As part of a reorientation in Department of Labor (DOL) policy, the Biden administration has removed from use a series of Trump administration opinion letters regarding the Fair Labor Standards Act (FLSA). Issuing these opinion letters was a practice widely used by the Trump DOL for quick deregulation without the need for a lengthy rulemaking and public comment period. However, the ease with which these letters are issued makes them a short-term fix, and they can be withdrawn just as quickly as they were issued.
The first wave of opinion letter revocations occurred when the DOL issued a notice on January 26 that three “last-minute” opinion letters issued by the Trump DOL in 2021, FLSA2021-4, FLSA2021-8, and FLSA2021-9, were to be withdrawn immediately.
The DOL’s explanation for withdrawing these three letters is that the “letters were issued prematurely because they are based on rules that have not gone into effect.” This is in reference to the proposed rule on independent contractor (IC) classification under the FLSA, which President Biden froze on inauguration day.
Then, on February 19, the DOL released another notice regarding the withdrawal of another two opinion letters, this time from 2019: FLSA2019-6 and FLSA2019-10.
The rationale given for this withdrawal was twofold. 2019-6 was withdrawn because it pertained to the issue of IC classification, the same issue at the heart of the IC rule frozen by Biden. The DOL therefore withdrew this opinion letter "consistent with its proposed delay of the final rule.” 2019-10 was withdrawn because “several courts have declined to follow this letter,” and DOL went on to suggest that 2019-10 “was inconsistent with the Department’s regulations; unpersuasive; and not entitled to deference.”
Two of the letters withdrawn in the last two months, FLSA2021-9 and FLSA2019-6, were of particular value to the customized logistics industry, given their context. FLSA2021-9 addressed whether requiring tractor-trailer truck drivers to implement safety measures required by law constitutes control by the motor carrier for purposes of their status as employees or independent contractors under the FLSA, and whether certain owner-operators are properly classified as independent contractors. As it was written, it would have been tremendously helpful to the logistics industry and those businesses who rely on the IC model.
FLSA2019-6 pertained to whether service providers for a virtual market company were properly classified as independent contractors or were in fact employees. It was a very helpful and well-received letter for many courier companies.
These decisions to revoke order letters that supported the usage of the IC model may be indicative of a posture at DOL that may lead to harsher audits on companies using the IC model. CLDA members should be advised that it is no longer possible to rely on the withdrawn opinion letters. Additionally, more withdrawals of old opinion letters may be forthcoming as the new administration completes its efforts to overturn Trump-era rules, policies, and subregulatory guidance.
