DOL issues final independent contractor rule

The DOL issued a final independent contractor rule, which reverses the more business-friendly Trump-era rule. Together with its new rule, the DOL issued a FAQ explaining the rule and a small business “compliance guide.”

According the DOL, the new rule differs from its Trump-era predecessor “in several important ways,” specifically, the DOL says this new rule

  • Returns to a totality-of-the-circumstances economic reality test, where no single factor or group of factors is assigned any predetermined weight;

  • Considers six factors (instead of five), including the investments made by the worker and the potential employer;

  • Provides additional analysis of the control factor, including a detailed discussion of how scheduling, supervision, price-setting, and the ability to work for others should be considered when analyzing the nature and degree of control over a worker;

  • Returns to the Department’s longstanding consideration of whether the work is integral to the employer’s business (rather than whether it is exclusively part of an “integrated unit of production”);

  • Provides additional context to some factors, including a discussion of exclusivity in the context of the permanency factor and initiative in the context of the skill factor; and

  • Omits a provision from the 2021 Independent Contractor Rule which minimized the relevance of an employer’s reserved but unexercised rights to control a worker.

The DOL’s rule applies to FLSA wage-hour issues under its jurisdiction. However, it’s noted that other agencies under the Biden administration, for example the NLRB, have also adopted similarly narrow independent contractor rules.

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