On February 19, 2021, the US Department of Labor’s (“DOL”) Wage and Hour Division (“WHD”) withdrew two Trump-era opinion letters. The first, FLSA2019-6, discussed whether a service provider for a virtual marketplace company (“VMC”) is an independent contractor or an employee subject to the Fair Labor Standards Act (“FLSA”). The second, FLSA2019-10, involved the compensability of time truck drivers spend in a truck’s sleeper berth while they are otherwise relieved from duty.
As discussed in one of our previous posts, the Trump administration’s DOL had opined on April 29, 2019 that the VMC’s service providers were properly characterized as independent contractors rather than employees, and thus, were exempt from wage protections under the FLSA. VMCs are part of the continually expanding “gig economy,” and include familiar companies such as Uber, Lyft, Postmates, Instacart, and others. The DOL’s withdrawal of this opinion letter is consistent with its recent decision to delay the effective date of a final rule issued late in the Trump administration entitled “Independent Contractor Status Under the Fair Labor Standards Act.” As discussed in this previous post, the rule, if implemented, would make it easier for businesses to classify workers as independent contractors rather than employees. The DOL’s recent actions signal that the Biden administration plans to return to the Obama-era skepticism that gig workers are bona fide independent contractors. It’s worth noting that the DOL’s withdrawal was announced on the same day as the United Kingdom’s Supreme Court ruled unanimously against Uber in a case in which the company alleged its drivers should not be treated as employees. The UK court held that, although the company contends it is only a technology platform that connects drivers with passengers, it acts more like an employer by assigning rides, determining rates and routes, and using a rating system to discipline drivers. As a result of these recent events, VMC businesses should consult legal counsel in order to prepare for the possibility of greater hostility toward independent contractor classification.
In addition, the DOL withdrew FLSA2019-10, a July 2019 opinion letter in which the agency opined that trucking companies are not obligated to pay drivers for the time they spend in the sleeping compartment of their trucks. On February 19, 2021, the DOL rescinded this opinion letter, stating it was “inconsistent with longstanding WHD interpretations regarding the compensability of time spent in a truck’s sleeper berth” and reasoning that “[s]everal courts have declined to follow this letter” because it is inconsistent with the Department’s regulations, unpersuasive, and not entitled to deference, in part because the letter “did not adequately explain WHD’s change in position.” To the extent that FLSA2019-10 had withdrawn prior opinion letters on this issue, those letters are now reinstated. Although this decision only directly affects employers in the motor carrier space, it highlights the departure from the employer-friendly approach under the Trump administration DOL to the Biden administration DOL’s decidely employee-friendly stance.
