Many commentators will likely suggest that the law involving independent contractor misclassification will become more favorable to businesses and less favorable to workers with a change in the White House. While things will not likely get worse, they will not likely improve one iota.

Right now, under the Biden Administration, the new federal regulation addressing IC status under the federal Fair Labor Standards Act hasn’t changed anything – and not just because of the pending lawsuits challenging its replacement of and substitution for the prior Administration’s worker classification rule.

Rather, as we observed in our blog post published on January 9, 2024, the day the final regulation was released to the public: “The legal impact of the final rule, however, will hardly ripple the waters. After all, it is the courts that create law on this subject, not regulatory agencies.” Similarly, when the Trump 2021 regulation was released as a proposed regulation on September 22, 2020, the title of our blog post that day was “Much Ado About (Almost Nothing).” We noted that the proposed Trump independent contractor rule was simply an interpretation of existing court decisions and, when issued in final form, “would provide little guidance to the public or the courts.”

When we last checked, neither of those two competing regulations had been relied upon by a single federal court in determining IC status. Only one court – a federal district court in Nevada – cited to the current regulation, and it essentially disregarded the regulation, concluding that the regulation was nothing more than “interpretative rules as a guide as opposed to a mandate.”

However, as we report in this blog each month, government agencies continue to regularly enforce state laws prohibiting independent contractor misclassification, and class action lawsuits under those state laws are increasing – and will likely remain a thorn in the side of many businesses using an IC business model for the foreseeable future.

The National Labor Relations Board under the Biden Administration has also been active in taking a more aggressive position involving independent contractor misclassification. As we noted in a recent blog post, the NLRB is about to rule the IC misclassification is, standing alone, a violation of the National Labor Relations Act. But as we pointed out in our post, any such effort by the NLRB would likely be rejected by the federal appellate courts as being contrary to the “free speech” section of the NLRA. While the NLRB in the next Administration will undoubtedly take a less aggressive view of IC misclassification, the end-result of that approach is likely to be the same as what we expected once the federal appellate courts had their say.

Companies that have meaningfully enhanced their IC compliance, including those who have used a process such as IC Diagnostics (TM), will remain in good stead, having structured, documented, and implemented their IC relationships in a manner that will minimize IC misclassification liability under applicable federal and state laws. Those businesses that have not yet done so should not take the current election results as a signal that IC misclassification liability will be on the wane. Indeed, if history is a guide, enforcement of state IC laws tends to rev up when businesses lessen their compliance with IC laws.

Written by Richard Reibstein