DOL issues proposed joint contractor rule

The DOL has issued yet another proposed rule regarding independent contractors. Under recent Presidents the DOL has ping-ponged back and forth issuing stricter or looser rules purporting to define the test for determining if individuals are working as employees or independent contractors (for the purposes of a number of laws under the DOL’s jurisdiction). In May 2021, the DOL under the Biden Administration withdrew its prior Trump-era rule and is now proposing to replace it with a stricter test that will involve a multi-factor test, which begins with the Trump-era DOL rule’s 5 factors:

1. The “opportunity for profit or loss depending on managerial skill” of the worker;
2. The extent of “investments” by the worker versus the company;
3. The relative “permanence” of the relationship between the worker and the company;
4. The extent to which the work is an “integral part of the” company’s business; and,
5. The degree of “skill and initiative” involved for the worker.

The DOL has called its new proposed test, the “Economic Realities” test. It is designed to be stricter than prior tests, in order to catch what DOL believes is a large number of currently misclassified workers, but the DOL advises it does not have numbers to suggest how many such relationships it would invalidate. The DOL requests comments prior to November 28, 2022.