A federal lawsuit filed by a trucking company challenging the Biden administration’s independent contractor rule has been delayed as President Donald Trump’s administration weighs its options, including reinstating Trump’s 2021 rule.
The Fifth Circuit Court of Appeals has postponed oral arguments that were scheduled for Wednesday, Feb. 5 in a case seeking to undo new independent contractor rules. Finalized last year, the Department of Labor’s new standards establishing who is considered an independent contractor or employee replaced a 2021 rule set by Trump during his first term.
The federal government has until March 25 to inform the court how it plans to proceed with the case. As of Monday, Feb. 10, the Trump administration had not announced any actions regarding the independent contractor rule.
A decision on whether to reinstate Trump’s 2021 independent contractor rule could come once Department of Labor leadership is established. On Wednesday, Feb. 12, the U.S. Senate Committee on Health, Education, Labor and Pensions will hold a confirmation hearing for Lori Chavez-DeRemer, the department’s secretary nominee.
Until then, the Department of Justice is trying to delay lawsuits while it waits for the Department of Labor to decide how it plans to move forward with the independent contractor rule. Every federal court has upheld the new rule, setting the stage for the Trump administration to rescind it.
Independent contractor rules
In January 2024, the Department of Labor replaced a 2021 independent contractor rule that was seen as more business-friendly, opening the door for workers previously considered independent contractors to be deemed employees.
The 2024 rule requires employers to consider six different factors when determining whether a worker is an independent contractor, including:
- Opportunity for profit or loss depending on managerial skill
- Nature and degree of control
- Investments by the worker and the employer
- Permanence of the work relationship
- Skill and initiative
- Whether the work performed is integral to the employer’s business
No single factor is determinative, and no one factor or combination of factors holds more weight than others.
The 2021 rule included only five factors, with opportunity for profit/loss and nature/degree of control considered “core factors.” If those core factors clearly favored an independent contractor, the determination was made. If the core factors were more ambiguous, then the remaining three factors were available for further guidance. Details of the new rule can be found here.
Proponents of the new rule have claimed it would solve widespread issues of misclassification. Opponents have argued the more ambiguous six-factor economic reality test would force employers to reclassify bona fide independent contractors as employees.
Legal challenges
The new independent contractor rule was swiftly met with several lawsuits, including two filed by trucking companies.
In February 2024, Gramercy, La.-based Frisard’s Transportation filed a lawsuit against the Department of Labor over its revised independent contractor rule. The trucking company claims new standards run counter to court precedent. Details of the case can be found here.
A Louisiana federal district court denied Frisard’s bid to stop the independent contractor rule while litigation is pending. The trucking company appealed that decision to the Fifth Circuit, which is where the case has sat since April 2024.
Shortly after Frisard’s filed its appeal, Albuquerque, N.M.-based Colt & Joe Trucking filed a similar lawsuit in a New Mexico federal district court. Last August, the trucking company asked the court to reverse the independent contractor rule. That request was denied in January. Colt & Joe Trucking has yet to file an appeal.
There are at least three other federal lawsuits challenging the independent contractor rule.
A case brought by freelance writers and editors was filed last January in a Georgia federal court but was dismissed in October. An appeal is pending in the Eleventh Circuit.
Freelance writers filed a separate case in Tennessee last February. No significant ruling has been handed down in that case, but motions for summary judgment and to dismiss are pending.
Lastly, the Coalition for Workforce Innovation filed its lawsuit in March 2021 in a Texas federal district court. The businesses group challenged a similar rule issued in 2021, which the Texas court lifted in March 2022. However, the Fifth Circuit reversed that reversal while litigation played out. After the 2024 rule was finalized, the lawsuit was revived and sent back to the Texas district court, where it awaits a ruling on motions for summary judgment and to dismiss.
Frisard’s case is the one furthest along in the litigation process. So far, it is the only case the federal government has requested to pause. LL
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