The U.S. Department of Labor announced that the agency will be issuing a notice of proposed rulemaking to address the distinction between independent contractors and employees portending a much stricter test for independent contractor status under the Fair Labor Standards Act.
DOL will host an employer listening session on Friday, June 24 from 2:30 p.m. to 4:30 p.m. ET to allow the business community to share its perspective on independent contractor classification.
Regulatory Ping-Pong: The Trump administration issued its own independent contractor rule in January 2021, which was then subsequently delayed and later withdrawn by the Biden administration. However, in March 2022, a Texas federal judge reinstated the Trump rule after finding that the Biden DOL unlawfully delayed and withdrew it. HR Policy previously submitted comments both supporting the Trump rule and opposing the Biden administration’s decision to nix it.
The Biden administration was widely expected to eventually issue its own independent contractor rule, which could significantly restrict an employer’s ability to classify workers as independent contractors. A proposed rule could resemble the ABC test as it currently exists in California and other state jurisdictions, and/or provide greater benefits to gig workers. Misclassification will be an enforcement priority of both the DOL and the National Labor Relations Board.
Outlook: The DOL anticipates submitting a draft notice of proposed rulemaking for interagency review this summer. Once a proposed rule is published in the Federal Register, there will be a notice and comment period allowing all stakeholders an opportunity to review the proposal and provide formal written comments. HR Policy Association will submit formal comments and will continue to urge the agency to provide employers with clear guidance on a standard for determining independent contractor status.