March 16, 2022

U.S. District Court Judge for the Eastern District of Texas Judge Marcia A. Crone invalidated the Department of Labor’s (DOL) recent rescission of the Trump-era independent contractor rule and reinstated the Trump-era version of the regulation. The court said the Biden Labor Department violated the Administrative Procedure Act by delaying, and then withdrawing, the Trump-era rule that made it easier for businesses to classify workers as independent contractors.

Specifically, the court said that Biden’s DOL did not provide the public with a “meaningful” opportunity to comment on the “delay” of the Trump-era independent contractor rule issued last January. The court noted that the comment period associated with the delay of the Trump-era rule was only 19 days, which it characterized as too short and said DOL improperly limited the “scope of the comments”. With regard to the withdrawal of the Trump-era rule, the court said the withdrawal is arbitrary and capricious because the agency failed to consider alternatives to rescinding the Trump rule, like making changes to the existing policy.

The decision leaves open the possibility that the Biden DOL will reissue the rescission through a rulemaking process that addresses the procedural concerns raised by the court or that DOL could appeal the decision to the U.S. Fifth Circuit Court of Appeals.

The case was brought before the court by the Coalition for Workforce Innovation, which represents gig-economy companies like Uber and Lyft. The case is Coalition for Workforce Innovation v. Walsh.

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