DOL Proposes Rules to Clarify Determining Independent Contractor Status

Editor's note: On May 5, 2021, the DOL announced the withdrawal of the Independent Contractor Rule. The withdrawal will be effective on May 6, 2021.

On September 22, 2020, the Department of Labor (DOL) announced a proposed rule addressing how to determine whether a worker is an employee under the Fair Labor Standards Act (FLSA) or an independent contractor.

The proposed guidance aligns with common factors employers currently use to determine independent contractor status including:

• The economic reality test, which considers whether a worker is in business for themselves or is economically dependent on the employer for work
• Core factors such as the nature and degree of the worker’s control over the work and the workers’ opportunity for profit or loss based on initiative and/or investment
• Other guideposts for analysis (e.g., amount of skill required for the work, the degree of permanence of the working relationship between the worker and the employer, whether the work is part of an integrated unit of production)
• Examining actual practice rather than what may be contractually or theoretically possible

The Notice of Proposed Rulemaking, including text of new regulations, is available on the DOL website. The public can submit comments for 30 days after it’s published in the Federal Register.

For more information on the topic, check out the DOL press release.