ASTA to Department of Labor: IC Proposal Should Be Withdrawn

Last month, the American Society of Travel Advisors (ASTA) sent a letter urging the U.S. Department of Labor (DOL) to withdraw its proposed rule for determining employee or independent contractor (IC) classification under the Fair Labor Standards Act (FLSA). 

In its proposal, the DOL is attempting to rescind a 2021 IC Rule that broke down one’s ability to determine if they are in business for themselves or their employer into two “core factors” and three less probative non-core factors—in essence, simplifying and modernizing the way worker status is defined. The rule became official on March 8, 2021, but the DOL has since said it “does not fully comport with the FLSA's text and purpose as interpreted by courts and departs from decades of case law applying the economic reality test.” The DOL proposes instead to a return to the more ambiguous “totality-of-the-circumstances” approach. 

“For decades, the usage of independent contractors in our industry has grown steadily because it provides substantial benefits for both workers and agencies in situations where a traditional employment relationship doesn’t make sense,” said Zane Kerby, ASTA president and CEO, in a written statement. “In our view, as compared with the interpretation currently in place, DOL’s proposal represents a clear, if modest, step backward that would increase uncertainty as to a worker’s status as either an employee or an independent contractor.” 

In ASTA’s filing, Peter Lobasso, SVP and general counsel, said that the current guidance DOL is seeking to overturn “provides businesses and other stakeholders, particularly those operating in multiple states, with the confidence to expand their businesses, resulting in growth of the economy as a whole. A secondary benefit derived from the 2021 IC Rule’s elevation of the nature of control element is the reduced likelihood (though not the elimination) of conflicting determinations when the same facts are evaluated under different worker classification tests used by other federal agencies.”

In contrast, he continued: “A return to an unstructured totality of the circumstances interpretive approach where no single factor predominates in the analysis practically ensures that the decades-long confusion among stakeholders and inconsistency among the federal circuits interpreting the FLSA, which the Department readily acknowledges exists, will only continue.” 

Lobasso also noted that nearly 65,000 ICs currently work in the travel advisor industry—equivalent to nearly 40 percent of its workforce. “As such, ASTA and its members have a significant and particular interest in the outcome of the present rulemaking,” he said.

In addition, 44 U.S. Senate and House members filed a letter in the docket similarly asking DOL to do away with the proposal entirely, saying, “We urge DOL not to move forward with its proposed rule for determining independent contractor classification due to this negative impact on workers and businesses, the test’s lack of clarity, and the devastating consequences for the U.S. economy. The proposed rule will jeopardize millions of individuals’ independent contractor status under the FLSA.” 

The public comment period on the proposal closed on December 13, 2022, and DOL will now consider stakeholder concerns and issue a final rule sometime in mid-to-late 2023. 

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