnecessary, the Department finds it has good cause to make this withdrawal effective immediately upon publication.
2. Effect of Withdrawal For the reasons described above, the Department has decided to withdraw the Independent Contractor Rule, effective immediately. Accordingly, the guidance that the Rule would have introduced as part 795 of Title 29 of the Code of Federal Regulations will not be introduced and the revisions that the Rule would have made to 29 CFR
780.330b and 29 CFR 788.16a will not occur and their text will remain unchanged. The Department did not propose and is not now issuing regulatory guidance to replace the 182 Memorandum M2114, Implementation of Memorandum Concerning Regulatory Freeze Pending Review, https www.whitehouse.gov/wpcontent/uploads/2021/01/M-21-14-RegulatoryReview.pdf last visited April 28, 2021.

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guidance that the Independent Contractor Rule would have introduced as part 795.
III. Paperwork Reduction Act The Paperwork Reduction Act of 1995
PRA and its attendant regulations require an agency to consider its need for any information collections, their practical utility, as well as the impact of paperwork and other information collection burdens imposed on the public, and how to minimize those burdens. The PRA typically requires an agency to provide notice and seek public comments on any proposed collection of information contained in a proposed rule. This final rule does not contain a collection of information subject to Office of Management and Budget approval under the PRA.
IV. Executive Order 12866, Regulatory Planning and Review; and Executive Order 13563, Improved Regulation and Regulatory Review A. Introduction Under Executive Order 12866, OMBs Office of Information and Regulatory Affairs determines whether a regulatory action is significant and, therefore, subject to the requirements of the Executive Order and OMB review.183
Section 3f of Executive Order 12866
defines a significant regulatory action as a regulatory action that is likely to result in a rule that may: 1 Have an annual effect on the economy of $100
million or more, or adversely affect in a material way a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or state, local or tribal governments or communities also referred to as economically significant; 2 create serious inconsistency or otherwise interfere with an action taken or planned by another agency; 3
materially alter the budgetary impact of entitlements, grants, user fees or loan programs or the rights and obligations of recipients thereof; or 4 raise novel legal or policy issues arising out of legal mandates, the Presidents priorities, or the principles set forth in the Executive Order. This final rule is economically significant under section 3f of Executive Order 12866 because it is withdrawing an economically significant rule.
Executive Order 13563 directs agencies to, among other things, propose or adopt a regulation only upon a reasoned determination that its benefits justify its costs; that it is tailored to impose the least burden on society, 183 See
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58 FR 51735 Sept. 30, 1993.

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