Today, the U.S. Department of Labor’s (DOL) Wage and Hour Division announced the publication of a highly anticipated notice of proposed rulemaking (NPRM) on worker classification under the Fair Labor Standards Act (FLSA). The proposed rule, the latest in a tumultuous line of regulations on the independent contractors topic, would establish a framework for applying a redrawn economic reality test to worker classification. In a statement accompanying the release, DOL said that the proposed rule seeks to combat misclassification of independent contractors, an issue that has gained national attention amid the rise of the gig economy.
Background
The DOL has long used variations on an economic reality test to assess employment status under the FLSA. During the Obama administration, an administrative interpretation was issued by the DOL that was later withdrawn by the Trump administration. The latter subsequently issued its own proposal, finalizing a rule in January 2021. However, shortly after President Biden took office later that month, the administration moved to delay and ultimately rescinded by rule the Trump-era independent contractor rule. Further complicating matters, in March 2021 a federal judge reinstated the Trump-era rule after finding that the DOL violated the Administrative Procedure Act by failing to properly seek public comment or consider policy alternatives before delaying and revoking the rule.
The newly proposed rule addresses the judicial findings by...
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