25 Sep Proposed Rule Addressing Independent Contractor Status Under the Fair Labor Standards Act Published in the Federal Register
Today the Federal Register published a U.S. Department of Labor proposed rule offering clarity to the determination whether a worker is an employee under the Fair Labor Standards Act (FLSA) or an independent contractor.
In the proposed rule, the Department would:
- Adopt an “economic reality” test to determine a worker’s status as an FLSA employee or an independent contractor. The test considers whether a worker is in business for himself or herself (independent contractor) or is economically dependent on a putative employer for work (employee);
- Identify and explain two “core factors,” specifically: the nature and degree of the worker’s control over the work; and the worker’s opportunity for profit or loss based on initiative and/or investment. These factors help determine if a worker is economically dependent on someone else’s business or is in business for himself or herself;
- Identify three other factors that may serve as additional guideposts in the analysis including: the amount of skill required for the work; the degree of permanence of the working relationship between the worker and the putative employer; and whether the work is part of an integrated unit of production; and
- Advise that the actual practice is more relevant than what may be contractually or theoretically possible in determining whether a worker is an employee or an independent contractor.
This Notice of Proposed Rulemaking is available for review and public comment for 30 days. The Department encourages interested parties to submit comments on all aspects of the proposed rule and reminds them that such comments must be submitted on or before October 26, 2020 to be considered.