New Independent Contractor Rule in the Works at DOL
Author: Michael Cardman, XpertHR Legal Editor
June 7, 2022
The US Department of Labor (DOL) intends to make a new rule for determining whether a worker is an employee or an independent contractor under the Fair Labor Standards Act (FLSA).
This plan has not yet been officially added to the agency's rulemaking agenda, but it was announced in a recent blog post from Jessica Looman, Acting Administrator of the DOL's Wage and Hour Division.
Looman said the agency wants to hear from workers and employers as it develops a new rule. A listening session for employers will be held June 24 from 2:30 pm to 4:30 pm EDT. Interested parties can RSVP here.
"We remain committed to ensuring that employees are recognized correctly when they are, in fact, employees so that they receive the protections the FLSA provides," Looman wrote. "At the same time, we recognize the important role legitimate independent contractors play in our economy."
The DOL's approach to independent contractor classification has see-sawed wildly in recent years.
In 2015, under the Obama administration, the DOL issued a non-binding administrator's interpretation, in which it said most workers should be treated as employees, not independent contractors.
In 2017, under the Trump administration, the DOL withdrew that guidance. Four years later, in 2021, the Trump administration DOL issued a new rule establishing a five-factor test that made it make it easier for businesses to classify workers as independent contractors rather than employees.
In 2022, the Biden administration delayed and then ultimately withdrew the rule one day before it was supposed to take effect.
But this March, a federal court in Texas reinstated the Trump administration's rule.
Employers should have plenty of time to prepare for the Biden administration's new approach to independent contractor classification.
First, the agency will need to propose a new rule. After that, the public will have at least 30 days to comment on the proposed rule before the DOL can issue a final rule.
The final rule would need to take effect no sooner than 60 days after it is published in the Federal Register, assuming it is classified as a major rule.