DOL proposes new independent contractor rule

The U.S. Department of Labor will issue a new proposed rule on Oct. 13 guiding determinations of whether a worker is an employee or an independent contractor under the Fair Labor Standards Act, the department announced on Oct. 11.

The proposed rule would rescind the rule currently in effect, which was issued by the Trump administration in January 2021.

The department said the Oct. 13 Notice of Proposed Rulemaking would propose a framework more consistent with longstanding judicial precedent on which employers have relied to classify workers as employees or independent contractors under the FLSA

In addition to rescinding the 2021 rule, the department said, the proposed rule would do the following:

• align the department’s approach with courts’ FLSA interpretation and the economic reality test;
• restore the multifactor, totality-of-the-circumstances analysis to determine whether a worker is an employee or an independent contractor under the FLSA;
• ensure that all factors are analyzed without assigning a predetermined weight to a particular factor or set of factors;
• revert to the longstanding interpretation of the economic reality factors, which include the investment, control, and opportunity for profit or loss factors, as well as the integral factor, which considers whether the work is integral to the employer’s business; and
• assist with the proper classification of employees and independent contractors under the FLSA.

Before publication of the proposed rulemaking, the department’s Wage and Hour Division considered feedback shared by stakeholders in forums during the summer. The department now will now solicit comments on the proposed rule from interested parties.

Comments, which must be submitted from Oct. 13 to Nov. 28, should be submitted online or in writing to the Division of Regulations, Legislation and Interpretation, Wage and Hour Division, U.S. Department of Labor, Room S-3502, 200 Constitution Ave. NW, Washington, D.C., 20210.