January 15, 2025

The Trump Administration's Impact on Independent Transportation Contractors

Holland & Knight Transportation Blog
Linda Auerbach Allderdice | Michael T. Maroney
20 Blog Posts in 20 Days Leading to Inauguration Day

Approximately one year ago, we discussed the impact of the final rule from the U.S. Department of Labor (DOL) regarding whether a worker is an employee or independent contractor under the Federal Fair Labor Standards Act (FLSA). That rule, which became effective on March 11, 2024, rescinded the 2021 independent contractor rule announced under the first Trump Administration and replaced it with a six-factor test that considers 1) opportunity for profit or loss depending on managerial skill, 2) investments by the worker and the potential employer, 3) degree of permanence of the work relationship, 4) nature and degree of control, 5) extent to which the work performed is an integral part of the potential employer's business, and 6) skill and initiative. The rule faced a number of legal challenges, some of which are ongoing.

A looming question now is whether the DOL under the next Trump Administration will take steps to return to the 2021 independent contractor rule, which identified five "economic realities" factors, with a particular focus on the nature and degree of control over the work and the worker's opportunity for profit or loss. Additionally, or alternatively, it is not yet clear whether the Trump Administration will let the classification battle play out on a case-by-case basis in federal courts or at the state level. Following the U.S. Supreme Court's decision in Loper Bright Enterprises v. Raimondo, 144 S. Ct. 2244 (2024), overturning the long-established Chevron doctrine – which had directed federal courts to defer to executive agency determinations – federal courts will now exercise independent judgment in construing the FLSA, rather than deferring to the DOL's interpretation of the statute. Furthermore, neither the 2021 rule nor the 2024 rule altered the independent contractor classification analyses under state laws utilizing the "ABC" test, such as in California, Massachusetts and New Jersey, to name a few. In addition, President-Elect Trump's pick for Labor Secretary, Lori Chavez-DeRemer, reportedly supported the Protecting the Right to Organize Act, or PRO Act (H.R. 842, S. 420), which adopted the ABC test for determining employee status under the National Labor Relations Act (NLRA). Under the Pro Act's ABC test, many independent contractors would be deemed "employees" under the NLRA.

It is reasonable to expect that the DOL and Trump Administration will take steps to return to the more business-friendly 2021 independent contractor rule under the FLSA. However, if the ABC test governs worker classification in other contexts, especially in those states with active and independent enforcement tools at both agency and state court levels, that will provide little solace to businesses that rely on an independent contractor model. Thus, as a practical matter, companies that do business in states where the ABC test persists will continue to face challenges on their use of independent contractors notwithstanding what happens on the federal level, unless new opportunities are presented to assert "federal preemption" defenses to the state action.

20 Posts in 20 Days Leading to Inauguration Day on Jan. 20

Holland & Knight's Transportation & Infrastructure Industry Sector Group is prepared to assist industry clients in adapting to the anticipated changes by the new administration. Our team is writing new blog posts each day leading up to President-Elect Donald J. Trump's inauguration, with insights regarding likely impacts on the various segments of the industry, including aviation, construction, maritime, freight rail, motor carriers, transit and autonomous transportation. Bookmark our Election Impacts on Transportation & Infrastructure resource page to follow along.

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