The Situation Report | October 17, 2022
On October 11, 2022, the U.S. Department of Labor (US DOL) announced the publication of a proposed rule to revise the Department’s guidance on how to determine who is an employee or independent contractor under the Fair Labor Standards Act (FLSA).
The Notice of Proposed Rulemaking (NPRM) would rescind an earlier rule on this topic that was published on January 7, 2021, and replace it with an analysis for determining employee or independent contractor status that, according to US DOL, is more consistent with the FLSA as interpreted by longstanding judicial precedent. U.S. DOL believes that its proposed rule would reduce the risk that employees are misclassified as independent contractors, while providing added certainty for businesses that engage (or wish to engage) with individuals who are in business for themselves.
The proposed rule would:
- Align the US DOL’s approach with courts’ interpretation of the FLSA and application of the economic reality test;
- Restore the longstanding multifactor, totality-of-the-circumstances analysis to determine whether a worker is an employee or an independent contractor under the FLSA;
- Ensure that all factors are analyzed without assigning any predetermined weight to any particular factor or set of facts;
- Return to the longstanding interpretation of the factors, including the investment factor, control factor, profit or loss factor, and the integral factor, which considers whether the work is integral to the employer’s business; and
- Rescind the 2021 Independent Contractor Rule.
More information is at https://www.dol.gov/newsroom/releases/WHD/WHD20221011-0; the proposed rule is here.