Status of the DOL’s Independent Contractor Rule

On March 11, 2021, the U.S. Department of Labor (DOL) announced a proposal to rescind the independent contractor final rule. The final rule was published on Jan. 7, 2021 and is scheduled to become effective on May 7, 2021. The DOL’s position is that adopting the rule would significantly weaken worker protections under the Fair Labor Standards Act (FLSA). Although the final rule’s effective date has technically not yet been canceled, this proposal signals the DOL’s intention to roll back the worker classification test established by the rule at the end of President Donald Trump’s administration. As a result, employers should continue to monitor DOL communications on this topic for updates regarding worker classification obligations.

LINKS AND RESOURCES

  • DOL independent contractor final rule
  • DOL Wage and Hour Division worker misclassification website
  • DOL Fact Sheet #13 – Employment Relationship Under the FLSA

Test Factors

  • The nature and degree of control over the work;
  • The worker’s opportunity for profit or loss based on initiative and/or investment;
  • 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.

Important Dates

  • Jan. 20, 2021 – President Joe Biden issued regulatory freeze on recently adopted laws.
  • March 8, 2021 – Original effective date of independent contractor final rule.
  • March 11, 2021 – DOL proposed to rescind the final rule.
  • May 7, 2021 – Delayed effective date for independent contractor final rule.
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