USDOL releases proposed regulations on independent contractors
This morning, the U.S. Department of Labor issued proposed regulations addressing whether a worker is an “employee” or an “independent contractor” under the Fair Labor Standards Act. We are reviewing the proposal now and will have a follow-up bulletin with the details soon.
The proposed regulations, which will be officially published Thursday in the Federal Register, will specify the factors that should be considered in determining a worker’s status and will lean toward finding that a worker is an “employee” rather than an independent contractor. The proposed regulations will also rescind regulations on this subject that were issued during the Trump Administration.
The Independent Contractor regulations have had quite a ride in the last two years:
- On January 7, 2021, the Trump Administration published a Final Rule in which it set forth new standards for determining independent contractor status. Under the Final Rule, two of the five economic reality factors were designated as “core factors” which carried greater weight in the economic realty analysis. Those two factors were (1) the nature and degree of control over the work and (2) the worker’s opportunity for profit or loss.
- On February 5, 2021, two weeks after President Biden’s swearing-in as President, the DOL published a proposal to delay the effective date of the Trump rule 60 days after the original effective date.
- On May 6, 2021, the DOL issued final regulations withdrawing the Trump regulations effective immediately.
- In May 2021, a number of business groups sued the DOL, alleging that the withdrawal did not comply with the requirements of the Administrative Procedure Act.
- On March 14, 2022, a federal judge in Texas found that the DOL violated the Administrative Procedure Act and reinstated the Trump Administration regulations.
- Last May, the DOL appealed, but in June it asked the court to pause the appeal, saying that a new rulemaking was in the works. Also in June, DOL Solicitor Seema Nanda said that the agency was gathering input for new rulemaking on independent contractors, as did acting Wage and Hour Administrator Jessica Looman in a blog post.
