On January 7, 2021, the Department published the Independent Contractor Status Under the Fair Labor Standards Act final rule (2021 IC Rule), 86 FR 1168 (Jan. 7, 2021), with a 60 day effective date. Before the rule went into effect, the Department issued the Delay of Effective Date, and the Withdrawal Rule, Independent Contractor Status Under the Fair Labor Standards Act (May 6, 2021). On March 14, 2022, a district court in the Eastern District of Texas vacated the Department’s Delay and Withdrawal Rules and held that the Independent Contractor Status Under the Fair Labor Standards Act final rule was effective as of March 8, 2021, the rule’s original effective date. The Department is applying the law in accordance with the district court’s decision.
On October 13, 2022, the U.S. Department of Labor published a Notice of Proposed Rulemaking (NPRM) that proposes 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 NPRM proposes to rescind the 2021 IC rule and replace it with an analysis for determining employee or independent contractor status that is more consistent with the FLSA as interpreted by longstanding judicial precedent. More information about the proposed rule can be found here.
A worker is entitled to minimum wage and overtime pay protections under the Fair Labor Standards Act (FLSA) when there is an employment relationship between the worker and an employer and there is coverage under the FLSA. The Wage and Hour Division is responsible for determining whether an employee has been misclassified as an independent contractor and has been denied critical benefits and labor standards protections.
Notice of Proposed Rulemaking
- Employee or Independent Contractor Classification Under the Fair Labor Standards Act Proposed Rule
- Regulatory History
Memoranda of Understanding with Federal and State Agencies to address Misclassification of employees as independent contractors
Federal Taxes and Misclassification
- IRS Independent Contractor or Employee? (Publication 1779)