On October 11, 2022, the Wage and Hour Division of the U.S. Department of Labor (DOL) issued a Notice of Proposed Rulemaking that would make it more difficult for employers to properly classify workers as independent contractors under the federal Fair Labor Standards Act (FLSA).

The proposed rule clarifies the applicable test for determining whether a worker is an employee or an independent contractor under the FLSA and seeks to rescind the more employer-friendly test issued in 2021 by the Trump administration. The “totality of the circumstances” analysis announced by the proposed rule represents a return to a more stringent standard that employers must meet in order to avoid potential liability for independent contractor misclassification.

The proposed rule is scheduled for official publication in the Federal Register on October 13, 2022, after which the public will have 45 days to comment.

The Current 2021 Rule Issued by the Trump Administration

On January 6, 2021, during the final days of the Trump administration, the DOL published a rule (2021 Rule) announcing a five-factor “economic realities” test used to determine whether a worker is in business for him-or-herself (and therefore an independent contractor) or economically dependent on an employer (and therefore an employee). The five factors are:

1. The nature and degree of the worker’s control over the work;
2. The worker’s opportunity for profit or loss;
3. The amount of skill required for the work;
4. The degree of...

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