The U.S. Department of Labor (DOL) issued a new proposed rule on October 11 that rescinded a rule promulgated by the Trump administration for independent contractors that modified Title 29 of the Code of Federal Regulations addressing whether workers are employees or independent contractors under the Fair Labor Standards Act.
This is the current administration’s second attempt to rescind the rule after a Texas federal court initially ruled against them on procedural grounds.
The current rule provided two “core factors” that were key and three other factors that could be used to determine whether a worker was “economically dependent” or “in business for him or herself.” Essentially, the rule reaffirmed an economic reality test that considered the nature and degree of control over the work and the worker’s opportunity for profit or loss based on initiative and/or investment. The proposed rule seeks to rescind the earlier rule and restore the multi-factor totality of the circumstances test where the factors do not have a predetermined weight and each factor is given full consideration, according to National Law Review.
The proposed rule identifies six factors which courts have examined previously that should be considered when determining the relationships of the parties: 1) opportunity for profit or loss depending on whether the worker exercises managerial skill that affects the worker’s economic success or failure to perform work; 2) investments by the worker and employer; 3) degree of permanence of the relationship; 4) degree and nature of control; 5) extent to which the work performed is an integral part of the employer’s business; and 6) the worker’s skill and initiative.
Since this is a proposed rule, the DOL has extended the comment deadline until December 13, 2022.
Resource: Mike Ripley at (317) 264-6883 or email: mripley@indianachamber.com
