Thursday, January 7, 2021

DOL publishes new independent contractor rule, but is it DOA?

You probably heard the big news out of DC yesterday... the U.S. Department of Labor published its final rule to clarify independent contractor status under the Fair Labor Standards Act (FLSA). What? Did something else happen?

The new rule generally makes it easier to classify workers as independent contractors as opposed to employees under the FLSA (i.e. federal minimum wage and overtime law). The actual rule is here. Short version of a long and complicated issue, the new rule focuses on two primary factors:

(1) the nature and degree of the worker’s control over the work; and 

(2) the worker’s opportunity for profit or loss.

But, if need be, there are three additional "guideposts":

(3) The amount of skill required for the work; 

(4) The degree of permanence of the working relationship between the worker and the potential employer.

(5) Whether the work is part of an integrated unit of production.

But, wait! This comes with so many caveats... I don't know where to begin. 

  • The Rule takes effect March 8th; 
  • But, we get a new president January 20th and he has already flagged this rule as "an example of the type of last-minute regulation Mr. Biden would seek to halt or delay with a memo he intends to sign on inauguration day;"
  • This is *just* the rule for the FLSA - There are countless other laws that require independent contractor vs. employee classification analysis and they each have their own tests (worker's comp., unemployment compensation, collective bargaining, etc.); 
  • Also, your state probably has its own minimum wage and overtime law that does not necessarily track with the federal rules; and
  • Courts are not bound by agency regulations, and often adopt their own tests (See, e.g., the Obama administration's paid intern rule that was rejected over and over again). 
In other words, although the rule itself is easier to apply, classifying workers remains as frustrating and convoluted as ever. 

No comments:

Post a Comment