Don’t Forget To Weigh In On New DOL Independent Contractor Standard

As Connecting the Dots previously reported, the U.S. Department of Labor (DOL) has proposed a new regulation to determine whether a person should be classified as an “independent contractor” or an “employee” under the Fair Labor Standards Act (FLSA).

The new rule is based on an Obama administration standard that was replaced by the Trump administration and that was supported by employers. The new proposal can be viewed here. Some of the questions businesses would need to consider under the new proposal include:

• Is the work integral to the company’s business?
• What investments do workers make (buying equipment, etc.) to do their jobs?
• How much control do workers have over their hours and responsibilities?

Interested parties can provide comments to the Department of Labor through Tuesday, December 13, 2022.

The new regulation is heavily biased towards concluding that someone should be considered an employee. That is because if an employer determines a worker should be classified as an independent contractor, that employer cannot be confident that classification is correct until the DOL approves it. The only way an employer can be confident in a classification decision is if it classifies someone as an employee since the DOL will is unlikely to question that decision. T

he DOL believes this rule will provide better pay and benefits to individuals by classifying more of them as employees. However, a Bloomberg Law study released earlier this fall found the contractor test developed by the Trump administration actually resulted in a higher rate of workers being classified as employees protected by federal labor law compared to the standard set by the Obama administration. This outcome was a boon for workers, but it also means that employers have more clarity under the Obama-era standard.