On Tuesday, October 11, 2022, the Biden Administration’s Department of Labor (“DOL”) issued a proposed rule revising the agency’s approach to evaluating independent contractor status under federal wage & hour law. The DOL’s proposal clarifies when workers are properly classified as independent contractors operating their own independent business or when they are employees entitled to the protections of the Fair Labor Standards Act.
In issuing the new proposed rule, the DOL stated that the Trump-era independent contractor rule was overly simplified and inconsistent with the jurisprudence of federal courts. The Trump-era test multi-factor test included five factors for which two factors received greater weight: (1) the nature and degree of the worker’s control over the work, and (2) the worker’s opportunity for profit or loss based on personal initiative or investment. The DOL previously attempted to withdraw the Trump-era rule, but a federal court found the withdrawal unlawful due to the DOL’s failure to comply with the Administrative Procedure Act. The federal court’s decision kept the Trump-era rule in place. Thus, the DOL began a new rulemaking process in issuing its proposed rule on October 11, 2022.
The DOL’s new proposed rule will use a multi-factor test that returns to the totality of the circumstances analysis of the worker relationship to determine the economic realities of the working relationship and whether the worker is truly an independent contractor. The...
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