DOL Plans to Propose Regulation for Determining FLSA Independent Contractor Status
Author: Michael Cardman, XpertHR Legal Editor
July 8, 2020
The US Department of Labor (DOL) may soon make it easier for gig economy companies and other businesses to classify workers as independent contractors rather than employees.
Included in the DOL's most recent regulatory agenda is a placeholder for a forthcoming regulation for "determining independent contractor status under the Fair Labor Standards Act (FLSA)."
Currently, neither the FLSA statute nor its implementing regulations define the term independent contractor. However, the federal courts have developed a relatively uniform set of factors to determine independent contractor status, commonly referred to as the economic realities test.
It appears likely the new regulation will establish an employer-friendly standard for independent contractor classification. Under the Trump administration, the DOL has already:
- Withdrawn guidance from the Obama administration that had taken a more worker-friendly approach toward independent contractor classification;
- Issued an opinion letter concluding that service providers for a gig economy company are independent contractors, not employees, under the FLSA; and
- Issued a bulletin outlining practices that the DOL considers when investigating whether an employment relationship exists at home care, nurse or caregiver registries.
One news outlet has reported that the DOL intends to finalize the regulation this year so that, in the event President Trump is not re-elected, it would be more difficult for a new administration to withdraw the regulation. XpertHR was not able to independently confirm this report. The DOL did not respond to a request for comment before publication.