When someone should be treated as an independent contractor has huge implications for companies under a variety of state and federal laws that have their own standards. Unfortunately for employers, the DOL’s view of how the so-called economic reality test under tCathe FLSA should be interpreted is in flux, making compliance very challenging.
In 2016, the DOL issued guidance adopting a very narrow of independent contractor classification. This guidance was withdrawn within months of President Trump’s election, but new guidance was slow to follow. After issuing guidance that was limited to the home health care industry and an opinion letter on virtual marketplace companies, proposed regulations were published 2019, shifting to a more expansive view of when workers can be contractors.
Final regulations were issued on January 8, 2021, to take effect in March, largely mirroring the proposed regulations. Within days, the DOL issued two opinion letters following this more relaxed standard. Following President Biden’s inauguration, however, the DOL withdrew these opinion letters as “premature” and the new regulations are not expected to take effect, leaving the DOL’s approach to independent contractor classification in flux. Read our Independent Contractor Rule Alert for more details.