DOL Proposes Withdrawal of Independent Contractor Rule

The Department of Labor (DOL) Wage and Hour Division has proposed to withdraw the independent contractor rule, which has not yet taken effect. The rule was previously delayed until May 7, 2021, which was 60 days after the original effective date of March 8, 2021.  

The regulations were published January 7, 2021, in the Federal Register. Their intended purpose, as described by the DOL, was to clarify distinctions between employee and independent contractor status in employment situations. 

In withdrawing the rule, the DOL cited, among other things, the Fair Labor Standards Act’s (FLSA’s) broad definition of “employ” and concern that the elevation of the rule’s two “core” factors of control and opportunity as improperly narrow. Additionally, the DOL pointed to past case law and the courts consideration and balance of a host of additional economic realities factors in such determinations.  

Workers classified as independent contractors may not be afforded the protections of the FLSA. These include payment of federal minimum wage for all hours worked and entitlement to overtime compensation for hours worked over 40 in a work week. 

Comments on the proposed withdrawal can be made before April 12, 2021.