On October 13, 2022, the United States Department of Labor (the “DOL”) published a new proposed rule to clarify who is an independent contractor under federal wage and hour law (the “Proposed Rule”). The Fair Labor Standards Act (FLSA) protects workers against unfair employment practices by requiring employers to provide certain benefits and protections to employees. Independent contractors are not employees under the FLSA. As such, employers that misclassify workers as independent contractors may wrongfully deny workers of benefits and protections under the FLSA and other laws.

The current independent contractor rule (the “Current Rule”) is a multi-factor test that focuses on two “core” factors – a worker’s control over their work and the opportunity for profit and loss. As previously reported here, the DOL attempted to withdraw the Current Rule in spring 2021. However, the withdrawal attempt was invalidated in March 2022 because the DOL did not follow certain procedural requirements. The Proposed Rule would revert back to the use of a longer non-exhaustive, multi-factor test for determining worker status, and would examine the following:

1. The worker’s opportunity for profit or loss depending on managerial skill.
2. The degree of investments (e., costs borne) by the worker and the employer.
3. The degree of permanence of the working relationship.
4. The nature and degree of employer control in the working relationship.
5. The extent to which the work performed is an integral part of...

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