NOTICE: The Department’s “Independent Contractor Status Under the Fair Labor Standards Act” final rule (Independent Contractor Rule) was published in the Federal Register on January 7, 2021, with an original effective date of March 8, 2021. See 86 FR 1168. However, consistent with the memorandum of January 20, 2021, from the Assistant to the President and Chief of Staff, titled “Regulatory Freeze Pending Review,” the Department subsequently issued a notice on March 4, 2021 delaying the Independent Contractor Rule’s effective date until May 7, 2021. See 86 FR 12535. On March 11, 2021, the Department announced a notice of proposed rulemaking (NPRM) proposing to rescind the Independent Contractor Rule. See 86 FR 14027. The Department encourages interested parties to submit comments on this proposal by 11:59 pm ET on April 12, 2021. Anyone who submits a comment (including duplicate comments) should understand and expect that the comment, including any personal information provided, will become a matter of public record and will be posted without change to www.regulations.gov. WHD posts comments gathered and submitted by a third-party organization as a group under a single document ID number on https://www.regulations.gov, including any personal information provided.
The U.S. Department of Labor (the Department) has received requests, available as part of the rulemaking docket on www.regulations.gov, for an extension of the comment period associated with the Notice of Proposed Rulemaking (NPRM) titled Independent Contractor Status Under the Fair Labor Standards Act; Withdrawal, that was published in the Federal Register on March 12, 2021. 86 FR 14027. The comment period for the proposed rule expires on April 12, 2021. The Department will not extend the comment period for this NPRM and you may review the Department’s full response at this link: https://www.regulations.gov/document/WHD-2020-0007-3615.
On January 6, 2021, the Department of Labor (Department) announced a final rule clarifying the standard for employee versus independent contractor under the Fair Labor Standards Act (FLSA). The effective date of the final rule is March 8, 2021.
In the final rule, the Department:
- Reaffirms 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).
- Identifies and explains two “core factors” that are most probative to the question of whether a worker is economically dependent on someone else’s business or is in business for him or herself:
- The nature and degree of control over the work.
- The worker’s opportunity for profit or loss based on initiative and/or investment.
- Identifies three other factors that may serve as additional guideposts in the analysis, particularly when the two core factors do not point to the same classification. The factors are:
- The amount of skill required for the work.
- The degree of permanence of the working relationship between the worker and the potential employer.
- Whether the work is part of an integrated unit of production.
- The actual practice of the worker and the potential employer is more relevant than what may be contractually or theoretically possible.
- Provides six fact-specific examples applying the factors.
The final rule was published in the Federal Register on January 7, 2021.