Labor Department details proposed employee, contractor classification rule

U.S. Department of Labor (DOL) officials are detailing a proposed rule determining if a worker is an employee or an independent contractor through the Fair Labor Standards Act.

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“While independent contractors have an important role in our economy, we have seen in many cases that employers misclassify their employees as independent contractors, particularly among our nation’s most vulnerable workers,” Secretary of Labor Marty Walsh said. “Misclassification deprives workers of their federal labor protections, including their right to be paid their full, legally earned wages. The Department of Labor remains committed to addressing the issue of misclassification.”

The Notice of Proposed Rulemaking (NPRM) seeks a framework more consistent with longstanding judicial precedent employers have relied on to classify workers as employees or independent contractors under the Fair Labor Standards Act (FLSA).

Proposed rule provisions, according to the DOL, include ensuring all factors are analyzed without assigning a predetermined weight to a particular factor or set of factors; reverting to the interpretation of economic reality factors that include the investment, control, and opportunity for profit or loss factors; aid with proper classification of employees and independent contractors via the FLSA; and rescinding the 2021 Independent Contractor Rule.

Proposed rule comments must be submitted online or in writing to the Division of Regulations, Legislation, and Interpretation, Wage and Hour Division.