Department of Labor Announces New Independent Contractor Status Rulemaking
On Tuesday, October 11, 2022, the Department of Labor (DOL) announced new rulemaking to rescind and replace the current regulation governing worker classification. The Notice of Proposed Rulemaking will be published in the Federal Register on Thursday, October 13, 2022, starting a 45-day comment period. TechServe will submit comments by the November 28, 2022, deadline.
The current rule, supported by TechServe, provides more certainty for classifying IT and engineering independent contractors focusing on two key factors:
- Nature and degree of control over the work; and
- A worker’s opportunity for profit/loss.
Previously, courts and government agencies used the common law seven-part economic reality test to determine employee/independent contractor status.
TechServe Alliance’s March 18, 2022, article provides background information, including links to our previous comments.
The proposed rule would substantially reinstate this “totality of the circumstances” seven-part economic reality test and will focus on the following non-weighted criteria:
- Opportunity for profit and loss based on managerial skill
- Investments by the worker and employer
- Degree of permanence of the relationship
- Nature and degree of control, including reserved control
- The extent to which the work performed is an integral part of the employer’s business
- Skill and initiative
- Other (undefined) factors
DOL has emphasized its goal of ensuring businesses pay minimum wage and overtime to vulnerable workers who should be classified as employees. However, the proposed regulations could cause uncertainty for companies that hire independent professionals who operate their own businesses.
Additional resources on this:
NPR, Labor Department Proposal Could Change Gig Worker and Company Rules, October 11, 2022
Vox, The Coming Fight Over the Gig Economy, Explained, October 12, 2022
Over the next few weeks, TechServe’s Government Affairs Team will work with our members on the association’s comments. Please email us your concerns and stories about how independent contractor regulation changes could impact your business.