In the ongoing battle over labor policy, the Trump administration has signaled plans to abandon or at least revise its defense of two Biden-Era lawsuits and their underlying initiatives.

The DOL’s Independent Contractor Rule

On January 24, 2025, the U.S. Court of Appeals for the Fifth Circuit granted the U.S. Department of Labor’s (DOL) request to delay oral arguments set for early February in a lawsuit challenging the Biden administration’s 2024 rule on classifying workers as independent contractors or employees under the Fair Labor Standards Act (FLSA). The rule requires the weighing of six factors and is designed to make it more difficult for employers to classify workers as independent contractors, who are afforded limited benefits and protections under federal labor laws compared to those workers classified as employees. 

While the DOL’s filing did not indicate whether it plans to rescind President Biden’s independent contractor rule, which would mean a return to the 2021 rule issued during the first Trump administration, the agency requested a 60-day extension to allow the new DOL leadership to determine how they wish to proceed. The Trump administration’s standard for evaluating independent contractor status is a simpler and more employer-friendly test, which focuses on two main factors—the nature and degree of the worker’s control over the work and the worker’s opportunity for profit or loss. Under this rule, employers face a lower burden to demonstrate that their workers are truly independent contractors.

The DOL’s treatment of independent contractor status has far-reaching implications for workers in nearly all industries, especially those operating in the “gig” economy. Employers found to have misclassified employees as independent contractors could face potential liability for unpaid minimum wage and overtime premiums, unpaid Medicare, social security, unemployment compensation, and retirement plan contributions, medical benefits, stock options, and related liquidated damages, penalties and interest.

While neither the 2021 nor the 2024 rule alter the independent contractor classification analyses under state laws utilizing other tests, the DOL’s actions—or inaction—in the coming months will reveal whether the shift in leadership will lead to substantial changes in the way independent contractors are treated under federal law.

EEOC Guidance on Workplace Identity Protections

Following President Donald Trump’s January 20, 2025 Executive Order, “Defending Women from Gender Ideology Extremism and restoring Biological Truth to the Federal Government,” the U.S. Department of Justice (DOJ) has backed away from defending the Equal Employment Opportunity Commission’s 2024 gender identity updates to its Enforcement Guidance on Harassment in the Workplace (“Guidance”), which is among the items the Executive Order directed the EEOC to rescind.

Among other changes, the new Guidance incorporated the 2020 U.S. Supreme Court decision in  Bostock v. Clayton County., which held that Title VII’s prohibition on sex-based discrimination includes discrimination on the basis of sexual orientation and gender identity. The Guidance now provides that the following conduct may be considered gender identity harassment: (1)“outing” the sexual orientation or gender identity of another employee without such employee’s permission; (2) repeated and intentional use of a name or pronoun that is inconsistent with the individual’s known gender identity; and (3) denying access to a restroom or other sex-segregated facility consistent with the individual’s gender identity.

On January 23, 2025, the U.S. District Court for the Eastern District of Tennessee approved the DOJ’s request to vacate oral arguments set for the following Monday in the lawsuit filed by 17 Republican-led states seeking to enjoin enforcement of the guidance. The court’s order questioned whether the Executive Order moots the plaintiffs’ motion for preliminary injunction, given that the plaintiffs would likely be unable to show irreparable harm if the gender identity additions to the Guidance are rescinded. As a result, the court denied the motion without prejudice, allowing the parties to refile their briefs given the significant impact of the Executive Order on the litigation.

The DOJ’s move to cancel the oral arguments indicates its intent to depart from its defense of the EEOC’s gender identity protections and other LGBTQ+ workplace protections, given the Trump administration’s clear stance on such issues as stated in the Executive Order and elsewhere.

Ballard Spahr’s Labor and Employment Group is monitoring the developments in both of these cases as well as other rollbacks of Biden-era regulations and is ready to guide employers through potentially necessary changes to their policies and practices.