DOL issues independent contractor redo proposal

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Meet the New Interpretation, (Pretty Much the) Same as the Old Interpretation: the DOL Proposes Its Own Independent Contractor Definition for the FLSA -- from Seyfarth Shaw

Today the U.S. Department of Labor issued its draft new rule (or NPRM) on defining independent contractor status under the Fair Labor Standards Act, seeking to replace the Trump Administration’s Rule which was modernized and provided clarity to businesses and workers in this NPRM (view a PDF here).   The NPRM is 184 pages.  The NPRM rejects the framework of the rule published under the Trump Administration which is currently in effect.  It returns to the totality of the circumstances test which it describes as the test applicable for decades to determine whether the worker is free from economic dependence on their employer for work and instead in business for themselves.

While under the FLSA distributors of newspapers and shopping news are excluded from coverage as statutory non-employees, regardless of the independent contractor analysis of the worker relationship, the independent contractor test (and the analysis contained in the NPRM) applies to other non-distribution workers such as freelancers.

Specifically, the NPRM:

• Eliminates the existing two core factors as most probative of the relationship and entitled to more weight than other factors set forth in the current regulations.
• Eliminates the current regulation’s focus of its analysis on five core and non-core factors.
• Interprets the integration factor differently than the 2021 Regulation that focuses on whether the work is part of an “integrated unit of production.” The NPRM defines integration as whether the work is integral, or important, to the business, similar to Prong B of California’s ABC test that includes a focus on whether the worker is engaged in performing work outside the usual course of the business.
• Investment is defined as a stand-alone factor (that also considers scheduling, supervision, price setting, and the ability to work for others). Interpretation of what investment by an independent worker is considered as consistent with their independence is narrowly construed to not recognize investment in a motor vehicle that the worker owns or leases.

Camille Olson is a partner with Seyfarth Shaw and a member of the America's Newspapers board of directors.