Monday, October 17, 2022

DOL proposes new independent contractor rule

Ah, one of the joys of being an employer (or employment lawyer) . . . the way the law just magically changes depending on who is president. The Fair Labor Standards Act (FLSA) is 84 years old, and yet we still don't quite know how to determine who is a covered "employee." Late last week, the Department of Labor issued a notice of proposed rulemaking (NPRM) for determining employee or independent contractor classification under the FLSA (News Release here).  

Long story, short: more workers will be classified as employees under the new rule. The new rule would apply a "totality-of-the-circumstances" analysis to the "economic realities test." The "ultimate inquiry" is whether the worker is "economically dependent on an employer for work." DOL has identified six factors to use as a "guide" in this analysis:

  • Opportunity for profit or loss depending on managerial skill;
  • Not official use.
    Investments by the worker and the employer;
  • Degree of permanence of the work relationship;
  • Nature and degree of control;
  • Extent to which the work performed is an integral part of the employer's business; and
  • Skill and initiative.
Sound convoluted? Well, wait, there's more! We must also consider "additional factors," which "may be relevant in determining whether the worker is an employee or independent contractor for purposes of the FLSA, if the factors in some way indicate whether the worker is in business for themself, as opposed to being economically dependent on the employer for work."

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