Labor Department Sends Independent Contractor Rule to White House
The U.S. Department of Labor sent its proposed rule to update the independent contractor status under the Fair Labor Standards Act to the White House Office of Management and Budget.
The OMB review marks the final step before a proposed rule is issued to the public, although no official date has been announced. NATSO will meet with OMB in coming days to continue advocating for a more business-friendly framework.
President Trump issued a final rule during his first Administration that was later rescinded by the Biden Administration. NATSO opposed the Biden Administration’s revised independent contractor standard.
The Labor Department’s independent contractor regulations set the criteria used to determine whether a worker is an employee or an independent contractor.
During President Trump’s first term, DOL issued a final rule that considered five factors to determine whether a worker is economically dependent on an employer, and therefore an employee rather than a contractor. Among them, it reaffirmed 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).
It further identified and explained 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.
Identified three other factors that could serve as additional guideposts in the analysis, particularly when the two core factors did not point to the same classification, including the amount of skill required for the work, the degree of permanence of the working relationship between the worker and the potential employer and whether the work is part of an integrated unit of production, among others.
NATSO will continue to update members on the status of this proposed rule.
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