Misclassifying workers as independent contractors rather than employees is a costly mistake. Among the many issues arising from misclassification is potential liability under federal and state minimum wage and overtime laws. As the laws continue to change and develop, so do the risks to contracting entities.
On January 6, 2021, the United States Department of Labor (DOL) announced its proposed Independent Contractor Rule to address the distinction between independent contractors and employees. After a delay for consideration of comments received in response to the proposed rule, it was scheduled to go into effect on May 7, 2021. However, on March 12, 2021, the DOL published a notice of proposed rulemaking to withdraw the Independent Contractor Rule. The DOL withdrew the rule on May 5, 2021 before it ever took effect. DOL Fact Sheet #13 continues to constitute the DOL’s guidance on the distinction between employees and independent contractors. Whether those factors are satisfied for particular workers will require industry- and jurisdiction-specific analysis.
President Biden’s DOL also withdrew Trump-era opinion letters on independent contractor status as having been issued prematurely, before the proposed Independent Contractor Rule became effective. The withdrawn opinion letters include:
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