The U.S. Department of Labor (DOL) published their Notice of Proposed Rulemaking on February 27 to rescind the Biden administration’s independent contractor (IC) regulation and replace it with the regulation issued at the end of the first Trump administration. The Rule is designed to determine when a worker is an employee or IC under the Fair Labor Standards Act and related federal laws.
The proposed rule would:
- Apply an “economic reality” test to determine whether a worker is in business for himself or herself as an independent contractor or is an employee economically dependent on an employer for work.
- Identify and explain two “core factors” to help determine if a worker is economically dependent on an employer for work or 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.
- Identify other factors to help determine a worker’s status as an employee or independent contractor, including the amount of skill required for the work, degree of permanence of the working relationship, and whether the work is part of an integrated unit of production.
- Advise that the actual practice of the worker and the potential employer is more relevant than what may be contractually or theoretically possible.
- Provide eight fact-specific examples applying the factors to real-life circumstances.
The Biden administration rescinded the Trump regulation and replaced it with one that presented seven different factors for consideration, all of which were to be given equal weight. In addition, each factor was weighted classifying a worker as an employee. Comments are due on April 28.
