Regulatory Update: US DOL’s Final Independent Contractor Rule

Attorneys from Council of Industry Associate Member Bond Schoeneck & King will provide a briefing on the Biden Administration’s changes to the rules governing independent contractors.

The standard for independent contractor classification under the FLSA was consistent from the 1940s until 2021. During that time, federal courts and the DOL applied the “economic realities” test, which analyzed whether a worker is economically dependent on the employer for work or if they are in business for themselves.  Under former-president Donald Trump, the DOL changed the longstanding rule on March 4, 2021 (the 2021 Rule). The 2021 Rule deemed the degree of control and opportunity for profit factors as “core” factors, granting them more weight in the analysis. It also limited consideration of whether services were integral to an employer’s business and instead considered whether a worker’s services were an integrated unit of production.

The new rule rescinds the 2021 Rule and returns to the original economic realities standard, which focused on the working relationship between the worker and his or her employer and was more consistent with the FLSA and longstanding judicial precedent. Under the new rule, the ultimate inquiry is one of “economic dependence,” meaning whether a worker qualifies as an independent contractor will depend on whether, as a matter of economic reality, the worker is in business for him or herself.

Jim McGrath, Labor and Employment Attorney with BSK, will discuss the new rule and help participants understand whether the status of their contractors will change and what steps they will need to take to comply with the new regulations which will take effect March 11, 2024.