Rule Delayed on ‘Independent Contractor’ Status for FLSA Applicability

Situation Report | February 8, 2021

The U.S. Department of Labor Wage and Hour Division (WHD) is proposing to delay, until May 7, 2021, the effective date of the rule on Independent Contractor Status Under the Fair Labor Standards Act.

This rule was previously published in the Federal Register on January 7, 2021 and effective March 8, 2021. 

It addresses the question of who is an independent contractor and, thus, not an employee under the FLSA. As such, it would adopt a new legal standard for determining employee and independent contractor status under the FLSA.

WHD is proposing to allow itself more time to further review and consider, among other issues, the legal, policy, and/or enforcement implications of adopting that standard.

The initial final rule did the following:

  • Reaffirmed an “economic reality” test to determine whether an individual is in business for him or herself (independent contractor) or is economically dependent on a potential employer for work (FLSA employee).
  • Identified two “core factors” as to whether a worker is economically dependent on someone else’s business or is in business for him or herself.
  • Identified three other factors that may serve as additional guideposts in the analysis.
  • Provided six fact-specific examples.