US DOL Proposes New Rule for Independent Contractor Determinations, Rescinding the 2021 IC Rule

On October 13, 2022, the USDOL proposed a new rule for determining whether a worker is an employee or an independent contractor under the Fair Labor Standards Act.  The USDOL is accepting public comment through November 28, 2022.  At the time of this writing, there were 170 public comments, mostly from members of the National Court Reporters Association (NCRA) opposed to the changes.  Other industry groups have requested additional time to comment.  The full publication can be found here and the link to submit public comment is contained therein.

The USDOL believes the 2021 IC Rule, which was addressed in a previous TunedIn article by P|K’s Terri Pastori found here, departs from decades of case law applying the “economic reality test,” to the extent it weighted certain factors over others, and is increasing confusion for businesses, leading to more misclassification of workers.  The USDOL’s proposed rulewill return to the “totality of the circumstances” analysis of the economic reality test, where the factors do not have a predetermined weight.  The proposed rule would also return the consideration of investment to a standalone factor, provide additional analysis of the control factor (including detailed discussion of how scheduling, supervision, price-setting, and the ability to work for others should be considered), and returning to the longstanding interpretation of the integral factor, which considers whether the work is integral to the employer’s business.  In summarizing the benefit of this change, the USDOL notes that the proposal, if finalized, “will provide more consistent guidance to employers as they determine whether workers are economically dependent on the employer for work or are in business for themselves.”

Determining whether a worker should be classified as an employee or independent contractor is a difficult task with significant risk to a business that does it incorrectly.If you are trying to determine how to classify your worker, you should consult experienced employment legal counsel, like the attorneys at Pastori|Krans.

P|K Tuned-In provides general legal information, not legal advice.  You should consult your attorney for guidance specific to your particular situation.