The California AB-5 saga has not come to a close yet, as what the Supreme Court will do with it remains a mystery, but other challenges to the independent contractor/employee dynamic are still in motion. One such case is the Department of Labor redefining the term “independent contractor” shortly after the Biden Administration came into power. Now, a Texas judge has ruled that the Department of Labor’s definition is invalid, based on a technicality.
In the final days of Trump’s term, the Department of Labor went through the process of establishing a new rule regarding the definition of an independent contractor.
In short, the regulation asked how economically dependent a person was on the business relationship for work. In terms of trucking, it would allow Owner-Operators to continue working under the larger carriers provided that they also worked under carriers as well. A small trucking business operating 100% through one carrier could be deemed an employee.
Ultimately the definition is seen to favor the business, and Biden’s Department of Labor went to work on undoing the rule.
Here is the technicality: the Texas judge did not reinstate the Trump regulation because of any impacts its removal may have on the economy or the independent contractor relationship, but because the new Department of Labor moved too fast in removing it.
The plaintiffs in the lawsuit said that the nineteen-day comment period given to them in the Federal Register was not enough time for stakeholders to provide meaningful feedback. Usually, proposed rules are subject to a minimum of thirty days for comments.
This marks a temporary victory for owner-operators in the trucking industry. While the recent regulation is rolled back, the fact that eleven days made the difference means that the Department of Labor may try again and give adequate commenting time. If that happens, the only remaining defense the Trump rule would have is the Texas court also stating that the Department of Labor did not consider alternatives to repeal.
Whatever the case, it is clear that the Department of Labor is not a fan of the independent contractor business model, and the fight will continue to continue.
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