DOL has stated concerns that the current independent contractor rules established by the Trump administration are resulting in misclassification of employees. DOL asserts that misclassification denies basic worker protections such as minimum wage and overtime pay and affects a wide range of workers in the home care, janitorial services, trucking, delivery, construction, personal services, and hospitality and restaurant industries, among others. The proposed rule would reverse the Trump policies and provide new guidance on classifying workers.
The NPRM proposes a framework more consistent with longstanding judicial precedent on which employers have relied to classify workers as employees or independent contractors under the FLSA. The department believes the new rule would preserve essential worker rights and provide consistency for regulated entities.
According to DOL, the proposed rule would do the following:
Align the department’s approach with courts’ FLSA interpretation and the economic reality test.
Restore the multifactor, totality-of-the-circumstances analysis to determine whether a worker is an employee or an independent contractor under the FLSA.
Ensure that all factors are analyzed without assigning a predetermined weight to a particular factor or set of factors.
Revert to the interpretation of the economic reality factors. These factors include the investment, control and opportunity for profit or loss factors. The integral factor, which considers whether the work is integral to the employer’s business, is also included.
Assist with the proper classification of employees and independent contractors under the FLSA.
