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DOL Begins New Independent Contractor Rulemaking Process

The U.S. Department of Labor (DOL) announced that it plans to begin the rulemaking process to determine employee or independent contractor status under the Fair Labor Standards Act (FLSA).
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dol begins new independent contractor rulemaking process

Last week, the U.S. Department of Labor (DOL) announced that it plans to begin the rulemaking process to determine employee or independent contractor status under the Fair Labor Standards Act (FLSA).

On January 7, 2021, the DOL published a rule making it easier for employers to classify workers as independent contractors rather than employees. Specifically, the Trump-era rule applied an economic-reality test that primarily considers whether the worker operates his or her own business or is economically dependent on the hiring entity.

However, under the Biden administration, the DOL first delayed the rule and eventually withdrew it on May 6, 2021, because it said it was inconsistent with the FLSA's text and purpose. On March 14, 2022, a district court vacated the DOL's rules to delay and withdraw the independent contractor status under the Fair Labor Standards Act rule. The court determined that the Trump administration's independent contractor rule took effect as of its original effective date, March 8, 2021, and remains in effect. 

When the DOL announced its most recent plans to engage in the rulemaking process, it noted that it, “remain committed to ensuring that employees are recognized correctly when they are, in fact, employees so that they receive the protections the FLSA provides. At the same time, we recognize the important role legitimate independent contractors play in our economy."

Additionally, the DOL announced that it would hold public forums in June to hear diverse perspectives from those who may be affected by employee or independent contractor classification. The Employer Forum is scheduled for June 24, 2022, from 2:30–4:30 p.m. ET and businesses wishing to participate can RSVP.

Once a proposed rule is published in the Federal Register, there will be a notice and comment period allowing all interested parties an opportunity to review the proposal and provide formal written comments.

Wyatt Stewart is Big “I" assistant vice president of federal government affairs.

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Thursday, June 16, 2022
On the Hill