Trump Administration Likely to Reverse Biden-Era Independent Contractor Rule
Last week, the Trump Administration’s Department of Labor issued a proposed rule to rescind the Biden Administration’s 2024 independent contractor rule and returning to the “economic reality test” adopted during President Trump’s first term in 2021.
On Jan. 9, 2024, the U.S. Department of Labor’s (DOL) Wage and Hour Division announced its final rule on Employee or Independent Contractor Classification. The final rule replaced a 2021 policy issued by the Trump administration and is based off an administrative interpretation issued by the DOL under the Obama administration. The final rule preserves the use of an “economic realities” test that analyzes an employee’s classification through the totality of the circumstances of the worker-employer relationship.
For EMA member companies, this primarily affects arrangements where common carriers haul motor fuels using independent operators (e.g., owner-operators or leased drivers) as drivers. Standard contracts with common carriers are unlikely to be directly problematic, as the marketer typically deals with the carrier, not the individual drivers. However, potential impact arises if the DOL rule leads to reclassifying those independent operators as employees of the common carrier: This could increase the carrier’s labor costs (e.g., minimum wage, overtime, benefits, taxes, workers’ comp) and carriers might pass on higher costs through increased hauling rates to marketers.
Additionally, if an energy marketer uses an independent operator to deliver fuels or packaged goods (e.g., lubricants) for the company, including using the EMA members’ trucks, they are also likely to be captured by the DOL final rule. Outside of transportation, there are issues under the DOL rule where the energy marketer uses independent contractors for sales or other non-transportation roles (e.g., accounting or environmental compliance). EMA plans to submit comments by the April 28th deadline.
