NORTHSHORE SOCIETY FOR HUMAN RESOURCE MANAGEMENT
What’s Happening in HR – Alert
By Michael F. Weiner, Legislative Director 10/14/22
DOL issues Proposed Rule on Independent Contractor Relationship under FLSA
On October 13, 2022, the Department of Labor issued a proposed rule on Employee or Independent Contractor Classification Under the Fairl Labor Standards Act. The Proposed Rule can be located at the Federal Register website at the following:
https://www.federalregister.gov/documents/2022/10/13/2022-21454/employee-or-independent-contractor-classification-under-the-fair-labor-standards-act
The DOL is accepting comments through November 28, 2022. The proposed rule seeks to reverse the more employer friendly rule adopted under the Trump administration. It uses a multi-factor Economic Reality Test, where no factor is dispositive, and the factors listed are illustrative and not exhaustive. The weight given to each factor will depend on the facts of each case. The factors to be consider include, but are not limited to:
1. Opportunity for profit or loss depending on managerial skill;
2. Investments by the worker and the employer;
3. Degree of permanence of the work relationship;
4. Nature and degree of control;
5. Extent to which the work performed is an integral part of the employer’s business; and
6. Skill and initiative
The proposed rule makes it clear that courts are to consider the totality of the circumstances and can consider additional factors if they are relevant. The proposed rule includes guidance on how to consider the six factors and the guidance make it more likely that a worker will be considered an employee rather than an independent contractor when considered against the current rule.
As HR is well aware, it is very important to properly classify a worker as an employee or independent contractor, and having a worker determined to be an employee instead of an independent contractor would increase costs and risks associated with that worker.
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