DOL final rules re gig workers and other independent contractors, likely DOA

In an apparently symbolic statement, the DOL issued its long-waited final rule re gig workers and other independent contractors. The rule purports to provide clearer, more pro-business provisions regarding independent contractor classifications. The DOL has summarized its final rule, as follows:

In the final rule, the Department:

• Reaffirms an “economic reality” test to determine whether an individual is in business for him or herself (independent contractor) or is economically dependent on a potential employer for work (FLSA employee).
• Identifies and explains two “core factors” that are most probative to the question of whether a worker is economically dependent on someone else’s business or is in business for him or herself:
  • The nature and degree of control over the work.
  • The worker’s opportunity for profit or loss based on initiative and/or investment.

• Identifies three other factors that may serve as additional guideposts in the analysis, particularly when the two core factors do not point to the same classification. The factors are:
  • The amount of skill required for the work.
  • The degree of permanence of the working relationship between the worker and the potential employer.
  • Whether the work is part of an integrated unit of production.
• The actual practice of the worker and the potential employer is more relevant than what may be contractually or theoretically possible.
• Provides six fact-specific examples applying the factors.

However, the DOL waited too long to issue its final rule for it to become effective. The regulatory rulemaking process provides that such rules do not become effective until at least 60 days following their publication (this rule was published 1/6/2021). In the interim President Elect Joe Biden will be inaugurated. The incoming Biden Administration has already announced that it will immediately freeze this and any other so-called “midnight” regulations. It is not clear why the Trump Administration, knowing the rulemaking process, chose to wait too long to issue this rule.